When Will Section 21 be Abolished?

Section 21 will be abolished when the Renters’ Rights Bill becomes an enforceable law. In order to become an enforceable law, the bill must first make its way through the stages in the House of Commons and subsequently the House of Lords, before it will be handed to the King for final approval (Royal Assent). Upon gaining royal assent the bill will become an Act of Parliament, which is effectively a law, but there may be certain external provisions that need to be met before the law becomes enforceable.

The most probable timeline:

Given that the Renters’ Rights Bill entered the House of Commons for its First Reading on September 11, 2024, and has already progressed to the Report Stage by November 2024, here’s our estimate based on when the Renters’ Rights Bill will become Law:

Key Stages Remaining:

1. Report Stage and Third Reading (November 2024 2025):
   • The Report Stage and Third Reading typically occur shortly after the Committee Stage, taking a few weeks to a month. If the bill is pushed forward without major delays, it could pass through these stages before the end of 2024.
2. House of Lords (Q1 2025):
   • Once it passes the Commons, the bill moves to the House of Lords. The Lords usually take 2-3 months to scrutinise the bill, suggest amendments, and send it back to the Commons if necessary. If there are no significant delays, this could be completed by March 2025.
3. Royal Assent (March – April):
   • After both Houses agree on the final version, the bill is sent for Royal Assent, which is typically a formality. This is on track to occur by April 2025, finalising the bill as an Act (or law).

Based on its current pace, the Renters’ Rights Bill is likely to become law, thus abolishing Section 21, between around April 2025, based on the current speed at which the bill is progressing through parliament .

So, What’s the Problem With Section 21?

Section 21 was originally intended to encourage more property owners to rent out homes, boosting housing availability. But, while Section 21 has meant fewer legal battles over evictions, it has also led to concerns over insecurity for tenants, as they can be asked to leave their homes with 2-months notice, even if they’ve adhered to all the terms of their tenancy.

A cynical perspective would be that back in 1989, only 7% of UK households were living in rented accommodation, while today it’s around 20%. A large population of renters means politicians are now doing everything they can to pander to this demographic in a bid to gain popularity (and votes).

How Might the Renters’ Rights Bill Affect Landlords

The Renters’ Rights Bill could cause serious problems for landlords because in its current state it appears to contain a variety of ways for tenants to exploit landlords.

It remains to be seen whether these loopholes will get patched as the bill gets amended during the course of its journey through parliament.

Tighter Restrictions on Non-Urgent Evictions:

The bill has restricted many traditional grounds for possession that landlords could use to reclaim their property. For example, landlords can no longer serve notice for repossession purely on a fixed-term expiry (the “no-fault” eviction method under ASTs). Instead, they must rely on specific grounds, such as:

• Needing the property back for their own residence or that of a close family member (Ground 1 of the 1988 Housing Act).
• Significant rent arrears or anti-social behaviour (serious grounds).

However, tenants could exploit these more stringent conditions by disputing the landlord’s grounds for possession. For instance, tenants might argue that the landlord does not genuinely need the property back for personal use, forcing the matter into court and delaying the process.

Increased Scrutiny of Grounds for Possession:

Under the bill, the court may closely scrutinise the landlord’s reasons for seeking possession. For example, if a landlord claims they need the property for personal or family use, the tenant might demand evidence and challenge the landlord’s claim. This opens the door for tenants to create delays through legal challenges, requiring landlords to engage lengthy legal battles, which can be costly. There will be no more section 21, so that means there’s no open and shut way to evict – everything will have potential to get dragged through the courts. This may make the proposition of regaining a property from a tenant too much hassle.

Rent Arrears Exploitation:

One of the most common reasons for eviction is rent arrears. However, tenants can exploit the new rules around rent arrears to delay eviction proceedings. For instance, under the bill:

• Landlords may seek possession if the tenant is in substantial or persistent arrears. A tenant could make reduced payments strategically while remaining below the threshold necessary for eviction under rent arrears grounds, effectively gaming the system to avoid eviction and not pay rent. As long as the tenant ensures that the owed monies don’t exceed 3-month’s worth of rent, the landlord won’t be able to do anything about it. This basically means that every tenancy will come with 3-months rent-free living, with no risk of eviction.
• In some cases, tenants might choose to extend their rent-free period by continuing to withhold rent deliberately beyond the three-month threshold, knowing that the eviction process can take months or even longer if they dispute the arrears or raise other BS defences.
• In addition, it looks likely that, in the absence of Section 21, the courts will be flooded with eviction hearings, which will prolong timelines to getting a hearing, which of course will play out in the favour or a non-paying tenant, possibly resulting in a year or more of rent free living.

