Industry News
What Labour’s version of rental reform might look like
T
he Renters (Reform) Bill has promised the biggest shake-up of the private rented sector in decades, but the bill has yet to clear all its
stages before it becomes law and there is a chance it may not be passed before an election is called. Te National Residential Landlords Association
has been working closely with the Government on the content of the bill and it is advising its members there are two likely options going forward: 1. Either the bill is rushed through in the last few days of Parliament during ‘wash-up’. Tis would need the co-operation of the opposition who would probably require some concessions to give their support.
2. Or the bill falls, meaning it is scrapped. However, it would almost certainly return in some form shortly aſter the election, with both the main parties committed to removing Section 21 no-fault evictions.
Either way private landlords should expect that at some point in the near future all tenancies will become periodic, membership of a redress scheme will be mandatory and Section 21 grounds for evictions will no longer be usable. During committee stage Labour MPs raised
several amendments, which may indicate the potential direction of travel for rental reform if Labour wins the election. Based on their proposed amendments, it is likely several other adjustments would be made to: • Te timing of implementation; • Which possession grounds would be mandatory; and
• Te length of certain notices. Under the current version of the bill, Section 21
grounds will not be removed immediately aſter Royal Assent is given. Instead, the Secretary of State has powers to set a date on which: • No new assured shorthold tenancies can be created; and
• Pre-existing assured shorthold tenancies become assured tenancies, losing the right to serve Section 21 notices.
To ensure that the courts are in a position to cope with contested cases, the Government has indicated these dates will not be set until the courts have been sufficiently reformed to cope with an increase in contested possession cases. However, it is thought Labour would push for the removal of Section 21 notices first, with court reform following aſterwards. Tey are also likely to amend proposed changes
to the Section 8 possession grounds. Changes are set to include: • Mandatory grounds, which can be used when the landlord intends to sell or move a family member into the property;
• A new ‘persistent rent arrears’ ground, to be used when a tenant has fallen into two months of arrears three times;
• A new mandatory ground for use in student HMOs;
• A lower evidence bar for the discretionary anti-social behaviour ground.
Labour has major concerns about the new grounds and this is where its version of rental reform is likely to be significantly different to that of the Conservatives. Proposed amendments included calls to: • Change the grounds in which a landlord intends to sell or move family member into
6 | HMMFebruary/March 2024 |
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the property, so that landlords cannot use it in the first two years of a tenancy (currently six months). It also wants to increase the notice required to four months (from two);
• Require the landlord to offer the property for sale to the tenant before the sale ground can be used;
• Remove the persistent rent arrears ground entirely, as well as giving courts power to adjourn or suspend possession claims brought under mandatory rent arrears grounds; and
• Introduce a ‘hardship test’ to some mandatory grounds, providing the courts with discretion to refuse a possession order if they believed greater hardship would be caused to the tenant than the landlord.
Labour also tabled amendments to strengthen the financial penalties for failing to sign up to the proposed Property Portal, and requiring landlords to notify the Portal when they serve a possession notice. Te Renters (Reform) Bill already restricts
landlords in relation to rent rises, by prohibiting the use of rent review clauses. Instead, landlords must give a Section 13 notice with at least two months notice if they plan to increase the rent. If the tenant challenges this, then the tribunal can set the rent to the market rate, even if this rate is higher than the rent proposed by the landlord. Labour’s amendments proposed limiting the
tribunal here. Under its plans if the proposed increase is challenged by the tenant, the Tribunal would only be able to set the rent at the amount proposed by the landlord or lower. In addition, it also proposed rent increases would only take effect two months aſter the tribunal had made its decision.
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