June 10, 2021
Rental reform set for the coming year – what would this mean for the PRS?
In the recent Queen’s Speech, the government heavily hinted that rental reform is coming in the next year.
The Queen opened the latest session of Parliament on May 11 2021. She then made a brief reference to the commitment for rental reform.
The government has said it will be a priority for the coming session of Parliament. And that the government would be ‘enhancing the right of those who rent’ as well as helping more people to own their home.
The Renters’ Reform Bill was not mentioned by name. But, nevertheless, it has been suggested in advance by the government that this Bill will be the vehicle for reform.
In the autumn, a government White Paper is expected, ahead of official legislation beginning its journey through Parliament.
What will the Bill likely include?
The Bill is expected to enact a long-term threat from the government of abolishing Section 21 eviction powers for landlords and agents. The so-called ‘no-fault’ eviction notices will be replaced by beefed-up Section 8 eviction notices. But many question the efficacy of these notices when it comes to gaining possession.
In addition, the Bill is anticipated to introduce the idea of ‘lifetime deposits’. It will allow deposits to move around from one tenancy to another. The aim is to speed up and cut the cost of moving rental properties for tenants. It will create a cheaper, more dynamic and more flexible system.
The Queen also insisted that ministers would set up a new Building Safety Regulator to make sure ‘the tragedies of the past are never repeated’. This is a reference to the Grenfell Tower disaster of June 2017.
Rental reform has been a long time coming and landlords and agents have been living with the threat of Section 21 abolishment for some time.
The idea of the Renters’ Reform Bill first appeared in the Conservative manifesto for the December 2019 general election, as part of its ‘better deal for renters’ pledge. It was also included in the Queen’s Speech in late 2019, after the Tories had won a thumping 80 seat majority. The pledge was that it would be included in the legislative programme for 2020. This, though, was hampered and delayed by the pandemic.
But now, with the vaccine rollout going well and life returning to normal, rental reform is back on the agenda.
Should landlords be prepared for eviction reform?
The ban on bailiff-enforced evictions only ended on May 31. For most of the last year, landlords have not been able to evict except in the most serious cases. Even then, the severe backlog in the courts and increased notice periods have made it difficult.
So, in some ways, landlords and letting agents would already have got a taste of a landscape where eviction is much more difficult. That would appear to be the goal of the abolition of Section 21, with Section 8 seen as a much blunter tool.
With government, opposition and public support, it seems certain that Section 21 evictions will be scrapped at some point. But this isn’t likely to happen until at least next year. Indeed, we have the White Paper later this year and the Bill likely to face barriers and scrutiny on its route through the Commons and Lords.
Still, landlords may want to seek alternatives to repossession, given the court backlogs and the current difficulties involved. Not to mention the future threat of a more difficult process if Section 21 notices are abolished.
In this spirit, the government has been trialling a mediation scheme. It has the in-principle support of the National Residential Landlords Association to try and make sure disputes don’t end up in court.
What is the scheme?
First revealed by Housing Secretary Robert Jenrick in February, the mediation pilot is free to use for landlords and tenants. It will involve as a third party a trained neutral mediator, independent from HM Courts and Tribunals Service, to identify issues and work to resolve them.
The Ministry of Housing, Communities and Local Government (MHCLG) argues that the mediation scheme may be quicker than a full court hearing.
“The Society of Mediators aims to conduct mediation remotely within 10 days of referral. If mediation is successful, the court will then be informed and the case closed,” MHCLG said in a statement. “While mediation may help you avoid a full court hearing, it will not delay your ongoing court process. You must continue to comply with all court directions.”
The mediation will be conducted remotely, by telephone. MHCLG says one or both parties may nonetheless want to have legal advice.
If mediation succeeds, after one or more sessions, all parties will sign an agreement. This will then be put forward to a judge for approval. The agreement will outline clearly what actions each party must take next.
“You can apply to the court to enforce the agreement if it is broken by the other party. If mediation is unsuccessful, the case will continue to the substantive hearing. The court will not be told about anything that was said during the mediation and the process will proceed as normal,” the statement added.
You can see the full announcement and description from MHCLG here.
Many will argue the PRS needs urgent reform. This must be done to the benefit of all stakeholders. Including, and especially, landlords, who provide the homes that so many tenants live in.
A mediation service is certainly a step in the right direction. It will keep disputes from descending all the way to a court hearing. But any new system must be fair and just for both landlords and tenants, to avoid further issues down the line.
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