White paper published - A fairer, private rented sector
Legal Development 21 June 2022 21 June 2022
UK & Europe
UK Real Estate Insights
The Government has published its white paper, A Fairer Private Rented Sector, setting out its plans to fundamentally reform the private rented sector and level up housing quality. Proposed changes include banning so-called ‘no-fault’ evictions; strengthening other grounds for possession; ending the use of rent review clauses; and introducing a new single Ombudsman that all private landlords must join.
The paper fits squarely into the government’s levelling up agenda and represents one component in its wider plans to reform the residential landlord and tenant arena. The paper sets out a 12-point action plan and includes commitments to:
- Abolish section 21 ‘no fault’ evictions (ie a landlord’s right under section 21 of the Housing Act 1988 to seek possession of property let on an assured shorthold tenancy on two months’ notice, either on a contractual break date or on or after expiry of the contractual term, without needing any underlying reason (other than that the fixed term has come to an end)).
- Replace the current structure of assured shorthold tenancies with a system of periodic tenancies. Under the new system, tenants will be able to end a tenancy by providing two months' notice, but a landlord will only be able to end the tenancy in reasonable circumstances (as yet unknown) that will be specified in legislation. This change will capture new and existing tenancies. Timing for implementation will depend on when the legislation that delivers these changes receives Royal Assent, but the government promises 6 months’ notice of the requirement that all new tenancies should be periodic and around 18 months’ notice before existing tenancies are converted over to the new system.
- Reform grounds for possession. There will be a new ground of possession for repeated serious arrears so that eviction is mandatory where a tenant has been in at least two months' rent arrears three times within the previous three years. Also, there will be a new ground for possession for landlords (and family members) who wish to sell their property or move into it.
- Permit rent increases once a year only, end the use of rent review clauses and improve tenants' ability to challenge excessive increases through the First Tier Tribunal. The minimum notice that landlords must provide of any change in rent will increase to two months.
- End blanket bans on renting to families with children or those in receipt of benefits
- Introduce a “Decent Homes Standard” into the private rented sector, similar to that which is already required in the social rented sector.
- Introduce a new single Ombudsman that all private landlords must join. The Ombudsman's powers will include compelling landlords to issue an apology, provide information, take remedial action and/or pay compensation up to £25,000.
- Establish a new digital Property Portal to make sure that tenants, landlords and local councils have the information they need. Local councils will be able to take enforcement action against private landlords that fail to join the portal.
If these proposals are converted into legislation, they will mean significant change for the private rented sector (although purpose built student accommodation will be exempt from some of these changes). In particular, landlords will need to keep an eye on the changing grounds for possession. A key question is whether the new mandatory grounds will allow landlords a sufficiently certain, quick and effective means of regaining control of their properties.
The full detail of the plans won’t emerge until legislation - in the form of the Renters Reform Bill – is introduced into Parliament. The government intends to introduce the bill in this session, so there will not be long to wait. We will continue to monitor these developments, so please look out for further updates.
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