Renters (Reform) Bill voted through, but S21 continues to divide the industry

Wednesday saw MPs vote in favour of the long-awaited Bill despite there still being no clear sign of any movement surrounding Section 21.

Related topics:  Landlords,  Tenants,  Government,  Renters Reform Bill
Property | Reporter
26th April 2024
Gov 99
"The Renters (Reform) Bill has been strengthened since it was first introduced but still misses the mark in providing the right level of fairness and flexibility for landlords and tenants and improved competency standards for letting agents."
- Timothy Douglas - Propertymark

The government's Renters (Reform) Bill passed its third reading in the House of Commons this week and will now go back to the House of Lords for further scrutiny.

MPs voted 287 to 144 in favour of the government plans for an indefinite delay to ending no-fault evictions until the court system is deemed ready and no guarantee from Secretary of State for Levelling Up, Housing and Communities, Michael Gove, that this could be achieved by the next general election.

Gary Scott, specialist in property disputes and partner at city law firm Spector Constant & Williams said: “Despite criticism from some sectors, the Government has added an amendment to the Bill to ensure that so-called ‘no-fault’ evictions will not end until the Court System can cope with the newly proposed system.

“This is an essential practical step which would otherwise mean the Court system as it stands would be completely overwhelmed with the vast number of new claims that it would be required to handle.

"The result would be a complete breakdown of the system. It is already taking up to a year to process a straightforward possession claim. Adding thousands more cases will break the current system.

“Court reform was always said to be a prerequisite to this change and it should be no surprise that this amendment has been added. It is, however, disappointing that there has been no announcement of a timeframe or any indication of the steps being taken toward such court reform.”

The Bill will fail

Meanwhile, according to The Renters' Reform Coalition, the bill in its current form will fail and won't deliver a fairer rental sector, adding "The bill has been watered down again and again by the government, with several rounds of damaging concessions to backbench MPs that have fundamentally weakened it."

However, Ben Beadle, chief executive of the National Residential Landlords Association, backed the bill in its current form.

He said: "This Bill delivers a fair deal for tenants and responsible landlords. In the interests of certainty for the sector, it is now time to ensure the Bill passes through Parliament.

“For renters, the Bill will abolish section 21 repossessions and fixed term tenancies, introduce a Decent Homes Standard for the sector, a new Ombudsman and Property Portal which landlords will have to join as well as measures to protect families and those in receipt of benefits from discrimination.

“Going forward, it will always be for the courts to decide if landlords have met the threshold to repossess a property based on a series of legitimate reasons. This includes tenant anti-social behaviour, serious rent arrears or where a landlord plans to sell a property.

“That said, the tenant group, Generation Rent, has rightly warned that landlords selling properties is ‘a leading cause of homelessness.’ The only answer to this is ensuring responsible landlords feel confident enough to stay in the market. Greater security for tenants will mean nothing if the rental homes are not there in the first place.

“A number of the amendments proposed to the Bill enact recommendations by the cross-party housing select committee. Taken together they would ensure a balanced Bill that protects tenants and ensures it is viable for responsible landlords to continue renting properties out.”

Still missing the mark

Timothy Douglas, Head of Policy and Campaigns at Propertymark, said: “The Renters (Reform) Bill has been strengthened since it was first introduced but still misses the mark in providing the right level of fairness and flexibility for landlords and tenants and improved competency standards for letting agents.

“It is disappointing that the UK Government continue to not recognise the benefit of allowing tenants and landlords to enter a fixed term tenancy where it is mutually beneficial to both parties. This will impact large parts of the market including students who rent.

“The legislation as a whole must help to increase the supply of homes to rent and not reduce the number, so Propertymark will continue to push for measures as the Bill goes to the House of Lords.

"It is important that it maintains the flexibility and choice that the private rented sector has provided over recent decades. The consequences of not doing so would be detrimental to landlords, tenants and agents alike.”

Uncertainty remains

Ian Fletcher, Director of Policy (Real Estate) at the British Property Federation said: “At a time when we need to increase investment in the supply of good quality private rented accommodation, one of the greatest obstacles to achieving that has been investor hesitancy caused by an uncertain regulatory environment, with many landlords and investors living with such uncertainty on renters’ reform since the Government made it a manifesto commitment in 2019.

"This uncertainly has undoubtedly had a cooling effect on the private rented sector and delayed many investment decisions. It is therefore imperative that not only does this Bill get passed overall to prevent landlords from living with uncertainty for a further prolonged period, but the government’s amendments in relation to an initial six-month period for tenants, the requirement for an assessment on the county court possession system before abolishing section 21, and changes to protect student landlords, in particular, are retained as the Bill progresses through its next stages in the House of Lords.”

Section 21

Oli Sherlock, Managing Director of Insurance at Goodlord, comments: “The Renters (Reform) Bill involves much more than the abolition of Section 21 eviction notices. However, it was the main topic of conversation again in Parliament on Wednesday.

"Although it is imperative for the county courts to have the resources they need to cope with the upcoming changes, the lack of detail around when and how the money to pay for this will be provided is disappointing."

Lauren Hughes, Director of Customer Success at Vouch, comments: "The Renters (Reform) Bill does seem to be creaking towards the finish line, but Wednesday's debate showcased just how much uncertainty remains.

"Section 21 was much discussed, with a range of Tory MPs continuing to put pressure on Gove to water down the manifesto proposal to scrap no-fault evictions.

"And it appears that this strategy has been effective, with the Housing Minister admitting that the Section 21 ban is unlikely to be in place before a General Election."

Olivia Harris, Chief Executive, Dolphin Living, said: “While we broadly support the principle objectives of the Bill and welcome the progress that is being made, especially around the introduction of an initial six-month tenancy period for tenants and the requirement for an assessment on the county court possession system before abolishing section 21, as the Bill progresses to the Lords we need to be mindful of the potential unintended consequences of the legislation on intermediate rental providers.

"Namely, the impact changes to section 21 might have on sub-market rent products which operate under the basis of a household income cap being used as a basis for tenancy allocation, and crucially, renewal. The ending of term tenancies, without an exemption for intermediate rent or allowing termination on the grounds that the initial qualifying income criteria are no longer met, will prevent the homes being available to those that need them.”

Allison Thompson, National Lettings Managing Director, Leaders Romans Group, said: "This amendment temporarily halts Section 21 evictions pending a comprehensive review of the court procedures for property repossessions, representing a prudent and effective strategy that balances the interests of both landlords and tenants.

"It should be recognised that tenants end approximately 90% of tenancies themselves. Among the 10% of tenancies terminated by landlords, only a small percentage utilise Section 21, generally in instances of ongoing anti-social behaviour or repeated rent defaults. This highlights that most landlords employ Section 21 evictions as a last resort, primarily to ensure they can reclaim their properties when absolutely necessary."

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