The Renters (Reform) Bill has finally been introduced into Parliament, almost five years after it was first promised. It will only apply across England, because various reforms have already been introduced in Scotland and Wales. There is a common denominator, however, in that the changes generally favour tenants over landlords.
Scotland
Scotland’s new tenancy regime arrived in 2017. This did away with fixed-term tenancies and also ended no-fault evictions. These changes have made it more difficult for overseas tenants to find accommodation because they cannot overcome the lack of a UK credit track record by paying rent in advance.
More recently, Scotland has introduced a cap on rent increases and a freeze on evictions.
- Although intended to be temporary, these measures have already been extended, with a second extension proposed to 31 March 2024.
- Currently, rent increases are generally capped at 3%, with only one increase permitted every 12 months.
The rent cap has somewhat perversely led to Scotland seeing the UK’s highest rent increases, with landlords putting up rents significantly between tenancies.
Wales
Wales has recently put in place various changes for landlords. Fixed-term tenancies and no-fault evictions have been retained, but, from this June, the notice period for a no-fault eviction is extended from two to six months.
The Welsh government is also consulting on possible rent controls, with a range of ideas – including a rent freeze or a price ceiling – being considered.
England
Similarly to Scotland, the Renters (Reform) Bill, if enacted, will do away with fixed-term tenancies and end no-fault evictions.
- Fixed-term tenancies normally run for six or 12 months, after which the contract is either renewed or switched to a periodic tenancy. The proposal is that all tenancies will be periodic, running from month to month. This will create a problem for landlords who currently have the guarantee of six months’ rent to cover the outlay on a new tenancy. The cost can be quite high if a letting agency is used.
- No-fault eviction, known as a section 21 eviction, currently means a landlord can easily obtain possession of a rental property once the fixed-term contract has come to an end. The change will leave landlords relying on a section 8 eviction, so a landlord will have to have a legal reason for ending a tenancy.
The grounds for a section 8 eviction will be expanded to include repeated rent arrears, the landlord intending to sell the property, the landlord or a close family member wanting to live in the property, or where the property is to be redeveloped.
The future
Even though the Renters (Reform) Bill is unlikely to be enacted during the lifetime of the current Parliament, it gives a good indication of what the future holds for English landlords; the Labour party has indicated it will go even further in moving the balance of power towards tenants. This shift could lead landlords to make securing a tenancy harder:
- If it becomes difficult to evict tenants, detailed pre-tenancy questionnaires are likely to become the norm.
- Many landlords will ask for a guarantor to be provided.
As is now happening in Scotland, landlords and tenants may give a non-binding indication of the period that each expects the tenancy to run which should help to manage the expectations of each from the outset.