After a consultation, a General Election, three Queen’s Speeches and a pandemic, the government’s plans for reform of the rental market are finally here. The commitment to abolish Section 21 that kicked off this process back in 2019 is still the centrepiece of the reforms, but there are wider changes to landlord regulation as well.
And before any of these measures make a difference to private renters’ lives, they need to be passed into law. That means we’ll still have a lot of work to do to persuade Parliament to get it through and get all the detail right.
Here’s a round up of what is in the White Paper and our initial thoughts.
Tenancies and grounds for eviction
In the White Paper: Section 21 evictions will be abolished, meaning that landlords will have to prove grounds to evict tenants – and new grounds will be created to allow landlords to sell or move close family members in. Grounds around persistent rent arrears and anti-social behaviour will be strengthened, with less notice for the latter – though renters who are in arrears of two months or more (currently ground 8) will have two more weeks to pay them off.
Landlords will only be able to evict tenants on sale or moving in grounds after the first 6 months of the tenancy. In these cases, tenants will have two months to move out and if the landlord has proven their grounds the court will have to make an order for eviction. Otherwise tenancies will be indefinite and can be ended only by the tenant or the landlord giving legitimate notice.
The government is considering what penalties there will be for abuse of new grounds (landlords will be banned from reletting the property within 3 months) with civil penalties issued by councils one option.
GR verdict: This is a huge moment for Generation Rent as we have campaigned for Section 21 abolition for years. These changes should stop landlords from evicting tenants simply to re-let at a higher rent, or to avoid making repairs after a complaint, giving tenants more confidence to report problems and hold their landlord to account. A little bit of power is back.
Periodic tenancies mean tenants will have the option of moving out with two months’ notice without penalty if their circumstances change or the home turns out not to be suitable, which is an excellent move and provides the flexibility that renters need.
However, there is a risk that if it is too easy to use no-fault grounds, unscrupulous landlords could abuse this, creating Section 21 by the back door. Penalties for abuse must be easy to enforce – Scotland has Wrongful Termination Orders which see tenants evicted on false grounds compensated, though this is tricky to prove. Enforcing a three-month void period is an attempt to make this easier but we’re not sure it will be enough.
While Section 21 is abused, sale is a very common reason for its use and that will continue. There is acknowledgement that landlords could sell with sitting tenants but no real incentive to do this, and no support for tenants evicted on no-fault grounds to cover their costs of finding a new home and moving. Two months’ notice is what we have at present and is not enough, particularly for families with children who face enormous upheaval during term time.
Where landlords are selling or moving family in, we want to see four-month notice periods, a longer period of protection from no-fault eviction, and relocation payments worth 2 months’ rent to help tenants move.
Although tenants will be able to move out more easily, this may still be difficult for victims of domestic abuse who are on joint tenancies that cannot be ended easily. We want to see legal mechanisms to help people in these situations.
Rent increases
In the White Paper: With fixed terms gone, automatic rent increases in the contract are also gone. If landlords want to raise the rent they must use Section 13 notices, a maximum of once a year, which can be challenged at tribunal. Tenants will get two months’ notice of a rent rise and while the tribunal will use the going market rent as the basis for their decision, the tenant will not be asked to pay more than what the landlord has asked for.
GR verdict: With Section 21 gone, it follows that tenants can challenge Section 13 notices or negotiate with their landlord with less of a threat of eviction hanging over them. Two months’ notice of a rent increase (up from one) will give tenants more time to challenge it and while the tribunal can’t award more than what the landlord wants, this may encourage landlords to ask for as much as they think they can get away with – an unintended consequence.
As things stand, landlords in areas with high demand for homes could easily use unaffordable rent rises to force tenants out so to stop this there needs to be a limit to rent rises based on affordability. There should also be restrictions on when a landlord can serve Section 13s – if they fail any sort of compliance they should be unable to raise the rent, as is the case with Section 21 now.
Decent Homes
In the White Paper: Private rented homes will need to meet the decent homes standard, which means not only free of hazards but also warm, free of disrepair and with suitable kitchen and bathroom facilities. Pilots with councils to trial improvements to enforcement. A new right to claim back rent on non-decent homes through expanded Rent Repayment Orders (RROs).
GR verdict: Private renting has grown as social housing has been sold off and not replaced – as a result more people are paying more for less regulated homes. Bringing standards into line with the social sector will stop private landlords from short-changing renters and – through the benefits system – taxpayers. Expanding RROs is welcome – they should be a huge deterrent to criminal landlords but are currently underused.
Ombudsman
In the White Paper: New Ombudsman that all landlords must join. It can award up to £25,000 in compensation, as well as require remedial works, and would be available for tenants to use to resolve complaints about their tenancy. Its remit “could include complaints about the behaviour of the landlord, the standards of the property or where repairs have not been completed within a reasonable timeframe”.
GR verdict: This has been a huge gap in regulation – if you rent from a letting agent you can pursue complaints through a redress scheme, but not if you rent direct from the landlord. A single Ombudsman is even better than the two-scheme-system we have for agents – it doesn’t need to pander to members so could more easily impose robust codes of practice, introduce easy-to-use complaints procedures, and publish their decisions to help improve understanding. The scale of compensation is also welcome when awards in the current system tend to be less than £1000.
