"As this legislation aims to create significant changes for the market and its landlords, it is vital that any legislation proposed equally recognises the needs of landlords, so that it also works with them rather than in opposition"
As the proposed changes will have implications for the rental housing sector and private landlords, London lettings agency JOHNS&CO share their insight on the opportunities and protections being explored for landlords.
Graeme Goessen, Management Services Director for JOHNS&CO, said: “Now that it has been published after years of speculation, there is some concern that the current proposal provides various risks to private landlords and therefore, we eagerly await further news on the specific nature of how the bill will work in practice.”
“The ongoing review and debate in parliament offer opportunities for additional amends, but it is also important that landlords do not overlook the potential benefits the Bill can have for them.”
The Bill is now at the “second reading” stage as it passes through the House of Commons. As the second reading “debate” has not taken place yet, JOHNS&CO anticipate it is unlikely to receive Royal Assent until 2024.
Graeme continued: “The government will then give at least six months' notice of the first implementation date, from which point all new tenancies will need to abide by the Bill. A further 12 months' notice will then be provided to retrospectively govern all tenancies. Here are a few of the key changes proposed by the Reform Bill."
Abolishment of Section 21
The most significant change is the abolishment of Section 21 ‘no fault’ evictions, which enabled landlords to repossess their properties without having to establish fault on the part of the tenant.
Graeme said: “The proposed new system will mean that tenants will be required to provide two months’ notice when leaving a tenancy and landlords will only be able to evict a tenant in reasonable circumstances, which will be defined in law. For landlords, this will change how they can approach evictions, however, it is important for landlords to understand that they will still be looking to regain possession for the same reasons.”
In place of Section 21, the Bill proposes strengthening Section 8 to allow landlords to end a tenancy agreement early if they have the legal reason to do so.
Graeme continued: “While intending to give tenants greater security and stability, the strengthening of Section 8 will also benefit landlords as it expands the reasons for eviction, giving landlords greater options in cases where tenants have breached their tenancy agreements, such as for persistent arrears.”
The Bill also recognises new mandatory grounds for eviction when landlords’ circumstances change, such as landlords wishing to sell the property or move family members into the property.
Graeme said: “While this provides more comprehensive grounds for possession, it does raise questions that some grounds will actually take longer to enforce, even when the landlord is able to make a claim immediately for possession. This is one area which would benefit from increased clarity during the government’s second reading debate.”
Mandatory Private Rented Sector Ombudsman
The Bill intends to introduce a mandatory Ombudsman to provide ‘fair, impartial, and binding’ resolution to disputes between landlords and tenants outside of court.
Graeme explains: “The Ombudsman will be a streamlined service that will help to resolve individual disputes without involving the courts, which will be a faster and cheaper solution to resolving issues. The government is also exploring the possibility of offering mediation services to landlords to help settle disputes raised by landlords.”
“While the Ombudsman will have additional powers granted to compel landlords to resolve situations, it also offers benefits for landlords, providing access to training, guidance, and support.”
Right to Pets
Graeme comments: “The Bill will also give tenants an implied right to request consent to keep a pet in the property, which landlords cannot reasonably refuse, and tenants will be able to challenge the landlord's decision.”
Despite this, it is also not possible to legislate for each individual situation where a landlord would or would not be able to ‘reasonably’ refuse a pet, and there will be situations where it is reasonable to refuse - including where their superior landlord prohibits pets. For example, as a clause in the head lease should a tenant be a leaseholder in a block of flats.
He adds: “As it stands, further clarity will need to be provided to help landlords determine if they can reasonably deny a tenant's request for a pet. However, the Bill also proposes amending the Tenant Fees Act 2019 so that landlords can require insurance as a permitted payment to cover any damage to their property.”
“This will help reassure landlords that any property damage caused by a pet will be covered and that the responsibility for preventing and resolving any damage will reside solely with the tenant.”
Graeme concluded: “The lettings market is an essential part of the UK housing market and it contributes significantly to the UK economy. As this legislation aims to create significant changes for the market and its landlords, it is vital that any legislation proposed equally recognises the needs of landlords, so that it also works with them rather than in opposition.”
“For now, it is important that landlords remain vigilant and agile to any new changes from the rental reforms, and consult their letting agents for guidance.”