The shift from fixed terms to periodic tenancies
The Renters Rights Bill represents the most substantial change to the private rented sector since the 1980s. Historically, the Assured Shorthold Tenancy (AST) has been the standard for buy-to-let properties, typically offering a fixed term of six or twelve months. Under the new legislation, the government intends to abolish fixed-term tenancies entirely. Every tenancy will become a rolling periodic tenancy from the first day.
For landlords with existing tenants, this change will likely be phased. Once the transition date is reached, your existing fixed-term agreements will automatically convert to periodic tenancies. This means a tenant can give notice to leave at any time (usually two months notice) without being tied to a long-term contract. For you as a landlord, the main adjustment is the loss of the guaranteed rental period that a fixed term provides.
The end of Section 21 and the reliance on Section 8
The headline change is the removal of Section 21, often called no-fault evictions. Currently, a landlord can regain possession of a property at the end of a fixed term without giving a reason, provided they have followed all compliance steps. When the new Act is fully implemented, this route will disappear for both new and existing tenancies.
You will only be able to end a tenancy if you can prove a specific legal ground for possession under Section 8 of the Housing Act 1988. This shifts the burden of proof onto the landlord. The government plans to expand and strengthen these grounds to ensure that landlords who have a legitimate reason to reclaim their property can still do so. These reasons include wanting to sell the property, moving yourself or a close family member into the home, or dealing with serious rent arrears and anti-social behaviour.
Mandatory vs discretionary grounds for possession
When using Section 8, grounds are split into two categories: mandatory and discretionary. If you can prove a mandatory ground exists, the court must grant a possession order. If you use a discretionary ground, the judge will decide whether it is reasonable to evict the tenant based on the evidence.
- Selling the property: This will be a new mandatory ground. You must give the tenant a notice period (expected to be four months) and you cannot use this ground within the first few months of a new tenancy.
- Moving in: Similar to selling, if you or a direct family member needs the property as a primary residence, this is a mandatory ground. You will likely be barred from re-marketing the property for rent for a set period after using this ground to prevent misuse.
- Rent arrears: The mandatory ground for arrears will remain, but the notice period will increase. If a tenant is in at least two months of arrears both at the time of the notice and at the time of the hearing, the court must grant possession.
- Anti-social behaviour: This remains a discretionary ground, but the government seeks to make it easier for landlords to take action. This often requires significant evidence and witness statements to satisfy a court.
Changes to rent increases and bidding wars
The Act will also change how rent increases are managed. Fixed rent review clauses within contracts will likely be abolished. Instead, landlords will be limited to increasing rent once a year using a formal Section 13 notice. This notice must reflect the let-market rate. If a tenant believes the increase is above market value, they can challenge it at a tribunal.
Additionally, the government intends to ban the practice of rental bidding wars. Landlords and letting agents will be prohibited from inviting or accepting offers that are higher than the advertised asking price. This is designed to make the process more transparent for tenants but requires landlords to be very accurate with their initial valuations.
Awaabs Law and the Decent Homes Standard
For the first time, the Decent Homes Standard will be applied to the private rented sector. Previously, this was a benchmark used mainly for social housing. Landlords will have a legal obligation to ensure their properties meet specific safety and quality criteria. Related to this is the extension of Awaabs Law, which mandates strict timelines for landlords to investigate and repair serious hazards such as damp and mould.
If a landlord fails to meet these standards, they may be prohibited from let-properties or face significant fines from local authorities. Furthermore, a tenant might be able to use the poor condition of a property as a defence against a possession claim for rent arrears, arguing that the value of the property was diminished by its condition.
Practical steps for landlords to prepare
While the legislation is moving through Parliament, there are several practical steps you can take to ensure your portfolio remains compliant and manageable.
- Update your documentation: Once the Act is passed, you will need to use new templates for periodic tenancies. Existing ASTs do not necessarily need to be rewritten immediately, but you must understand that the Section 21 clauses within them will be legally void.
- Conduct thorough inspections: Ensure your property meets the Decent Homes Standard now. Address any signs of damp, mould, or structural issues immediately. Keep a paper trail of every repair and inspection.
- Communication records: Because Section 8 requires evidence, you must keep professional records of all interactions with tenants. If a tenant falls into arrears, document your attempts to help them or set up a payment plan. This evidence is vital if you eventually need to go to court.
- Review your insurance: Check if your landlord insurance includes legal expenses cover. With the removal of the paper-based Section 21 process, more possession claims may require a physical court hearing, which can be expensive and time-consuming.
Digital requirements and the Private Rented Sector Database
A new digital database will be introduced, requiring all landlords to register themselves and their properties. This is intended to help local councils target rogue landlords and provide tenants with more information about who they are renting from. Compliance with this database will likely be linked to your ability to use the Section 8 possession grounds. Failing to register could mean you lose the right to evict a tenant legally.
Furthermore, a new Ombudsman for the private rented sector will be created. All landlords must join this scheme. The Ombudsman will provide a way for tenants to settle disputes without going to court, covering issues like repairs or poor management. The Ombudsman will have the power to compel landlords to issue apologies, reimburse rent, or carry out specific works.
The importance of the transition period
The government has indicated there will be a clear lead-in time before these changes apply to existing tenancies. This is to allow the court system to be digitised and improved, as the removal of Section 21 will increase the volume of cases seen by judges. You should use this period to assess your current tenancies. If you have tenants who are already in significant arrears or are causing issues, you may wish to address these using the current system before the new rules come into force.
In summary, while the flexibility of the fixed-term AST is ending, the new system intends to create a more professional and stable environment for both parties. By focusing on property standards, clear evidence-gathering, and proactive management, you can continue to run a successful buy-to-let business under the new framework.