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Renters' Rights Bill: What Landlords Must Know Before It Arrives
The Labour Government has revived and reshaped the reforms that Rishi Sunak’s administration was unable to pass before the 2024 election, transforming the former Renters (Reform) Bill into its successor, the Renters’ Rights Bill.
The Bill is expected to receive Royal Assent in the coming weeks, marking one of the most significant overhauls of the private rented sector in decades.
There is, however, still uncertainty around when the new regime will take effect. While Royal Assent may be imminent, it is widely expected that not all provisions will commence immediately. The Government will likely introduce the reforms in phases through secondary legislation, but the timetable remains unclear. Nevertheless, it is crucial for lenders, agents, surveyors and landlords to prepare for these impending changes now, ensuring documentation, procedures, and tenancy arrangements will remain compliant once the new regime takes effect.
5 Key Changes Proposed by the Bill
1. Abolition of Section 21 “No-Fault” Evictions
Under the new Act, landlords will no longer be able to serve Section 21 notices, which currently allow them to regain possession of a property let on an assured shorthold tenancy (AST) without establishing any fault on the part of the tenant. At present, a landlord can terminate an AST by giving at least two months’ notice without providing a reason, provided all statutory obligations (such as deposit protection and EPC compliance) have been met. Should a tenant not leave the property on expiry of the notice, the landlord would need to go to court to seek an order to enforce the tenant’s eviction.
Once the Bill takes effect, landlords will instead need to rely on the grounds for possession set out in Section 8 of the Housing Act 1988 (which will be modified), proving that one or more grounds apply. This makes the process more evidentially demanding and potentially lengthier, providing more security for tenants. Those modifications include introducing a new mandatory ground for possession where the landlord intends to sell the property, raising the rent arrears threshold for the existing mandatory ground, while retaining strengthened provisions relating to anti-social behaviour and landlord reoccupation. As in the current system, a landlord would need to prove the relevant ground to a court and obtain a court order before evicting a tenant who hasn’t vacated the property by expiry of the notice.
Landlords should therefore maintain clear records, arrears logs, inspection reports and correspondence to ensure they have the necessary evidence to support any future possession claim. Landlords should also review existing tenancy terms to ensure alignment with the new legislative framework.
2. End of Fixed-Term ASTs
After the new rules take effect, all existing fixed term assured shorthold tenancies (ASTs) will automatically convert into periodic tenancies, which continue on a rolling monthly basis and have no minimum fixed term. Any new tenancies will be periodic tenancies. Tenants will have the right to serve two months’ notice to end the tenancy from day one. Currently, tenants must give at least one month’s notice and cannot usually leave before the expiry of a fixed term without a break clause. This shift will give tenants far greater flexibility (designed to provide an exit route where a let property is substandard), while landlords will lose the security of guaranteed fixed terms.
3. Rent Increases
The new rules will mean rent increases will be limited to once per year (via a section 13 notice) and must reflect the market rate. Tenants will still have the option of challenging a rent increase. Crucially, any contractual rent review clauses or other mechanisms for rent increases in existing tenancy agreements will no longer be valid. In addition to this, the Bill also prohibits landlords from requiring more than one month’s rent in advance of the start of a tenancy. Landlords will therefore need to consider reviewing their policies on rent to ensure their agreements reflect the new legislation.
4. Private Rented Sector Ombudsman and Database
Every private landlord in England and Wales letting an assured tenancy will be legally required to register with the new Private Rented Sector Landlord Ombudsman Service. It is likely that this will include an annual membership fee per property, which investors may need to consider. This service is intended to provide a quick, impartial and binding mechanism for resolving tenant complaints without court proceedings. Failure to register and/or comply with Ombudsman decisions will attract financial penalties, and even letting agents may also face sanctions for marketing properties on behalf of unregistered landlords. The Bill goes as far as including the option for criminal proceedings for repeat offenders.
Landlords must also join a central Private Rented Sector Database, which is intended to help landlords demonstrate compliance and understand their legal obligations, while also providing tenants with reliable information when choosing rental properties. A registration fee will be payable by landlords. Failure to register on the database could result in financial penalties, criminal prosecution and also result in a landlord being prohibited from evicting a tenant, even if the tenant is at fault.
5. Prohibition on Discrimination
The Bill will make it unlawful for landlords, agents, or lenders to impose blanket bans on letting to tenants with children or those who receive benefits. This prohibition will extend to lease agreements, mortgage terms, and insurance policies, rendering any clauses imposing blanket bans contained in those documents, void. There will be financial penalties for non-compliance. However, it is worth highlighting that this does not prevent landlords from assessing (and rejecting a tenant’s application on the basis of) a potential tenant’s affordability.
Preparing for Change: How We Can Help
With the precise implementation date still uncertain, proactive preparation is essential to avoid being caught off guard by the changes. At Feldon Dunsmore, we are already advising clients on how to navigate the transition and ensure compliance when the Renters’ Rights Bill becomes law.
We act for lenders and borrowers in commercial and residential transactions, reviewing portfolios that include multiple ASTs. As part of ensuring good and marketable title, we examine tenancy agreements and statutory compliance documentation, a process that will become even more critical under the new regime. Instructing lawyers who are actively tracking legislative developments is crucial to ensuring that transactions of this nature progress smoothly and remain fully compliant with future legislative changes.
For purchasers of investment properties subject to ASTs, we are constantly working to ensure they understand their obligations and potential risks under the current and upcoming framework.
Our team will continue to monitor developments as the Bill progresses and will update clients once commencement dates are confirmed.For more information on other provisions of the Renter’s Rights Bill, please see the following link which contains government guidance:
This blog is intended as general information only and does not constitute legal advice.
If you need further assistance, please contact a member of our team.