Insight on the new Renters' Rights Bill

With the King's Speech, we got our first look into the new Renters' Rights Bill. In this article, Foxtons Director – Legal and Compliance Manjit Kataora delves into what the new bill could mean for landlords.

The Kings Speech on 17 July marked the State Opening of Parliament and the formal announcement of the new Labour government’s legislative agenda through which it will seek to deliver its commitment to bring change, growth and stability to the UK economy.

Reflecting both the ambition of the new government (and the opportunities afforded by its significant commons majority) the Speech announced no less than 40 bills – as compared to the 21 announced in 2023.

As expected, rental reforms were back on the agenda. By nature, the Speech was light on detail but set out in headline form the commitment to a new bill this time called the Renters’ Rights Bill to give “greater rights and protections to people renting their homes, including ending 'no fault' evictions and reforming grounds for possession”. Slightly more detail is contained in the background briefing notes to the Speech, from which can we see that tenants will be able to challenge rent increases and have the right to request a pet. A Decent Homes Standard will apply to the private rented sector (PRS); Awaab’s law will be applied to the PRS setting clear legal expectations and timeframes for landlords to ensure hazards in homes are made safe; a new, digital, PRS database will consolidate key data for landlords, tenants and councils allowing tenants to access key information before they enter into tenancy agreements; a new ombudsman service will apply to the PRS to make dispute resolution easier and less costly, and landlords will be outlawed from discriminating against tenants in receipt of benefits. Much then, as we saw under the old Renters Reform bill.

Though widely supported by pro-tenant lobbyists, abolishing no-fault evictions is tricky. Labour had pledged to abolish these on ‘day one’ – something which was always impossible given the need to legislate. What will be interesting to see is whether the government will abolish this law without ensuring an adequate replacement process is in place or that the court infrastructure can cope without it. As bills progress, so too at various stages are they debated. It’s during these stages – when real-world examples of how a new law might adversely impact those it was intended to help, and potential unintended consequences are ventilated and scrutinised - that the speed of legislative progress can slow down as parliament tries to ensure that what has been drafted on paper will work in practice. In short, not only will the content of the new bill be compared to the previous bill, so too will the speed of its progress. With the briefing notes fleshing out some familiar concepts, it may well proceed more swiftly this time round.

Other notable changes announced today include a devolution package to the regions in the form of new powers to Metro Mayors and combined authorities to enable regions to make more effective decision-making on things like planning without having to revert to central government.

Changes too, to leasehold and commonhold tenures can be expected as the government aims to add to the provisions contained in the Leasehold and Commonhold Reform Act that was passed shortly after the election was announced. There is an element of ‘filling in of the gaps’ here as the new bill aims to tackle unregulated and unaffordable ground rents and remove the remedy of forfeiture as a means of ensuring compliance with lease conditions. Probably the most radical is the plan to modernise the legal framework by banning the sale of new leasehold flats, establishing commonhold as the default tenure.

Data protection reforms are expected in the less-lauded Digital Information and Smart Data Bill, set to reform data sharing and standards, as well as giving the UK data protection regulatory authority the ICO greater powers to enforce standards. Anyone processing personal data (landlords and agents alike) would be wise to follow these changes.

The job of drafting new laws falls to the office of the Parliamentary Counsel. From what we’ve seen today, they can expect a very busy year ahead indeed.

London landlords weigh in

We asked Foxtons landlords what a change in government would mean for the sector, and the response was staggering. Over 1,600 landlords shared their thoughts. As a new government gets to work on key bills and policies like Renters’ Rights and housing, here’s what landlords have to say:

• In terms of tenancy reforms, 77% of respondents feel they should allow landlords and tenants to agree a fixed-term tenancy where they both wanted one.

• Nearly 59% of landlords expect a new Labour government would make no difference to their decision to maintain, grow or sell their portfolios.

• On what changes landlords would like to see in the Private Rental Sector (PRS), an ‘increase in supply of social housing so low-income and homeless households do not have to rely on the PRS’ was ranked most important by most respondents.

It seems that the majority of landlords will not be altering their approach to investing in, owning and renting their properties. However, no matter what this new parliamentary session brings, Foxtons are here to help you navigate the market, manage any changes and make the most of your investments.