Preparing for the Renters’ Rights Bill 2024
With the Renters’ Rights Bill 2024 expected to commence in mid-2025, landlords must start preparing for the significant changes that will reshape the rental sector. Given that any tenancy agreements granted today will likely still be active when the new law takes effect, reviewing and potentially revising tenancy terms is crucial. The Bill, which abolishes Section 21 ‘no-reason’ evictions and introduces a system of periodic tenancies, will undoubtedly require landlords to adjust their practices.
It’s also important to note that the Bill is still subject to change, and the proposals could shift significantly before becoming law. However, early action to ensure compliance with the most likely changes can help minimise disruption.
Below, we look at how landlords can prepare for the upcoming regulations by focusing on crucial tenancy terms and other matters.
Written Statement of Terms
The Bill will require landlords to issue a written statement of terms for every new assured periodic tenancy. While the exact details of this requirement still need to be clarified - particularly for existing converted tenancies- landlords can now take steps to simplify future compliance.
- Review and Standardise Contracts: Start issuing tenancy agreements that clearly outline all essential terms, bringing them as close as possible to what the law might require.
- Reduce Future Admin: Adopting detailed written agreements now will reduce the workload once the new rules take effect.
Rent Periods: Keep Them to One Month
One of the changes will restrict rent periods to a maximum of one month once the tenancy becomes periodic. This aligns with the general move towards monthly rent payments, and any current arrangements with rent periods longer than one month will need adjustment.
- Switch to Monthly Rent Periods: To ensure compliance when the bill becomes law, ensure all rent periods in your agreements are one month or less.
Notice Period for Tenants: Two Months
The new legislation requires tenants to give two months’ notice to end their tenancy. If your current agreements allow tenants to leave with shorter notice, this may need to be updated, as the rules will enable the landlord and tenant to agree on a shorter notice length.
- Revise Notice Clauses: Amend your tenancy agreements to reflect the new rules requiring tenants to give two months' notice.
- Tenancy Builder: We have updated our assured shorthold tenancies to require two months' notice from a tenant. The updated agreements apply to any built from the evening of 21 October 2024.
Remove Rent Increase Clauses
The Bill proposes banning rent increase clauses in tenancy agreements. Instead, landlords will only be able to raise rents through a formal process that includes giving two months’ notice under a Section 13 notice.
- Avoid Rent Increase Clauses: Stop including automatic rent increase clauses in new contracts. Landlords should prepare to use Section 13 for future rent adjustments.
- Tenancy Builder: Our assured shorthold tenancies have never included a rent increase clause, so we need not act. Check if you usually add one in the additional terms.
Check Possession Grounds
The Bill introduces changes to possession grounds and clarifies when landlords can regain their properties. With the abolition of Section 21, landlords will rely on specific Section 8 grounds to evict tenants. Your tenancy agreements may need to be updated to reflect these changes.
- Update Grounds for Possession: Make sure your tenancy agreements reference the complete list of grounds for possession under Schedule 2 of the Housing Act 1988, including any amendments from the new Bill. This will safeguard your ability to reclaim possession of the property when necessary.
- Listing individual grounds: If your tenancy lists individual grounds like "Grounds 1, 2, 3 ...", these may not match any new grounds introduced.
- Tenancy Builder: Tenancy Builder agreements already refer to all grounds, so no update is necessary.
Pets Clauses
Under the proposed Bill, tenants can request permission to keep pets, and landlords must not unreasonably refuse. Although landlords can require pet insurance to cover potential damage, this shift will impact most current tenancy agreements.
- Prepare for Pet Requests: These changes can't be made just yet because any request for insurance will be contrary to the Tenant Fees Act until the Bill becomes law. However, preparations can start for suitable wording, and pet clauses should allow a tenant to seek consent for a pet.
Keep Fixed Terms Short
All tenancies will become periodic under the new system, but it’s currently unclear whether being in a fixed term when the Bill takes effect will have any additional requirements. Issuing shorter fixed terms (e.g., six months) may make the transition smoother for landlords and tenants.
- Issue Shorter Fixed Terms: Consider offering six-month fixed-term tenancies to ensure they naturally become periodic, reducing confusion when the new law converts all tenancies to periodic agreements.
Student Lettings
With the upcoming Renters’ Rights Bill 2024 changes, landlords are particularly concerned about student lettings. Traditionally, student tenants sign fixed-term contracts months before the academic year. However, the Bill’s abolition of fixed-term tenancies could pose significant challenges to this practice.
- Avoid Signing Fixed-Term Tenancies for 2025/2026: From autumn 2025, when the new legislation is expected to take effect, offering a fixed-term tenancy that commences after the Bill is enforced may be an offence. If a fixed-term tenancy is signed now for the 2025/2026 academic year, you could be required to rewrite the contract if the law changes before the start of the tenancy. This could result in logistical complications and resistance from tenants already committed to an earlier agreement.
- Agreement to Lease: To avoid complications, landlords may consider offering an agreement to lease instead of a full tenancy contract.
Other Key Considerations
The End of Section 21
With the abolishment of Section 21 ‘no-reason’ evictions, landlords will no longer be able to regain possession of their properties without giving a reason. Moving forward, they must rely on Section 8 possession grounds, which could complicate reclaiming a property.
- Be Ready to Prove Grounds: Ensure you’re fully aware of the revised grounds for possession, as these will be the only legal route to evict tenants once Section 21 is abolished.
New Ombudsman and PRS Database
The Bill introduces a new Private Rented Sector Landlord Ombudsman, which all landlords will be required to join, and a Private Rented Sector Database that landlords will need to register with. Failure to comply with these new obligations could result in penalties and restrictions on possession claims. These provisions might become law after the initial Bill comes into effect.
- Prepare for Registration: Ensure you have all relevant documentation ready for the PRS Database and be prepared to join the new Ombudsman service.
Future Rent Adjustments
Rent controls are not being introduced, but all future rent increases must follow the statutory Section 13 process. This could slow down the process of raising rents, so landlords should plan accordingly.
- Plan for Market Increases: Stay informed about local market rates to ensure future rent increases align with the market and can be justified under the new system.
Conclusion
The Renters’ Rights Bill 2024 will significantly change landlords' tenancy management, so it is essential to start preparing now. Although the details of the Bill are not yet finalised, taking proactive steps—such as revising tenancy agreements, preparing for new requirements, and updating notice periods—can help landlords avoid future non-compliance and disruption. Remember that the Bill may still change, so staying informed is crucial.
Landlords should regularly consult professional bodies such as the Guild of Residential Landlords and official government sources for further updates and guidance.
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