The Renters’ Rights Bill, announced  this week by the Labour Government, signals a critical shift in the private rented sector (PRS). It builds upon the scrapped Renters (Reform) Bill, initially proposed by the Conservatives, with a few key revisions and additions that reflect Labour’s vision for tenant protections. The new Bill does not represent a simple reworking of the original; it introduces new measures and removes provisions that were contentious under the prior administration.

While some of these changes will benefit tenants, others leave both landlords and renters facing new uncertainties. Ironically, the backbenchers of the previous government, many of whom are landlords, might now regret the abandonment of their own Bill, as Labour’s version introduces more complexity - and arguably, more restrictions on landlords.

What’s Been Omitted from the Renters’ Rights Bill?

Labour has omitted several provisions from the Renters (Reform) Bill that were designed to address key concerns from both landlords and tenant advocates. Here are the most significant omissions:

No Minimum Six-Month Tenancy Period

Under the original Reform Bill, tenants had to wait four months before serving two months' notice to quit, creating a de facto minimum six-month tenancy. This measure was introduced to protect landlords from short-term lets, particularly in areas where holiday lets (like Airbnb) were increasingly common. As Jacob Young explained during the Report Stage, this change was meant to ensure landlords could "recover the costs of replacing tenants" and prevent properties from being used as temporary or holiday accommodation.

Matthew Pennycook criticised the minimum tenancy clause, arguing that it would trap tenants in unsafe or unsuitable conditions. Labour has now removed this provision, meaning renters can serve notice to quit even from day one of the tenancy. For landlords, particularly in regions popular with short-term holiday lets, this is likely to cause significant concern. Letting agents charging up-front fees for tenant-finding services may find their business models under strain. Landlords are anyway, increasingly turning to online platforms, bypassing traditional agents.

No New Mandatory Ground 8A for Serious Rent Arrears

The original Reform Bill introduced a new ground - Mandatory Ground 8A - that allowed landlords to evict tenants who repeatedly fell into rent arrears. Labour, however, criticised this as being "draconian" and punitive towards vulnerable tenants. Matthew Pennycook, during the Committee Stage, called the measure "threadbare" and accused the Conservative government of bowing to pressure from the landlord lobby.

Thus, Ground 8A has been omitted from the Rights Bill. This leaves landlords without a streamlined method to evict tenants with serious and repeated rent arrears. 

Landlords will rightly view this as a missed opportunity to address a critical issue in the PRS. Homes are homes, but agreed rent is agreed. 

No Widening of Ground 14 for Anti-Social Behaviour

In the Renters (Reform) Bill, Ground 14 for anti-social behaviour was expanded to cover behaviours that were "capable of causing" nuisance or annoyance, rather than the current threshold of behaviour that was "likely to cause" such disruption. This subtle change would have given landlords more power to evict tenants engaging in disruptive behaviour, even if the consequences weren’t immediately evident.

Matthew Pennycook opposed this broader wording previously, citing concerns that it could unfairly target families with children or tenants whose behaviour was misinterpreted. As a result, Labour has chosen not to include this provision in the Renters' Rights Bill, leaving landlords with the existing, narrower definition of anti-social behaviour.

No Lord Chancellor’s Assessment of the Court System

Another key provision missing from the Rights Bill is the Lord Chancellor’s assessment of the county court system. Under the Reform Bill, there was a clause requiring an evaluation of the court process before Section 21 could be abolished for existing tenancies. The idea was to ensure that the courts could handle the increased volume of eviction cases under Section 8.

Critics of the Conservative proposal, including Pennycook, argued that this clause lacked timescales, obligations, or meaningful metrics. Labour has removed it from their version, meaning the system will proceed without a formal assessment of the courts’ capacity to handle the additional workload. As of now, landlords must simply trust that the courts will manage.

No Hardship Test for Evictions

During the summer, there was speculation that the new Bill might introduce a French-style hardship test that would prevent landlords from evicting tenants found to be in financial distress. While this would have provided a safeguard for the most vulnerable renters, no such test has appeared in the final Rights Bill. This leaves Section 8 evictions unaffected—if a landlord meets the criteria for a ground of possession, the courts will still be obliged to grant it, regardless of the tenant's financial situation.

