Renters (Reform) Bill: where are we?

The Renters (Reform) Bill (RRB) was introduced with much public fanfare to Parliament on 17 May 2023, with the headline of banning notices under Section 21 of the Housing Act 1988. These are often referred to as “no fault notices” owing to the need to only give two months’ notice to end an assured shorthold tenancy following expiry of a fixed term.

The RRB seemed to have been put on the legislative backburner but a series of leaked messages from a group of around 50 Conservative MPs sceptical to the RRB has put it back in the spotlight. Despite cross-party support, it is still unclear when the RRB will reach the statute book and, evidently from the recent developments, what its final form will look like.

What are the rumoured amendments?

Amendments apparently put forward include:

• Allowing “hearsay evidence” (eg second-hand evidence, often seen as weaker and generally not permitted in most proceedings) in eviction claims relating to anti-social behaviour; and
• Requiring renters to live in a property for a minimum of four months before they can give notice to end their tenancy.

The Government has also announced a review "with the explicit aim of reducing burdens on landlords". This has led to accusations of the RRB being watered down, with Labour’s Angela Rayner branding it “yet another betrayal of renters”.

While changes look likely, what lies in store for the RRB remains unclear. The above proposed amendments have not been confirmed by the Government. However, there still appears to be a firm commitment to banning Section 21 notices. A spokesperson for the Department for Levelling Up, Housing and Communities said the RRB will “abolish Section 21 Evictions”.

That headline impact seems to be the only certainty, while the legislative timetable only adds to the unpredictability. The RRB’s “Report Stage” (where MPs can consider changes made during the Committee stage) is yet to be announced and even then, a Third Reading will have to follow. The same process would then be required in the Lords, all before a suspected Autumn election.

Should landlords be doing anything?

Let’s take the example of a family office who own a substantial portfolio of residential properties in London. They believe the ban on the Section 21 process will take place and leave them to rely on other methods to secure vacant possession where necessary eg offering settlement payments to the tenant or if applicable, relying on “fault grounds” under Section 8 of the Housing Act 1988.

These options are not ideal because both are often more expensive (and in the case of fault-based terminations, protracted and uncertain) options compared to Section 21 notices.

To avoid ending up in the position in the first place, they should review and put more emphasis on their due diligence process to ensure they have the most desirable tenants (financial background, behaviour in previous lets all confirmed etc) from the outset. This should decrease the likelihood of having to evict a tenant.

Once a tenant is in a property, this family office should keep a close eye on term end dates in fixed term tenancies. In good time before the expiry of a fixed term, communications could be had with the tenant(s) to understand their plans. It might be they want to move on, or the family office are able to offer alternative accommodation if vacant possession of this property is needed for whatever reason eg for repair works or to have tenants willing to pay higher rent in occupation. An open discussion could lead to a mutually beneficial departure date being agreed.

In case an agreed departure date is not achievable, potential breaches of the tenancy agreement that could give rise to a fault-based eviction should be very closely monitored. As well as potentially being a basis for court proceedings (if that proves necessary), breaches could act as leverage in discussions for the agreed surrender of a property.

In summary, there are a few planning tactics the family office should have on their radar. But they should be alive to how the RRB could change as it makes its way through Parliament. Although Section 21 notices look set to go, the Report Stage and Third Reading have not happened yet. Additional amendments will probably be thrown up here, as they likely will when the RRB goes through the Lords. So while some advance planning is probably useful, the uncertainty is inescapable and landlords can arguably do no more than keep a close eye on the RRB’s progress.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2024