UK real estate: Renters' Rights Bill receives Royal Assent

The most important changes encompassed in the Bill include:

1. A seismic change to the short-term tenancy regime: The Bill heralds a shift from fixed-term to periodic tenancies, and the need to have statutory grounds for possession. Limited fixed-term occupation under Assured Shorthold Tenancies (ASTs) will become a thing of the past. Instead, tenants will be entitled to keep occupying their properties under rolling periodic tenancies unless and until the landlord can satisfy specific grounds for possession, such as an intention to occupy, sell or redevelop, or because of specific tenant defaults. The new legislation therefore ends so-called “no fault” section 21 evictions, by replacing them with a specified range of termination grounds.
2. It also seeks to give tenants greater rights including the introduction of a new decent homes standard, the right to request permission to keep a pet, anti-discrimination provisions, limits on bidding wars and a ban on collection of over one month’s rent up-front. It also imposes greater regulation on landlords, and introduces sanctions for failure to comply. Landlords will also only be able to increase the rent once per year in an attempt to give certainty for tenants.

The intention behind the Bill is to shift the balance between landlords and tenants and give tenants greater certainty and security, recognizing that a property may be the landlord’s house, but it is also the tenant’s home.

3. In terms of timescales for when the new legislation will come into force, the government has confirmed that we can expect more detail “in the coming weeks,” including information on any transition period for pre-existing ASTs. The new legislation is expected to come into force next Spring.

There are some concerns that the effects on the rental market may lead to unintended consequences. This might include small scale “buy-to-let” landlords leaving the market for fear of the time, uncertainty and increased cost involved in evicting tenants who fail to pay their rent. This could mean the buy to rent and build to rent markets consolidate in the hands of fewer investors with deeper reserves, who are better placed to weather these processes. Some have speculated this (particularly when it comes to individual houses or flats rather than large developments) could potentially reduce leasehold housing stock and drive up residential rents.

At the time of writing, the final version of the Bill is not yet available and we will bring you more details once it is published.

Authored by Tim Reid, Lucy Redman, and Ingrid Stables.