Summary

The Government has published its “fairer private rented sector white paper” (the “White Paper”), following consultation to make the Private Rented Sector fairer.

Amongst the proposals, homes will be required to be of a better standard, tenants will be able to keep pets, a new tenancy structure will be introduced and the long-awaited ban on “no fault evictions” will be pushed through.

What are the implications?

Landlords will become subject to the Decent Homes Standard, currently utilised in the social renting sector. Properties must be at a decent standard of repair with no health and safety issues (the White Paper cites that poor quality homes cost the NHS £340 million a year). Properties with damp, old kitchens and bathrooms, temperature control issues, will all be required to be made good. Private landlords will have a legislative duty to meet the Decent Homes Standard, but the Government will consider how best to support “good landlords” including phased introductions of reforms where needed.

The White Paper details the Government’s proposal including a timetable for implementation to abolish section 21 evictions and simplify tenancy structures. To achieve this, they will move all tenants who would previously have had an assured tenancy or an assured shorthold tenancy onto a single system of periodic tenancies (a tenancy of no fixed term but renewing periodically). Tenants will be free to leave at any time, subject to giving two months’ notice, with no liability for future rent. It is feasible therefore that landlords may experience a higher turnover in tenants and be at greater risk of voids, but equally abolition of section 21 evictions will make it more difficult for landlords to end the tenancies on non-fault grounds.

It seems unlikely that the proposed reformed grounds for possession will be as flexible for the landlord as the section 21 eviction, albeit it is proposed there will be a new mandatory ground for repeated serious arrears where a tenant has been in at least two months’ rent arrears three times within the previous three years, regardless of the arrears balance at hearing.

Historically possession has been avoided by bringing the amount of arrears under the mandatory limit. With the reform, those who persistently pay late will be subject to mandatory eviction.

Landlords will no longer be able to exclude tenants with children or those in receipt of benefits, although the Government proposes to improve support to landlords who let to people on benefits. Similarly, pets can only be excluded, where requested, if there are reasonable grounds to refuse consent.

For tenants, homes are promised to be of a better quality, freedom to move will be given by the reform (including a potential ability to “passport deposits” to avoid having to save for a second deposit) and some security will be given by the restriction of rent increases to once per year. The Government proposes to end the use of rent review clauses and improve tenants’ ability to challenge excessive rent increases through the First Tier Tribunal to support people to manage their costs and remain in their homes.

The White Paper also confirms plans to tackle unacceptable delays in Court, which can cause hardship to landlords and uncertainty to tenants. An Ombudsman will be created to assist with dispute resolution and a Property Portal will be created to assist landlords with navigation of their legal obligations.

What’s Next?

The White Paper is the first step towards reform. We now expect to see the Renters Reform Bill move its way through parliament in the current session providing the legislative basis for the reforms outlined in the White Paper, though the timescales for its ultimate implementation are currently unknown. The White Paper makes clear that some of the proposals are still being considered (for example, the “passporting” of deposits) so the wider scheme of reform may take several years.

Click here to view the White Paper.