Renters’ Rights Bill: What is it and what does it mean for the market?
Labour’s Renters’ Rights Bill, which landlord groups have said will be the biggest change in the sector for over thirty years, entered parliament this week.
Legislation will be introduced “to give greater rights and protections to people renting their homes”, including removing no-fault evictions, tightening housing standards and loosening rules on pet ownership, King Charles said in the King’s Speech earlier this year.
The reform bill started life under Rishi Sunak’s premiership, where it was beset by delays and significant amendments. It was scrapped when the parliament dissolved earlier this year.
Labour have said they will “take action where the previous government has failed” and go further in their protection for tenants.
What will the bill do?
The previous iteration of the bill, which covers England’s 11m private renters, had been watered down after pressure from landlord groups. In particular, the Conservative government took out a clause banning “no-fault evictions”, or Section 21.
Previously, no-fault evictions were shelved from the bill, but Labour have put them squarely back in. Housing minister Matthew Pennycook told the BBC on Wednesday that he plans to abolish no-fault evictions by summer 2024.
Over a third of households experienced a no-fault eviction in 2023, according to the Ministry of Justice.
“It is welcome to see the end to no-fault evictions included in the government’s plans. After five years of promises from the previous government, with no improvements at the end of it, renters are understandably demoralised and wary of new commitments,” deputy director of Generation Rent, Dan Wilson Craw, said earlier this year.
The bill will also apply the “decent homes standard” to private rental homes, which sets minimum standards for the basic state of repair of properties. The Government have said that around a fifth of properties will require upgrades to ensure compliance with the standards.
It will give tenants the right to challenge rent increases designed to “force them out by the backdoor, and introduce new laws to end the practice of rental bidding wars by landlords and letting agents. This will include a requirement for landlords to publish the rental price and a ban on encouraging or accepting bids over that price, according to the FT.
Additional reforms include the application of “Awaab’s law” to the sector, which requires landlords to adhere to strict time limits to address dangerous hazards such as damp and mould in their properties, the introduction of a digital private rented sector database, a new Ombudsman and the right for tenants to request a pet.
How will reform impact the market?
Naturally, landlords have opposed the introduction of further red tap to the private rented market. There has been an uptick in landlords selling their properties as they fear the twin effects of a tough Autumn Budget and tighter compliance laws.
“Unfortunately, more landlords are selling than buying at present mainly due to concerns about regaining possession of properties from disruptive tenants,” Jeremy Leaf, north London estate agent and a former RICS residential chairman, said.
“[However] many of the landlords who were worried about the change – and mainly ‘accidental’ landlords – have either sold long ago or are in the process of selling,” Leaf said. “Others who have stayed the course have been waiting to hear the finer points of the proposed legislation before making a decision one way or the other.”
“As far as we are concerned, all new housing measures need to pass the following test: ‘will the change help to address the present chronic shortage of affordable housing for sale and to let?’ We are not convinced the Renters’ Rights Bill does so in its present form,” he added.
There is also concern that the increase in court cases as a results of the removal of Section 21 will cause courts to clog up.
However, Labour have said that the new Ombudsman, which will look into complaints about housing and provide “fair, impartial and binding resolution” to landlords and tenants, should reduce the need to go to court.
Stephen Weston, a Senior Solicitor at SJS Legal, which represents people whose health and wellbeing is being badly affected by often desperate housing conditions, was optimistic about the social effects of the Bill when it was announced earlier this year but warned there is still a lot of work to do.
He said: “Social housing in the UK is in dire need of an overhaul. Personnel and funding should be available to fix problems much quicker.
“Many tenants find themselves going round in circles, all while their homes fall to pieces around them.
“We’ve had some clients who have waited up to seven years for work to be carried out to an acceptable standard. But we do not give up on them and I hope the new Labour government won’t either.”