Gove returns to Government and re-commits to the Renters’ Reform Bill

Secretary of State for Levelling Up, Housing and Communities, and Minister for Intergovernmental Relations, Michael Gove, has reaffirmed his department’s commitment to reforming the private rented sector (PRS).

It will follow closely the recommendations in the Government’s policy paper “A fairer private rented sector” which was followed by a consultation process and was updated 2 August 2022.

Further, at the weekend the minister suggested private renters could be eligible for targeted financial support in cases of hardship. Tenants could also be eligible for cash rent refunds under the legislation if landlords fail to meet the basic standards of repair with the introduction of the Decent Housing Standard for private rentals.

The legislation in detail

As reported before on these pages, the proposed new legislation will follow some basic principles which aim to produce a higher quality Private Rented Sector. The Government says it is committed to delivering a fairer, more secure, and higher quality Private Rented Sector:

– All tenants should have access to a good quality, safe and secure home

– All tenants should be able to treat their house as their home and be empowered to challenge poor practice

– All landlords should have information on how to comply with their responsibilities and be able to repossess their properties when necessary

– Landlords and tenants should be supported by a system that enables effective resolution of issues

– Local councils should have strong and effective enforcement tools to crack down on poor practice.

The cash-back threat is a “big stick” to be wielded as a mean of focussing landlords minds on this issue of standards when it will be enforced by local authority inspectors. It aims to redress the balance in power between landlord and tenant and remove the threat of eviction for complaining about conditions.

Twelve point plan

As the legislation passes through Parliament things will inevitably change, but the legislation will be presented alone the lines of the 12-point plan of action presented in the White Paper:

1 – There is to be a drive to halve the number (said to be around 20 per cent of rental homes) of non-decent rented homes by 2030. They will all be required to meet the Decent Homes Standard for the first time, in the private sector.

2 – There will be a drive to speed-up the shift to quality rental accommodation improvements starting with those most in need. Pilot schemes will be run with selected local councils to find the best means of enforcing standards, working with landlords to speed up adoption of the Decent Homes Standard.

3 – The long standing commitment (and in the Conservative manifesto) to abolish the Section 21 ‘no fault’ eviction process and provide a “simpler, more secure tenancy structure.” Fixed term tenancies will go, so that a tenancy will only end if the tenant ends it, or if the landlord has a valid ground for getting back possession. The aim is to provide tenants with some security of tenure, such that they can challenge poor practice and living conditions without fear of eviction, while it will reduce the costs associated with unexpected moves.

4 – The grounds for possession under Section 8 of the Housing Act 1988 as amended will be reformed and extended “to make sure that landlords have effective means to gain possession of their properties when necessary.” The Government promises to “expedite landlords’ ability to evict those who disrupt neighbourhoods through antisocial behaviour and introduce new grounds for persistent arrears and sale of the property.”

5 – Rent increases will be restricted to once per year. Rent review clauses in agreements will be banned and tenants will be given powers to “challenge excessive rent increases through the First Tier Tribunal.”

6 – A private landlord-tenant Ombudsman scheme will be introduced which all private landlords must join. This will act as a “fair, impartial, and binding resolution to many issues and be quicker, cheaper, and less adversarial than the court system.” The system of imposing rent repayment orders will be strengthened and, as referred to above, tenants will be repaid rent for non-decent homes.

7 – The Government promises to focus on improving the services of HM Courts and Tribunal Service (HMCTS), working with the Ministry of Justice to target unacceptable delays in proceedings. The will be a drive to strengthen mediation and alternative dispute resolution processes “to enable landlords and tenants to work together to reduce the risk of issues escalating.”

8 – The Government will introduce a new Property Portal to improve the availability of information online for tenants, landlords and local councils. Here, responsibilities will be spelled out to help all three parties with compliance, and help local councils crack down on criminal landlords. Subject to the Information Commissioner’s Office (ICO) approval the Database of Rogue Landlords, will list a landlord’s offences for all to see.

9 – Local authority powers will be strengthened the fines regime and crack down on criminal landlords. There will also be increased monitoring of the effectiveness of local authorities in policing the PRS in this way.

10 – Blanket bans on renting to families with children, benefit claimants and other vulnerable groups, such as prison leavers, will be outlawed. There could be increased support for landlords who take on people in some of these categories.

11 – Tenants will be given the right to request a pet in their property, “which the landlord must consider and cannot unreasonably refuse.” There may be an amendment to the Tenant Fees Act 2019 to so that landlords can request tenants have pet insurance.

12 – This point was to encourage the development of innovative market-led solutions to passport deposits, but it has since been revealed that deposit passports have been dropped from renting reform White Paper due to “lack of enthusiasm from landlords, tenants and letting agents.”

Legislation of this sweeping nature will take time and there could be many amendments before it becomes law, but much of it is coming to a buy-to-let near you!

Another major issue facing landlords

As if these changes where not enough facing small-scale landlords, the coming changes to Energy Efficiency Standards in rentals is also a major challenge for many landlords with older properties – the cost could be considerable. Some of them will need considerable additional investment to bring them from their present minimum EPC rating of “E” up to “B” and beyond to “C”.

From 1 April 2018 rules came into force, making it unlawful to let properties, both domestic and commercial, on a new lease with an EPC rating lower than E.

From 1 April 2020 band “E” was applied to all existing privately rented residential properties. The minimum energy efficiency standard, (MEES) requirements will extend to all existing commercial leases from 1 April 2023 and this rating is to rise in future. Currently EPC band “C” is mooted for the end of this decade be this could be brought forward to as early as 2025.

When the new legislation is eventually passed it is very likely that tenants will be in a position to sue their landlord for having properties below the current standard, whatever that is at the time – that of course will concentrate minds.

A Michael Gove told the BBC’s presenter, Laura Kuenssberg, on Sunday:

“Before I left government in the summer, we had put in place plans both to deal with social landlords that are not doing their job effectively, and also to deal with the very small but noxious minority of private landlords who are not treating their tenants properly.

“We will bring forward that legislation to deal effectively with them.”

Gove said his “blueprint for renters” will see the end of Section 21 evictions, what he says is this is “one of the biggest causes of family homelessness.”

Section 21 has been the legal process where landlords, after serving a 2 month notice, once the tenancy term has ended, the tenant can be removed without a court hearing – it’s all done by processing documents and eviction is guaranteed. It usually takes around 6 months to complete an eviction using Section 21.

What is now being proposed is a system where landlords will be encouraged to go through a process of mediation and other forms of dispute resolution before resorting to court action, which under Section 8 would require a court hearing. The courts are already overbusy.

Additional grounds for eviction are to be added to the exiting 17 grounds but even so, mediation and/or court action will probably take longer and take the decision out of the landlord’s hands – it removes the certainty of section 21, which landlords value.

To be objective about this, evictions are relatively rare and most landlords never need to use one, but when there is an intractable problem, landlords need to know that the system works for them.

If the new system succeeds in reducing the number of below standard rental houses then so much to the good, but if the system results in landlords being disadvantage to a large degree, either by giving tenants the power to hold them to ransom, by long delays in deciding on evictions, or being stuck with unruly tenants without the possibility of release, then the number of landlords and therefore, the provision of rental accommodation, will dwindle and add to more pressure on a housing sector already in crisis.

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