What does the Renters (Reform) Bill mean for rural landlords?
If it becomes law, it would be the biggest shake-up of the private rented sector in decades. Knight Frank's Jess Waddington and Mark Topliff examine how the Renters (Reform) Bill impacts rural landlords.
4 minutes to read
The government introduced a Bill to parliament on 17 May 2023 that could introduce some major legislative changes to the private rented sector. The Renters (Reform) Bill has a mix of amendments affecting tenants and landlords. Key points of the Bill include:
• abolishment of section 21 ‘no fault’ evictions and move to a simpler tenancy structure where all assured tenancies are periodic with no initial fixed terms
• introduction of more comprehensive possession grounds so landlords can still recover their property (including where they wish to sell their property or move in close family) and to make it easier to repossess properties where tenants are at fault
• removal of the inclusion of rent review clauses and applies a statutory regime where rent can only be reviewed once a year and on two months’ notice
• provide stronger protections against backdoor eviction by ensuring tenants are able to appeal excessively above-market rents
• introducing a new Private Rented Sector Ombudsman
• creating a Privately Rented Property Portal to help landlords understand their legal obligations and demonstrate compliance
• give tenants the right to request a pet on the property.
For rural landlords, the Bill should make it easier to repossess property where the tenants are at fault, e.g., due to repeated rent arrears or in situations of anti-social behaviour. But it will also allow the landlord to repossess the dwelling to house an agricultural worker who the landlord will employ. Or occupation by the landlord or their close family members (no definition of ‘close’ has been released yet). There is a proposed notice period of two months.
The legislation will also retain Assured Agricultural Occupancies (AAOs) and replicate the existing “opt-out” so that agricultural landlords can issue new periodic tenancies instead of AAOs as long as they inform the tenant from the outset.
One major facet of the Bill outlines a move to a simpler tenancy structure based on periodic rather than fixed terms. The new regime would apply to every new tenancy created after a ‘commencement date’. Regulations will set this, and the date for implementation is currently unknown. Landlords could find this creates more uncertainty around how long their tenants will rent their properties. Many rural landlords prefer the security of a longer-term tenancy (reducing reletting costs and minimising costly rental voids) and this minimises the reliance that an Agent can have on security of a term.
However, landlords who put rents up excessively in order to force tenants out may find themselves in front of an independent tribunal. But they can still increase rents according to the prevailing market prices. The Bill outlines how serving new rent increases for properties cannot be done earlier than the anniversary of the date on which the first period of the tenancy began, and two months’ notice must be given.
There is a specific notice allowing possession by a superior landlord after a superior tenancy ends, the landlord becomes the tenant’s direct landlord and can seek to take possession. This can only be used where the immediate landlord prior to reversion was a private registered provider of social housing or an agricultural landlord.
The creation of a Private Rented Sector Ombudsman will hopefully provide a less adversarial route than going through the courts to settle disputes. The Ombudsman will still have the power to order a binding resolution. It should also be a cheaper process than using the court system.
Which legislation landlords need to be aware of can be difficult or time-consuming to find out. A portal for the private rental market will bring together the legal obligations and demonstrate compliance in one place, giving landlords confidence in their position. The portal will also provide information for tenants and local councils.
Regarding animals, tenants will have the right to have a pet on the property, and the landlord will have to consider it but not unreasonably refuse it. This could mean that a landlord could refuse a pet in the accommodation if deemed unsuitable. However, the landlord will require pet insurance to cover any damage if a pet is allowed on the property.
Changes to legislation for the private rented sector won’t stop with this Bill. The government has also committed to bringing in the Decent Homes Standard, which means that rented homes should be of a certain quality. It has also said it will make sure that it will be illegal to have a blanket ban on tenants in receipt of benefits or with children.
Jess Waddington of the Rural Consultancy team says, “this Bill will affect all rural landlords, but despite the headlines in the press, it shouldn’t mean rural landlords react rashly by considering selling off their rental housing portfolio. The successful implementation of this bill is reliant on transparent, quick and improved court systems so that the amended Discretionary repossession grounds can be realised by Landlords. With 11 million tenants in England, we could see the court delays having a significant impact. I would advise waiting to see how the Bill translates into law before considering how it will impact you specifically.”