The Ombudsman is ambitious – which is good. To be successful needs to be well-resourced so it can deal with the sheer volume of complaints that tenants will raise with it.
Despite acknowledging the “confusion and perverse incentives resulting from competitive schemes”, it is surprising that they have said nothing about making changes for letting agents.
Property Portal
In the White Paper: A digital property portal to help landlords demonstrate their compliance with legal requirements. This will help councils focus their enforcement work and help tenants make informed decisions. “Tenants will be able to access necessary information in relation to their landlord’s identity and compliance with key legislative requirements”. Information about landlords’ convictions, banning orders and fines will be publicly available. Landlords who don’t join the portal will face enforcement action by councils.
GR verdict: Alongside the Ombudsman this is basically what a landlord register looks like, but DLUHC don’t want to call it that! They sound a little nervous about the data protection implications of publishing landlords’ information, but ultimately this will not work unless tenants can access information about who owns their home and how they can contact them. This already works in Wales, Northern Ireland and Scotland, albeit without enforcement records.
Although councils will be responsible for enforcing portal membership, the government should give tenants an incentive to take action if their landlord is not on there already. This already happens with licensing schemes and tenants with unlicensed landlords can get up to 12 months’ rent back via Rent Repayment Orders.
The portal will also help to educate landlords about their responsibilities. This could be particularly valuable in training landlords in dealing with people with particular vulnerabilities, or navigating cases of domestic abuse.
Enforcement
In the White Paper: Commitments to look at strengthening councils’ powers to crack down on illegal evictions, update RROs so that superior landlords can be held liable for failures, and introducing national oversight over councils’ activities.
GR verdict: These are small changes compared with the rest but could be critical in bringing criminal landlords to justice and improving the lives of the most vulnerable renters. Marginalised renters are most likely to be subject to illegal evictions (and get little protection at present) and to live in complicated “rent to rent” arrangements that landlords use to avoid the authorities. One of the big challenges for local authorities is the lack of skills and resources to enforce the law, so this must also be addressed if we are to see success.
Access to tenancies
In the White Paper: The government will outlaw blanket bans on children and benefit claimants. Insurance is often a barrier cited by landlords so they will work with the insurance industry to overcome this. They will make it easier for tenants to pay rent directly from their Universal Credit. The government will also create a power for it to limit the number of months’ rent a landlord can ask for at any one time if it continues to be a problem.
GR verdict: One in three private renters lives with children; nearly 40% of private renters relies on benefits. Yet landlords are still able to deny them a tenancy – this has been successfully challenged in court, but it hasn’t been explicitly banned. If a tenancy applicant fails an affordability test, landlords can currently ask them for multiple months’ rent up front which is effectively a way to discriminate against people on benefits. Although there’s not a firm commitment to stop this it is welcome that this is on the government’s radar and they are willing to do something about it.
Ultimately discrimination happens because many landlords don’t trust the welfare system to cover their tenants’ rent, so while direct payments will be possible, the underlying problems still need to be addressed, in terms of Universal Credit delays and sanctions, the benefit cap, Local Housing Allowance rates and, of course, the fact that rents are too high in the first place.
It is also important to note that the Right to Rent policy, which criminalises landlords for letting to undocumented migrants, has been shown to cause ethnic and racial discrimination in the private rented sector. The White Paper says nothing about this.
Pets
In the White Paper: Tenants will have the right to request a pet, and their landlord cannot unreasonably refuse. Tenants would be able to challenge a refusal. However, the landlord can insist on the tenant taking out pet insurance.
GR verdict: This is welcome – the lack of a pet is a significant hole in many renters’ lives but it is too easy to have permission refused. It is not clear if the Ombudsman would hear these disputes or another body. We believe pet insurance, which we understand costs between £10 and £20 a month, is unnecessary when the tenancy deposit is there to cover damage to the property, and landlords are already unlikely to require the maximum five weeks’ deposit. It is somewhat concerning that they want to reopen the Tenant Fees Act, which has been largely successful at preventing tenants from getting ripped off. It is also unclear how pet insurance claims would interact with claims on the deposit at the end of the tenancy.
Deposits
In the White Paper: Monitor private sector solutions to problems with deposits between tenancies, and keep the deposit protection system under review.
GR verdict: This is something of a retreat from the government’s manifesto commitment to a Lifetime Deposit which would allow passporting of deposits between tenancies. There are some emergent schemes which may be affordable for some but none of the alternatives to traditional deposits are regulated and you need that if renters are to have faith in using them. Too many people have been stung by non-refundable deposit-free schemes to ignore them. Problems with deposits are probably the most common negative experience for private renters so it is frustrating to see that it is only being kept under review.
Conclusion:
This is a serious set of proposals that will help to raise standards in private rented homes and restore some balance to the relationship between tenants and landlords. At the heart of the reforms is the need to give tenants more confidence to assert their rights and the threat of losing your home has a chilling effect.
The big test is how easy it will be for landlords to claim they need to sell or move family in then simply re-let the property, or raise the rent to an unaffordable level. Get the protections for tenants in those situations right and these plans will significantly improve quality of life for private renters.
We are now waiting for the legislation to be published. There will be more work to do as the Renters Reform Bill makes its way through Parliament and more opportunities to improve it for renters.
