Renters’ Rights Bill- What does it mean for the Social Housing Sector?

On 11th September 2024, the Renters Rights Bill (‘the Bill’) was introduced into Parliament and had its first reading. Whilst still at an early stage, the Bill delivers upon Labour’s manifesto promise to ‘reform’ the housing sector. In this article, Jenna Tym, Partner in the Housing & Regeneration (Litigation) Department, has considered the Bill and has summarised a number of key changes that the Social Housing Sector will need to be aware of:

The End of Section 21:

The primary target of the Bill is to end ‘no fault’ evictions, also known as Section 21 evictions[1] which currently allows landlords to evict tenants without having to prove any breach of tenancy.

There are notable differences here to the proposals under the Renters’ (Reform) Bill.

Under the Bill, the end of Section 21 will be accomplished by ending Assured Shorthold Tenancies (‘ASTs’) and turning them into periodic assured tenancies, with a term of no more than one month.  Interestingly, there will be no transitional provisions. Instead, as it currently stands, for private tenancies, there will be a single date where all existing ASTs will become an assured periodic tenancy (save where there are existing possession proceedings, including under the Section).  This date has not yet been set but is likely to take place soon after the Bill becomes law.

For the Social Housing sector, the Government remains similarly committed to the abolition of Section 21. Whilst their intention is to do this as quickly as possible, to ensure clarity in what RPs will be required to do under the new system, the Government have stated that they will update the Direction to the Regulator of Social Housing so that they can update their Tenancy Standard. As this will require a statutory consultation process, the Government has stated that they will apply the new system to social housing tenancies at a later date.

It is expected that there will be a sudden increase in the serving of Section 21 notices prior to the Bill taking effect, with predictions that the Courts will require additional investment to cope with potential claim influxes.

Not only will this assumed impact on the Courts likely increase wait times for claims in the Social Housing sector, the likelihood of claim processes becoming more complex is also probable. It will be interesting to see how the Government expects the Court systems to adapt, process and deal with so many new cases to avoid them becoming completely overwhelmed.[2]

 Grounds for Possession:

Following from the abolition of Section 21, claims for possession will have to be commenced by the service of a Section 8 Notice.  To this end, the Bill seeks to expand and clarify the Grounds for possession under the Housing Act 1988.

Examples of the reforms under the Bill include:

The introduction of new grounds of possession for:

-          ‘Landlord/landlord’s family member wants to live in the property’ (Ground 1) and ‘landlord wants to sell’ (Ground 1A).  However, neither such Ground can be used in the first twelve months of a tenancy and both Grounds will require 4 months’ notice by the landlord.

-          Supported accommodation, namely Ground 5E (where the property is held for use as supported accommodation and the current tenant did not enter the tenancy for the purpose of receiving care, support or supervision) and Ground 5F (the tenancy is for supported accommodation and one of the circumstances set out in the Ground, making the accommodation no longer viable or suitable for that tenant, has occurred).  The notice periods for these Grounds will be 4 weeks.

-          Occupation as stepping stone accommodation – Ground 5H (where an RP or a charity lets to a tenant meeting eligibility criteria at “affordable rent”, to help them access the private rented sector and/or transition to living independently, and the tenant no longer meets the eligibility criteria, or a limited period has come to an end).  The relevant notice period for this Ground will be 2 months.

Changes to current Grounds for possession, for example:

-          An increase to the required level of arrears and notice period under Ground 8.  Within the Bill, the period of arrears will increase from two months to three months (or from 8 weeks to 13 weeks) at service of notice and at the hearing of possession claim. The Notice period will all increase from 2 weeks to 4 weeks.   Given the increased notice period, tenants will be in at least 4 months of arrears before court proceedings could be commenced.

-          An increase to the required notice period under Grounds 10 and 11 from 2 weeks to 4 weeks.

-          The Notice period for Ground 7A will be reduced from 4 weeks/1 month to allow landlords to commence possession proceedings immediately.

Further Reforms under the Bill:

-          A ban on rent bidding wars and arbitrary rent hikes will be provided for to limit increases to once annually only by service of a Section 13 Notice, and to no more than the ‘market rate; [3] this will have a notice period of two months. The drawbacks of this requirement may be mitigated by setting higher asking rates at the outset of tenancy agreements, for rent to then be negotiated to a lower amount where necessary whilst maintaining control. However, for landlords with social rented tenants who meet the definition of “relevant low-cost tenancies” (as defined in the Bill), the current mechanisms for increasing rent[4] will be maintained.

-          With all tenancies becoming periodic, tenants will be able to stay in their home until they decide to end the tenancy by giving 2 months’ notice at any stage.  The form of the notice cannot be dictated; however, it will be possible to stipulate where and who the notice is to be served upon. Additionally, no lease of longer than 7 years term can be an assured tenancy.

-          Furthermore, the Bill will outlaw blanket bans on renting to people with children or those receiving housing benefits, and also grants tenants a right to request pets, with landlords not able to unreasonably refuse such a request.

-          ‘Awaab’s Law,’[5] will also be extended to the private sector, requiring landlords to undertake works within set timescales dealing with hazards such as damp and mould – when these are set out in regulations

-          Local councils will have strengthened enforcement and investigatory powers[6], being able to issue civil penalties against landlords who fail to comply with the reforms – for example if they abuse the new Grounds of possession.   First or minor non-compliance will incur a civil penalty of up to £7,000 and serious or repeat non-compliance a civil penalty of up to £40,000.

How can we help you?

Whilst the Bill remains in its early stages and awaits scrutiny and possible amendment, the reforms introduced will likely take effect in over the next year alongside any necessary changes to related legal frameworks and housing infrastructure.

Nevertheless, this period certainly spurs a significant change and close attention will be required from Social and Private Housing sectors landlords alike.

Keep your eyes out for more updates and commentary from us in due course as the Bill progresses.  In the meantime, for further information on the changes discussed, please contact our Housing and Regeneration team.

[1] s.21, Housing Act 1988

[2] Becky Morton & Jennifer McKiernan, Aim for no-fault eviction ban to be in place by summer, < Aim for no-fault eviction ban to be in place by summer - BBC News>

[3] Renters’ Rights Bill to ban Section 21 evictions for new and existing tenancies, <Renters’ Rights Bill to ban Section 21 evictions for new and existing tenancies (localgovernmentlawyer.co.uk)> Accessed 11 September 2024

[4] Ministry of Housing, Communities and Local Government, Guide to the Renters’ Rights Bill, < Guide to the Renters’ Rights Bill - GOV.UK (www.gov.uk)> Accessed 13 September 2024

[5] Awaab’s Law: Consultation on timescales for repairs in the social rented sector, < Awaab’s Law: Consultation on timescales for repairs in the social rented sector - GOV.UK (www.gov.uk)> Accessed 11 September 2024

[6] The King’s Speech, Break Down the Barriers to Opportunity, Renters’ Rights Bill, 69-70, < FINAL - 17/07/24 King's Speech 2024 background briefing final GOV.uk.docx (publishing.service.gov.uk)