Introduction
Just under a year ago the government announced plans for the "the biggest shake up of the private rented sector in 30 years" promising a "private rental sector that is fit for the 21st century". And now, at long last, the much-anticipated Renters (Reform) Bill ('the RRB') has made its debut, coming before Parliament on 17 May 2023.
The Department for Levelling Up, Housing and Communities ('DLUHC') set out a "12- point plan of action" (A fairer private rented sector - GOV.UK (www.gov.uk). The plan, in summary, was to require all private rented homes to meet the "Decent Homes" standard; to abolish "no-fault" evictions; reform other grounds for possession; restrict rent increases to once a year; strengthen tenants' rights of redress through the Ombudsman and courts; strengthen enforcement powers against criminal landlords; make blanket bans on tenants on benefits or with children; introduce a right for tenants to request a pet; and work towards deposit reform.
It is difficult to find a starting point in the history of residential landlord and tenant statutory protection. Suffice to say that the twentieth century saw the growth in statutory regulation of tenancies (both residential and commercial) which often reflected the economic zeitgeist and tried to balance the needs of landlord and tenant to keep the market alive while giving necessary protection to the weaker parties.
The last major reform of the private rental sector was the Housing Act 1988. The Housing Act 1988 was introduced as a reaction to the stagnation of the rental market in the 1980s, which was blamed on the security of tenure and rent protections offered to tenants under the Rent Act 1977. Landlords could recover possession only on certain grounds. Even rent arrears grounds were discretionary (i.e. the court had discretion to make a possession order and the landlord would have to persuade it that it was reasonable to do so). Rents were restricted to "Fair Rents" which deliberately did not take into account the scarcity value of a property when being assessed, so a fair rent was often far below the open market rent.
The intention behind the Housing Act 1988 was to free up the private rental sector and make it more attractive to potential landlords by providing a mechanism by which landlords could recover possession without having to give a reason and to make renting profitable by being able to charge a market rent. Landlords became able to choose to serve notice on the tenant that their tenancy would be a "shorthold" tenancy with security of tenure for only six months, after which the landlord could recover possession by serving notice under section 21 of the Act (the infamous "section 21 notice").
Under the Housing Act 1996 the assured shorthold tenancy became the default tenancy and for the past thirty years a tenancy for an individual paying rent to a private landlord is an assured shorthold tenancy (AST) (with certain exceptions). An AST can be for a fixed term of any length. In practice most fixed terms are for a fixed term of six months or a year, after which a landlord can – currently - serve a section 21 notice (without specifying any reason) and recover possession.
When the Housing Acts were introduced the housing landscape was completely different to that of today. Much of the population lived in permanent homes either by way of long-term local authority tenancies or by way of home ownership, but also in private Rent Act 1977 protected tenancies.
In recent years the landscape of property ownership and occupation has changed significantly, and many people spend years or decades in the private rental sector, but with very limited security of tenure.
However, minimum regulation led to residential letting being seen primarily as vehicle for landlords to maximise their profit rather than provide decent homes for tenants. While there has always been a significant number of reasonable landlords, unscrupulous landlords could and did (and continue to) take advantage of their position.
Until recently, a landlord whose tenant complained about the state of repair of the property could simply serve notice under section 21. This particular practice was so widespread that the government saw the need to address it which it did by introducing a ban on retaliatory evictions (under the Deregulation Act 2015).
Meanwhile during the past thirty years the lettings industry became a huge industry and agents' profits were until recently often subsidised by charging fees to tenants for tenancy agreements, renewals, check-in reports and so forth.
Over the past two decades the government has introduced many measures to tame the "wild west" of the private rental sector. The Housing Act 2004 introduced compulsory protection of deposits, and licensing requirements for certain properties. The Homes (Fitness for Human Habitation) Act 2018 gave tenants a standing to take a landlord to court for providing substandard housing even when there was no disrepair as such (for example for hazards such as the inability to heat the property to a certain level).
The Tenant Fees Act 2019 sought to redress the balance. It introduced a prohibition on charging tenants any money save for certain prescribed exceptions (the most important being rent), meaning that landlords could no longer pass their agents' fees on to tenants. Since 2018 "retaliatory eviction" has been unlawful and the circumstances in which a section 21 notice can be served or relied on in possession proceedings has been narrowed by a hotchpotch of rules and regulations.
To give an example, a valid section 21 cannot be served if the tenant has not been given certain prescribed information, including the gas safety certificate, EPC and the "How to Rent" guide, nor can one be served if the deposit is not protected in a prescribed tenancy deposit scheme. There has been considerable litigation as a result. A valid section 21 notice cannot be served if a tenant has been required to make a prohibited payment under the Tenant Fees Act 2019 and it has not been returned.
Despite these piecemeal reforms, provided the landlord has complied with the necessary requirements, the sword of Damocles (that is the section 21 notice) still hangs over tenants. The default fixed term remains six months or one year, and tenants are often unable to consider their rental property their home.
It is against this background that the DLUHC promised its "New Deal to those living in the Private Rented Sector; one with quality, affordability, and fairness at its heart". Enter the Renters (Reform Bill).
