Renters’ Rights Bill: how will it affect residential landlords?

The Renters’ Rights Bill was introduced by the new Government in September 2024 and is expected to pass Royal Assent within the next couple of months and come into force from summer 2025.

Set to transform the landscape of the private rented sector, the Bill will have wide-ranging implications for residential landlords.

What does the Bill propose to change?

The Bill seeks to:

• Abolish fixed-term assured shorthold tenancies: all existing fixed-term assured shorthold tenancies will automatically convert to periodic tenancies without any transitional period; any new tenancies granted will also be periodic tenancies.
• Abolish ‘no fault’ evictions under section 21 of the Housing Act 1988: evictions will only be possible through reliance on grounds set out in section 8 of the Housing Act 1988, with amendments to be made to section 8 to include new grounds (including where landlords wish to sell the property).
• Limit the ability of landlords to increase rents: rent increases must be made through the service of a notice under section 13 Housing Act 1988 and will only be possible once a year. If a tenant believes the proposed rent increase exceeds market rate, then it can be challenged at the First-tier Tribunal, who will determine what the market rent should be.
• Set a maximum of one month’s rent in advance: landlords will be unable to charge more than one month’s rent upfront and are prohibited from charging rent before the tenancy has been entered into.
• Apply the Decent Homes Standard:this is designed to ensure that private rented properties meet the same minimum quality standards as already apply to social housing; this represents an improvement on the current implied term for fitness for habitation.
• Prohibit “bidding wars”: landlords may not accept offers above the advertised price.
• Introduce a database of landlords and managing agents: all landlords and managing agents will be required to register with the Private Rented Sector Database, which will keep their contact details, together with any enforcement action taken against them, and details of any previous eviction notices served to tenants.
• Restrict advance rental agreements for students:this will prevent landlords from locking in students to rental agreements more than six months in advance.
• Reduce discrimination:landlords will not be able to discriminate against prospective tenants on benefits or with children.

What will the Renters’ Rights Bill mean for landlords?

In terms of regaining possession of their property, because of the abolition of the no-fault eviction under section 21, landlords will have to rely on the mandatory and discretionary grounds set out in Schedule 2 of the Housing Act 1988. Those grounds (in respect of which a notice under section 8 can be served) are set to be expanded by the Bill. Current mandatory grounds include non-payment of rent; discretionary grounds include delay in paying rent, breach of tenancy conditions, and engaging in anti-social behaviour.

The abolition of section 21 means that possession will generally be a more complicated process, requiring the submission and consideration of evidence; the citing of incorrect grounds or grounds unsupported by evidence may result in the court refusing a possession order.

In terms of rents, landlords currently can increase rent either through a rent review clause in the tenancy agreement, or by renewing a fixed-term tenancy at a higher rent, or increasing rent with the agreement of the tenant. The proposed abolition of fixed-term tenancies means that landlords will only be able to increase rent in line with the market rate by serving a notice under section 13 of the Housing Act 1988, and this can only be served once a year. Tenants are able to challenge that rent in the First-tier Tribunal.

When vetting prospective tenants, landlords will need to take care to ensure that they do not discriminate against individuals who have children or who are in receipt of benefits. They will not be able to accept offers above the advertised price (aimed at deterring the so-called “bidding wars”). Neither will landlords be able to charge more than one month’s rent in advance.

Landlords will need to be aware of, and comply with, their obligations in terms of their properties meeting minimum quality standards, and will be held to account through the proposed database.

The Bill will have implications for all landlords in the private rented sector. With only a few months before the Bill comes into force and the automatic changes it will bring to existing tenancies, landlords should review their existing tenancy agreements now and plan ahead.

If you have any questions or concerns about the Renters’ Rights Bill or landlord and tenant matters, please contact Property lawyers Ed John or Nadine Obayda.