How landlords can navigate eviction and rent-setting with the new Renters’ Rights Bill

The anticipated Renters’ Rights Bill is set to bring with it a number of changes when it comes to eviction processes and rent-setting practices, with much more specific guidelines set out by law. The primary goal of these changes is to give domestic renters greater home security, reducing the risk of homelessness. Helping landlords to navigate this particular part of the legislation when it comes into force, here are our top suggestions.

Adjusting to changes in eviction processes

Changes to eviction processes are a big part of the Renters’ Rights Bill, with the notable abolition of Section 21 evictions (sometimes referred to colloquially as 'no-fault' evictions), as well as reformed grounds and timelines for eviction for other reasons.

Abolition of Section 21 evictions

Section 21 of the 1988 Housing Act sets out that landlords can issue a Section 21 notice to evict tenants either:

● After a fixed term tenancy ends - if there’s a written contract

● During a tenancy with no fixed end date - known as a ‘periodic’ tenancy

What’s changing?

While there have always been guidelines around this to prevent it from being used unreasonably, issues have arisen over time. As a result, the Renters’ Rights Bill will bring an end to Section 21 evictions, with a view to giving tenants greater stability and security. The purpose of this isn't to make things difficult for property owners, but to prevent bad practices amongst a minority of landlords.

What landlords can do

Make sure you and your tenants understand the latest legislation and that your tenancy agreements reflect those changes.

Reformed grounds for eviction

Alongside the abolition of Section 21 evictions, the rules around what is possible surrounding evictions have become much more specific.

What’s changing?

Landlords will need to use a Section 8 notice with valid grounds for possession. Section 8 of the Housing Act outlines specific reasons you can issue an eviction notice, whereas under Section 21 you don't need a reason.

Where tenants fail to vacate at the expiration of the notice, landlords will need to seek a court order to evict a tenant on either mandatory or discretionary grounds. Both categories can include things like ongoing rental arrears, antisocial behaviour, owner occupation, redevelopment, holiday lets, and mortgage repossession.

Those grounds will be updated as part of the Bill, and notice periods are being adjusted. Each ground will have a set notice, varying from four weeks to four months.

New mandatory and discretionary grounds for eviction include:

Mandatory grounds

Landlords can regain possession if they wish to sell the property, but they won't be able to use this ground until the eighth month of a tenancy.

Landlord occupation

Landlords or their close family members will be able to move into the property, but not during the first 12 months of a new tenancy.

Rental arrears

The threshold for mandatory eviction due to rental arrears will increase from two to three months, with the notice period extended from two to four weeks.

No re-letting within 12-months

If you evict a tenant with a view to selling your property, but then find that you are unable to sell it or you change your mind, you are not allowed to market it to re-let (including Airbnb), for at least 12 months from the point of serving the eviction notice.

What landlords can do

Review and update your tenancy agreements to reflect the new grounds for eviction and make sure you are in compliance with the extended notice periods if you do decide to ask your tenant to leave.

Enhanced protection for tenants

In addition to the Section 21 and Section 8 specifics, the Renters’ Rights Bill will introduce other enhanced protections for tenants to give them a greater sense of security. In particular, this includes a protected period at the start of their tenancy.

What’s changing? ?

Tenants will now have a 12-month protected period at the start of their tenancy, where landlords can't evict them, even if they intend to move back in or sell the property.

What landlords can do ?

At this stage it's just about being aware of this new protection period and planning accordingly if you are considering selling or moving back into a property. Make sure you keep copies of communications and documentation, give tenants plenty of notice, and try to foster positive lines of open communication early on, whether it's directly or through a letting agent you trust.

Adjusting to changes in rent-setting practices

Changes to rent-setting apply to both the duration of the renter's tenure, as well as the fees, with the removal of fixed-term assured tenancies, as well as limits as to how much rent can be increased by and how often.

Transition to periodic tenancies

While tenants have suffered from sudden eviction notices with very little warning, with the rising cost of living, job losses and volatility in individual circumstances, there have also been challenges from those who find themselves locked into fixed-term tenancies.

What’s changing?

The Renters’ Rights Bill will see the removal of fixed-term assured tenancies so renters have greater flexibility to move if their circumstances change. This is being replaced with a general two-month notice period.

What landlords can do

Discuss the implications of periodic tenancies on rental income stability and personal plans for your property with your letting agent so they can help you plan your property management strategy accordingly.

Limitations on rent increases

Understandably, the shortage of properties in the rental market and the rising costs of operating properties has led to rental increases, which many tenants have felt unable to keep up with. In a bid to tackle the cost of living and provide tenants with a greater sense of security when it comes to predicting their monthly outgoings, the Bill will introduce rules that limit how often rents can be increased and by how much.

What’s changing?

When it comes to rent increases, private tenants will have increased support to challenge anything they consider unreasonable. Furthermore, landlords will only be able to increase rent once a year, and to the price it would realistically get if it was newly advertised. This has to be done by issuing a Section 13 notice with at least two months’ warning.

What landlords can do

Work with your letting agent to make sure any rent increases comply with the new notice requirements and are justifiable in terms of market conditions.

An end to rental bidding

‘Rental bidding’, or the practice of encouraging multiple prospective tenants to offer over the advertised price to secure the property has been a source of contention for a while, and has been considered part of the problem to affordability in the private rental housing market. Therefore, the Bill seeks to bring the practice to an end.

What’s changing?

The Renters’ Rights Bill will forbid 'rental bidding', by asking landlords and agents to publish an asking price for a property and prevent them from asking for, or accepting, bids above that value. Breaches could result in civil penalties in the form of significant fines of up to £40,000.

What landlords can do

It's important to establish what you deem to be a fair price for your property, and one that you would feel happy to maintain for at least a year. Work with a letting agent you trust to give you good advice about optimum market rates and to advertise within the parameters of the new rules, assuming a prospective tenant meets affordability checks and any other permissible approvals. As part of this, it's also important to be aware of other aspects of the legislation. For example, remembering that you can only increase rents once a year and that tenants will be able to appeal if they deem the rise to be unreasonable.

Tribunal oversight of rent increases

The Renters' Rights Bill will be introducing a new system that enables tenants to challenge rent increases if they are considered to be unfair, above market rent increases, in breach of the once-per-year rule, or if landlords don't give the required two-month minimum notice period that a rent increase will come into effect.

What’s changing?

The First-tier Property Tribunal (Property Chamber) is a dedicated part of the UK legal system, set up to handle property and land disputes as a first-level court. If tenants wish to challenge rent increases, they will be able to do so through the First-tier Property Tribunal.

What landlords can do

Make sure you know and understand the new rules. Then, work with your letting agent to make sure you maintain clear and transparent communications with your tenants, as well as up-to-date and accurate records of your interactions and actions to show compliance. Ensure any rate increases are communicated fairly, that you can show they are in line with market rates in the area, and that communications notifying the tenant do not breach the once-a-year rule. It's also important to understand that you cannot backdate notices of rent increases.

Read our complete landlord's introductory guide to the Renters’ Rights Bill - here

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