New Provisions and Adjustments

Although many elements of the Renters (Reform) Bill remain intact, Labour has made several notable adjustments:

Longer Notice Periods for Section 8 Possession Grounds

The Rights Bill increases the notice periods for several Section 8 possession grounds. For example:

• Ground 1 (landlord or family occupation) now requires a 4-month notice period, up from 2 months in the Reform Bill. Additionally, this ground cannot be exercised within the first 12 months of a tenancy, compared to 6 months previously.
• Ground 1A (sale of property) follows the same pattern, with a 4-month notice period and a 12-month tenancy requirement.
• Ground 4A (student HMOs) also now requires 4 months’ notice, up from 2 months.
• Ground 6 (redevelopment) has also seen its notice period extended to 4 months.

Conversely, the notice period for Ground 8 (serious rent arrears) remains unchanged at 4 weeks.

Changes to Mandatory Ground 1A for Property Sales

Under the Reform Bill, landlords could use Ground 1A to sell their property after six months into a tenancy. Labour has extended this to 12 months in the Rights Bill, further tightening landlords’ ability to sell within the first year. Moreover, landlords will face stringent requirements to prove genuine intent to sell, including a ban on re-marketing or re-letting the property for 12 months. Breaching this rule could lead to fines of up to £7,000.

Restrictions on Ground 4A for Student Accommodation

Labour has reverted Ground 4A to its original version, which restricts it to full-time students in HMOs. This provision excludes student households where even one tenant is part-time, limiting landlords' ability to regain possession under this ground.

Changes to Ground 8 for Serious Rent Arrears

The Rights Bill increases the threshold for rent arrears under Ground 8. Previously, landlords could seek possession if tenants were two months in arrears; this has now been increased to three months. Despite speculation that this ground would be made discretionary or subject to a hardship test, it remains a mandatory ground for possession.

Ban on Rental Bidding and Advertising Requirements

A significant addition to the Rights Bill is the outright ban on rental bidding. Landlords and agents will be prohibited from inviting offers above the stated rent, and even if tenants offer more, landlords cannot accept it. 

Anyone who has looked for a property to rent in London in the last 6 months will have experienced the stress caused by rental bidding. As investors and prospective home owners we all understand the annoyance and stress caused by gazumping. Well this is very similar but even more extreme. I saw properties go for >50% more than what was advertised in Q2. The process of looking for a property to rent in some areas has not been easy. 

This move obviously aims to stabilise rent prices in high-demand areas. And additionally, landlords will now be required to state the proposed rent in all property advertisements. This does not apply to physical 'To Let' boards.

Lastly “Currently, tenants face the risk that the Tribunal may increase rent beyond what the landlord initially proposed – we will end this, so tenants never pay more than what the landlord asked for”.

The New Additions

Aside from the changes mentioned above, Labour has introduced a few entirely new provisions in the Renters’ Rights Bill:

Remedying Hazards 

Following the tragic death of Awaab Ishak, Labour has extended Awaab’s Law to the private rented sector. Although details on implementation are still pending, this law will require landlords to remedy hazardous conditions within a specific timeframe. The specifics of how this will apply to the PRS will be subject to consultation, but the guidance states “We will carefully consider how best to apply Awaab’s Law to the private rented sector in a way that is fair, proportionate and effective for both tenants and landlords, and will consult on this.”

Additional Offences for Rent Repayment Orders

Landlords will now face additional risks of Rent Repayment Orders for offences such as knowingly misusing possession grounds or breaching restrictions on letting or marketing a property. The penalties for these offences will be enforced by the First-tier Tribunal.

The Final Word

The Renters’ Rights Bill represents a more aggressive step towards tenant protection than its predecessor. While some provisions will appease landlords, particularly those around mandatory possession for property sales, the general direction of the Bill places more restrictions on landlords' rights. For both tenants and landlords, this legislation represents a reshaping of the rental landscape - a shift that will have long-lasting consequences for the whole Private Rental Sector.

As implementation approaches in 2025 we, as landlords, would do well to familiarise ourselves with these changes, or we will find ourselves unprepared for the new legal landscape.

Ed Fowkes

September 2024