What now for the Renters (Reform) Bill?
Simon Foster and Laura Kent take a look at the Renters (Reform) Bill, which has suffered a setback, just six months after its unveiling on 17 May 2023
The Bill seeks to provide greater flexibility and security for residential tenants by imposing additional restrictions and obligations on private landlords. The reforms also look to improve the leasehold system through increased regulation, digitisation and standardisation.
While proposing many changes to leasehold property, a key aspect of the Bill was the abolition of the landlord’s right to gain possession without having to prove tenant default under Section 21 of the Housing Act 1988. However, the government has decided to delay the introduction of the abolition – citing a need to first reform and improve the court system for dealing with possession claims.
At present, if a landlord seeks possession on the basis of a Section 21 notice, it can use the courts’ accelerated procedure that allows cases to be dealt with by court staff and without judicial involvement. The abolition of Section 21 will require a landlord to prove fault on the part of the tenant, or some other statutory ground, in order to recover possession under the Section 8 notice procedure.
Many practitioners share the government’s concern that the court system, which is already overstretched, will not cope with the resulting increase in contested possession claims. The National Residential Landlords Association reports that it already takes an average of over half a year for courts to currently process possession claims.
Areas for reform
Potential reform – particularly increased digitisation – has been on the to-do list for many years without visible progress. Indeed, the Justice Committee has recently announced an inquiry and call for evidence on the work of the County Court amid capacity and resource concerns.
Given that the Bill was already a diluted version of the initial vision set out in the 2022 white papers, ‘Levelling Up’ and ‘A Fairer Private Rented Sector’, this latest delay will come as a disappointment to many, particularly tenants for whom security of tenure has been a long-standing concern.
The government has also rejected calls to create a new specialist housing court, which might have been well placed to support the Bill’s aims.
Other changes in the Bill include the introduction of a Private Rented Sector Ombudsman, intended to provide impartial and binding resolutions to landlord and tenant disputes. Plus, the introduction of a database with which landlords will be required to register before they can market a property as available for rent. Both are intended to give more support and clarity to residential tenants, and to be funded by landlords.
The main counter issue is that, like the proposed court reform, there is currently limited information about how they will work in practice, other than to increase regulation and administrative requirements on landlords – many of whom are also individuals.
The uncertainty around implementation of these reforms is likely to have knock-on effects. With elevated interest rates and inflation impacting the residential market, some private landlords are already leaving the sector – leading to a lack of properties available to tenants.
The Bill will now continue to the Committee Stage and undergo line-by-line scrutiny. As it will not receive Royal Assent during this session of parliament, however, a continuation motion has been passed to ensure it is a ‘carried over’ bill in the next session of parliament, as confirmed in the King’s Speech.
It is likely that, even if the Bill passes through parliament with no amendment, its provisions will not be binding until, at least 2024, and some sections will not come into force until much later, as implementation will be phased for those tenancies already in existence when the Bill is enacted.
Simon Foster is a partner and residential litigation specialist and Laura Kent is a professional support lawyer at Shoosmiths