Rental Reform bill - the latest update

On 24 April 2024, the Rental Reform Bill passed its Third Reading in the House of Commons. The Third Reading is the last stage in the Commons before being sent to the House of Lords. Here, we examine how the bill shapes up and what happens next.

What are the notable amendments?

One of the key amendments is a new provision governing when tenants can serve notice after they have entered into an assured tenancy. The amendment would prevent tenants from serving a two-month notice to quit before four months into the tenancy. The practical effect of this is to create six months during which tenants can only serve notice if something goes wrong - e.g. there is a severe case of disrepair the landlord fails to remedy.

This may initially seem a radical departure from the original draft bill under which tenants could have served notice at any point during the tenancy. In reality, it is a significantly smaller amendment when you consider today's market, in which increasing numbers of tenants request lengthier fixed-term tenancies to insulate themselves against market rent rises typically negotiated at renewal or on a new tenancy. By contrast, under today's law, the longer a fixed-term tenancy, the longer a tenant will pay the same level of rent.

Will tenants be any better off in terms of their cost of living under the new law? We will have to wait and see. Under the proposed bill, landlords can propose rent increases once yearly, which is no different from the law today in the case of statutory periodic tenancies. However, under the new law, there will be some slight tightening of the rules for this procedure.

The abolition of no-fault (Section 21) notices

Long since promised by this Government and a significant focus of housing campaign groups, the abolition of no-fault (Section 21) notices is now expected to take place only after a review has been conducted into the ability of the court system to cope with the level of possession cases once the bill becomes law.

This is a sensible measure because it will prevent an already overburdened and creaky court system from having to absorb potentially far greater numbers of possession claims. However, it also means there is no precise date for a ban. Additionally, the Department for Levelling Up, Housing and Communities (DLUHC) has reaffirmed its commitment to giving six months' notice before Section 21 notices are formally outlawed.

So, what now?

We've got an amended bill that has completed its stages in the House of Commons. The bill now moves to the House of Lords for a repeat of the stages in the Commons (first, second and third reading, etc), during which phase, the Lords will consider any amendments made in the Commons. Once completed, The Commons and the Lords will debate the bill between themselves (a back-and-forth process aptly referred to as 'ping-pong') until agreement is reached about the amendments and the wording, after which the bill will receive Royal Assent and become law.

The bill will not come into effect immediately but, as with all new legislation, will do so on a commencement date. Some aspects of the bill will be delivered in phases (not all tenancies will be subject to it immediately). Reviews of the court system's ability to cope will be undertaken and reported on before section 21 is banned altogether.

The big question is when all this will be done, and when can we expect the new law? That's still a difficult one. The Government is committed to passing this bill and will need to do so before parliament is dissolved before a general election, the date for which still needs to be determined. You can track the bill's progress here, and we will continue to provide updates on significant milestones when they occur.

If you'd like to talk to an agent for more personalised advice, our team are always on hand to help. We'd love to hear from you, whether just a quick chat or a no-obligation property valuation.

Warm wishes,

The team at Rolstons.