The Renters Rights Bill contains provision which will make significant changes to the private rented sector. In this article, James Harrison, Partner and Head of our Housing Team, summarises the keys changes.

Abolition of Assured Shorthold Tenancies

We have all become familiar with Assured Shorthold Tenancies (ASTs) since they were introduced over 30 years ago by the Housing Act 1988. They are soon to become extinct, at least in the private-rented sector, as the Bill provides that ASTs will be abolished, to be replaced by Assured periodic tenancies. Not only will it no longer be possible to grant a new AST, the Bill also provides that all current ASTs will become Assured periodic tenancies. The only exception will be ASTs which at the time of commencement of the Act are the subject of possession proceedings under section 21 Housing Act 1988.

The end of section 21 notices

Subject to compliance with various technical requirements, a landlord can currently terminate an AST by serving two months’ notice on the tenant under section 21 Housing Act 1988. This has become known as the “no-fault” ground for possession as such a notice can be served without the need to prove that the tenant has breached the terms of the tenancy and without the landlord needing to give any reason for the notice. The last Government promised to abolish the no-fault ground for possession under section 21 but after long delays in putting forward its proposals, the General Election was called before the Renters’ Reform Bill completed its passage through Parliament. As with the Renters’ Reform Bill, the Renters’ Rights Bill provides for section 21 to be abolished so when the Bill becomes law, section 21 – and all its peculiarities – will be consigned to history.  

If by the time the Bill becomes law the landlord has served a section 21 notice and has commenced possession proceedings relying on that notice, the AST will continue pending the conclusion of those proceedings. If however possession proceedings have not commenced, the notice will be of no effect. 

New grounds for possession

The Bill provides for several new grounds for possession and amends a number of existing grounds. In summary:

• Ground 1 is available where the landlord or a close family member wishes to move into the property. The landlord cannot rely on this ground during the first 12 months of a new tenancy. Four months’ notice is required.

• Ground 1A can be relied on where the landlord wishes to sell the property. Again the landlord cannot rely on this ground during the first 12 months of a new tenancy and 4 months’ notice is required.

These are mandatory grounds for possession so the Court must make a Possession Order if it is satisfied that the grounds is made out. In order to discourage abuse of these grounds (which anecdotally has been a concern in Scotland where section 21 has already been abolished) a landlord cannot re-let a property within 12 months of serving notice, or commencing court proceedings, on these grounds. A landlord who breaches this restriction is at risk of a fine of up to £7000. 

There is also a new mandatory ground for possession, Ground 4, in relation to a property let to full-time students, where the property is required for a new group of students in line with the academic year. Four months’ notice is required.

The mandatory rent arrears ground, Ground 8, has been amended in two respects. First, 4 weeks notice rather than 2 is required. Secondly the landlord must show that the tenant is 3 months in arrears (or 13 weeks in the case of a weekly or 2-weekly rent) both at the time that the notice is served and at the time of the possession hearing rather than 2 months (or 8 weeks) at present.

There are other mandatory and discretionary grounds for possession which are beyond the scope of this article.

When will these changes take effect?

The Bill is currently at the report stage in the House of Commons. After its third reading the Bill will be considered by the House of Lords. At the current rate of progress the Bill is unlikely to become law until the Spring or Summer of this year.