The UK Government has unveiled the full details of the Fairer Private Rented Sector White Paper, which may see power swing from agents and landlords to tenants.
The radical measures are expected to shape part of the Renters’ Reform Bill that was first announced in the Queen’s Speech in December 2019 and is expected to be brought into Parliament later in the year. It could now be the case that the Bill is called the Fairer Private Rented Sector Bill after this recent announcement.
After a spate of delays and promises that it would be issued ‘later this year’, the White Paper was released quite suddenly in the early morning of June 16, containing a set of sweeping reforms to split the rented sector.
Levelling up accelerates
In a statement to Parliament, Michael Gove’s Department for Levelling Up, Housing and Communities (DLUHC) promised the ‘biggest shake-up of the rented sector for 30 years’. DLUHC said around 1.6 million people are living in dangerously low-quality homes, driving up costs for the health service.
As part of its ambition to provide tenants with access to good-quality homes that are safe and secure, the Government will force up the quality of accommodation offered by rogue landlords through the Decent Homes Standard.
For the first time ever, this ‘new deal’ for tenants will now extend to the private rented sector, it said. This follows the UK Government’s introduction of the Social Housing Regulation Bill in early June 2022, which means failing social housing landlords could face unlimited fines and Ofsted-style inspections.
It claimed these reforms would help ease the cost of living pressures renters face, saving families from unnecessarily moving from one privately rented home and hundreds of pounds in moving costs.
What does the white paper contain?
The long-awaited White Paper proposed to end the use of ‘arbitrary rent review clauses’, which will restrict tribunals from hiking up rent and enable tenants to be paid rent for non-decent homes.
It will also outlaw ‘blanket bans’ by agents or landlords on renting to families with children or those receiving benefits. It also confirmed the scrapping of Section 21.
Tenants will be given the right to request a pet in their house, which the landlord must consider and cannot unreasonably refuse.
There will also be a doubling of notice periods for rent increases, and tenants will have stronger powers to challenge them if they are unjustified.
Furthermore, all tenants are to be moved onto a single system of periodic tenancies, which the Government says would allow them to ‘leave poor-quality housing without remaining liable for the rent or move more easily when their circumstances change’. A tenancy will only end if a tenant ends it or a landlord has a valid reason, as defined in law.
Moreover, the proposals in the White Paper will also give councils stronger powers to tackle the worst offenders, supported by enforcement pilots, and increasing fines for serious offences.
But there are measures designed to appease landlords, including a new Private Renters’ Ombudsman, which will enable disputes between tenants and landlords to be settled quickly, at low cost and without going to court.
A new property portal will also be introduced that will aim to ‘provide a single front door to help landlords understand, and comply with, their responsibilities and give councils and tenants the information they need to tackle rogue operators.
You can read the full White Paper, with a foreword by Housing Secretary Michael Gove, here.
How did the industry react?
Following three years of predictions and waiting, there has been a lot of reaction from the industry.
The overall reaction from agents and landlords is adverse, with many of their powers being reduced and fears of more landlords potentially being forced to leave the industry.
Despite worries around the scrapping of Section 21 evictions, our Head of Legal and Claims, Will Eastman, believes that as long as the system is appropriately reformed, it wouldn’t be as catastrophic as some suggest.
Although many feel that these changes could unfairly sway the power into tenants’ hands, the industry is glad to end the speculation.
The earlier-than-expected arrival of the White Paper has provided some much-needed clarity on what rental reform will look like, but it has also raised some eyebrows across the sector, with some asking whether the announcement was a distraction from government failures elsewhere.
The future of PRS
With focus on the Prime Minister’s levelling-up agenda and the cost of living crisis, DLUHC said it intends to introduce its Renters’ Reform Bill before March 2023. Until then, there will likely be continued discourse on whether the system is equitable if tenants have more agency to end a tenancy, but an agent or landlord must show a valid reason that is defined in law.
It seems highly likely that the proposals will face the same opposition that the controversial Tenant Fees Act did, which could slow its progress to and through Parliament. While the direction of travel is now much clearer, it’s still likely to be a bumpy ride for some time yet – and the final Bill could yet look very different to the proposals announced in the White Paper.