Second Reading of the Renters Reform Bill

The contentious Renters Reform Bill is due to receive its second reading in the House of Commons on 23 October.  The Bill proposes considerable reforms to the PRS with the intention of creating more security for tenants. The two central planks of the proposed legislation concern the length and termination of tenancies.

The 2019 Conservative Party Manifesto stated, ‘We will… create a fairer rental market: if you’re a tenant, you will be protected from revenge evictions and rogue landlords, and if you’re one of the many good landlords, we will strengthen your rights of possession’.

But according to analysis by Zoopla’s lettings advisory board, property experts Leaders Romans Group (LRG), conversations across the industry and considerable specialist insight, it has been found that both proposals would actually reduce security of occupancy for tenants.

Tenancy duration

The Bill proposes to simplify existing tenancy structures by moving all assured shorthold tenancies (ASTs) to a single system of periodic tenancies. This will reduce flexibility and the opportunity for a landlord and tenant to agree a mutually beneficial contract.

Michael Cook, Group Managing Director of LRG has written to MPs to voice his concerns.  As he explains, ‘The average time that a tenant remains in a rented home is four years and assured shorthold tenancies (typically of six or 12 months, but often more) are currently the standard rental agreement. After the specified time has elapsed, a decision is made to either renew the contract or switch to a periodic (e.g. month by month) tenancy. But the Renters Reform Bill proposes that all rental properties will be under a periodic tenancy - rolling on a monthly basis.

‘Many tenants currently opt for fixed term tenancies – some of as much as two years. But under the proposed changes, a landlord may now ask the tenant to leave with just two months’ notice on the basis that they wish to sell the property. This creates less, not more, security for tenants.

‘Many of LRG’s landlords would rather give their tenants the security of a renewed contract for a set period of time – a year, or two – rather than the insecurity of a rolling one-month contract. Tenants with children in local schools frequently choose the certainty that ASTs bring. But with the proposed changes it would be impossible to provide that certainty.’

Tenancy cessation

A further shortcoming of the Bill is the proposed removal of Section 21 ‘no fault evictions’; instead landlords may only end tenancies through Section 8 of the Housing Act 1988.

The legislation proposes new grounds by which landlords can apply Section 8 to a tenancy: that they may do so if they wish to sell a property, or if they wish to allow their family members to move into it. This would apply after a tenant has been in a property for six months and could then be applied with just two months’ notice – contributing significantly to a lack of security for the tenant.

Furthermore, it is not feasible, nor sensitive to the tenants’ circumstances. Section 8 notices usually involve cases going to court which is invariably intimidating, costly and subject to considerable delays.

The proposed change is unlikely to have a considerable impact: the English Housing Survey 2021 to 2022 found that in only 6% of tenancies ended at the landlord’s volition. And stating a wish to sell, specifically as there is no requirement to produce evidence, is unlikely to reduce the small number of tenancies ended by landlords. Citizens Advice’s research found that of that small number of tenancies ended by landlords, almost half (48%) of tenants had been told their landlord wanted to sell and states that, ‘Worryingly, the new rules won’t require landlords to give evidence they have followed through on this once a tenant has left’.

LRG has conducted some research of Section 21 usage and found that Section 21 is rarely overused, and even more rarely misused. LRG surveyed 271 landlords across its estate agency brands and found that 80%  have never used Section 21. Of those that had, 6% did so when the tenant was in breach of the lease and only 3% where the tenant was not in breach of the lease.

There is broad agreement from across the housing sector. The Joseph Rowntree Foundation states that the impact of this reduction - which sought to give tenants greater security - results in giving tenants little protection from the most common reason for no-fault eviction. In addressing the Levelling Up, Housing and Communities Committee on 10 July 2023, Tarun Bhakta, Policy Manager of Shelter said, ‘We see a risk of the unintended consequences of unfair or no-fault evictions by the back door after Section 21 is gone’.

Michael Cook comments, ‘Wide-ranging research demonstrates the fact that the vast majority of landlords don’t evict tenants on a whim.

‘Furthermore, Section 21 notices are a straightforward way to bring a tenancy to an end when both the landlord and tenant agree, or when there’s another good reason for a landlord to evict their tenant. To end no-fault evictions through abolishing Section 21 is extreme, unnecessary, and damaging to landlords and tenants alike.

‘In reviewing the legislation and drawing these conclusions we make no apology to our landlord clients for taking the tenants’ point of view in our reasoning: because the property industry in our experience, is rarely about landlord versus tenant. Rather, it can only succeed when landlords and tenants co-operate. I know from my own experiences as a landlord, that happy tenants make for a happy landlord. And this is what we hope that these reforms can deliver.’

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