Renters (Reform) Bill: What does it mean for social housing providers?

Blog by NHC supporter member, Ward Hadaway.

The Renters (Reform) Bill (currently at its second reading in Parliament) will be one of the biggest reforms of the English rental market we have seen in recent years.

The Bill itself is split into 5 distinct parts – parts 1 (assured tenancies) and 4 (supported and temporary accommodation) are most relevant to social housing providers.

Key provisions

1. Abolition of Section 21 ‘no fault’ evictions

The government’s view is that “no-fault” evictions make it challenging for tenants to put down roots, reducing investment into local areas and impacting upon on homeless figures. In response to that, S.21 and the ability to end an assured shorthold tenancy on giving 2 months’ notice will be abolished.

It means landlords will need to rely upon other grounds for possession (including new grounds) as to which see below.

2. Assured tenancies

Pursuant to the Bill,  all tenancies will be fully assured, periodic tenancies. Rental periods cannot be greater than 1 month.

It also means that social housing providers will no longer be able to grant “starter” tenancies as a trial before allowing tenants to convert to fully assured tenancies.

Tenants will still be able to end their assured tenancy by giving notice to quit at any time – but that notice period will be extended to at least 2 months, expiring at the end of a rental period.

Existing shorthold tenancies will convert to periodic tenancies by a specified long stop date.

But – a tenancy granted for a term of more than 7 years cannot be an assured tenancy. Currently, there is no upper limit. It means that, for example, shared ownership leases will no longer be a hybrid between a long lease and an assured tenancy – and therefore the current grounds for possession under Schedule 2 of the Housing Act 1988 will cease to have effect and shared ownership leases can only be terminated by forfeiture, bringing them into line with leasehold tenure generally.

3. Strengthening of grounds for possession:

The government says “responsible” landlords will still be able to recover possession of their properties where tenants are at fault, through the Bill’s strengthened eviction powers and possession grounds.

New, or amended, possession grounds relevant to social housing providers include:

• Where certain landlords, including providers of social housing, hold a leasehold interest in its property and that lease will come to an end within 12 months of the date of a S.8 Notice Seeking Possession (new mandatory ground 2ZA)
• The notice period for ground 7A will be reduced so that landlords can issue proceedings immediately upon service of the notice;
• The notice period for ground 8 will increase to 4 weeks;
• Where a tenant has been in at least 2 months’ rent arrears at least 3 times in the last 3 years (new mandatory ground 8A);
• Ground 14 is amended to include conduct “capable of causing” nuisance or annoyance rather than “likely to cause” bringing it in line with the definition of ASB in the Anti-social Behaviour, Crime and Policing Act 2014;
• The tenancy is used for supported accommodation and the tenant has unreasonably refused to co-operate with the support provider (new discretionary ground 18)

4. Rent Review

The Bill will abolish contractual rent review clauses – instead, rent reviews for assured tenancies will be effected by:

• Notice under S.13 of the Housing Act 1988;
• FTT determination of an open marked rent under S.14; or
• Written agreement between the landlord and tenant following a FTT determination.

The period of notice for a rent increase will increase to 2 months and no increase shall take effect within the first 52 weeks of the tenancy.

Many housing providers will have standard provisions in their tenancy agreements that relate to a contractual right to review the rent, and that reviews will take place on fixed dates (e.g. 1 April) each year. These provisions of the Bill will void those clauses.

5. Redress system, supported and temporary accommodation

The Bill provides for the creation of a landlord redress system, a new Ombudsman and a landlord database. The aim is to provide tenants in the PRS with greater protection and the ability to have their landlords’ actions independently assessed.

Social housing providers are expressly excluded from the redress provisions.

However – within a year of clause 63 of the Bill coming into force, the government must set out its policy in relation to supported and temporary (homelessness) accommodation, including the standards of safety and quality  that should apply to that accommodation and how that should be enforced.

What does this mean?

For now we must wait and see how the Bill progresses through Parliament and await any potential amendments – it would be a surprise if there were no changes to the Bill, but the underlying objectives are likely to remain.

If the Bill is enacted, all new tenancies will be governed by its rules from its commencement. Existing tenancies will be governed by the new rules after the expiry of a long stop date – except where fixed term ASTs expire before that long stop date, in which case the new rules will apply from the expiry of that fixed term.

Until the Bill is enacted, there is currently no need to housing providers to do anything differently as to the creation and management of their tenancies. But at a strategic level, providers should be giving thought as to the operational effect of having no tenancies with fixed terms and limitations upon rent review – and what this may mean for property turnover and financial planning.