Challenging Landlord’s Evidence of Breach:

For grounds like anti-social behaviour or property damage, the burden will be on the landlord to prove the tenant’s misconduct. A bad tenant could contest these claims, forcing the landlord to gather substantial evidence and go through lengthy legal proceedings. For antisocial behaviour grounds to be solid, the landlords will need to convince neighbours to testify in court against their antisocial neighbour (the bad tenant) This could result in extended delays or prove completely impractical since neighbours might be afraid of the unruly tenant.

Delays from Increased Notice Periods:

The bill extends the notice periods that landlords must give in many situations. Tenants could exploit this by waiting until the last possible moment to contest a notice of eviction, forcing landlords to restart the process or address procedural defects. This tactic could delay eviction proceedings by weeks or months, allowing tenants to remain in the property without paying rent or addressing other breaches of the tenancy agreement.

Court’s Consideration of Tenant’s Circumstances:

When landlords finally get a court hearing, courts are required to consider the tenant’s personal circumstances, such as their health, financial situation, or the availability of alternative accommodation. Tenants could potentially exaggerate or misrepresent their circumstances to persuade the court to delay or deny the eviction, particularly when claiming that they would face severe hardship if evicted. This provision, intended to protect vulnerable tenants, could be misused by those seeking to remain in the property unjustly.

Exploit no fixed term

Based on the new bill, there will be no fixed term for tenancies, as all tenancies will be periodic from day one. TWith no fixed term contracts, a tenant is free to hand in their statutory 2-month notice on the first day of their tenancy. So, if a person just needed short-term accommodation for two months, instead of booking an Airbnb or a hotel, they could use long-term rental properties as a cheap alternative to short-term accommodation, which would save the tenant a lot of money vs the price of an Airbnb. But this would mean that the landlord would need to pay the letting agent to market the property all over again and find new tenants, which would cost the landlord about a month’s rent in letting agent fees, as well as losses arising from the property being vacant between such short tenancies.

How Will the Renters’ Rights Bill Affect Tenants

Naturally, tenants will be afforded a whole array of extra rights, as suggested by the name of the bill. Below is an outline of these rights:

1. Periodic Tenancies and Abolition of Fixed-Term Tenancies

The Bill makes a significant change to how tenancies are structured:

• All assured tenancies will become periodic, meaning they continue on a rolling basis, typically with a rent period not exceeding one month. Fixed-term tenancies (such as Assured Shorthold Tenancies) are abolished (sections 1-2).
• This eliminates the automatic “end date” of a tenancy and prevents landlords from evicting tenants without providing a legal reason, ensuring tenants have more stability in their housing situation.

2. Statutory Procedure for Rent Increases and Rent Control

• The Bill introduces a statutory procedure for rent increases. Landlords will need to provide a notice to tenants if they intend to increase the rent, and they can only do so after a fixed period (usually annually) (section 7).
• Tenants gain the right to challenge excessive rent increases at a tribunal (section 8). This gives tenants greater power to resist unfair or unreasonable rent hikes, potentially leading to a fairer rental market.
• Rent increases will only be enforceable through a formal procedure, preventing arbitrary or frequent changes to rent that could put tenants in financial jeopardy.

3. Repayment of Rent Paid in Advance

• Tenants who pay rent in advance and leave the property before the end of the rental period will now have the right to a repayment for any unused rent (section 9). This provision is designed to protect tenants from losing out financially if they move out before the end of the period they’ve paid for.

4. Right to Keep Pets

• One of the most notable reforms is the right for tenants to request permission to keep a pet (section 10). The landlord cannot unreasonably refuse this request. If the landlord consents, they can impose certain conditions, such as requiring the tenant to either have pet insurance or cover the costs of any damage caused by the pet (section 11).
• This addresses long-standing tenant concerns, as many tenants with pets face difficulty securing rental properties. This right is designed to make the rental market more accessible for pet owners.

5. Protection from Discrimination

• The Bill expands protections against discrimination in the rental market, prohibiting landlords from discriminating against tenants based on their benefits status (i.e., whether they receive welfare support) or whether they have children (sections 32-37).
• Landlords and letting agents cannot include terms in tenancy agreements that discriminate against these groups. This includes clauses that exclude tenants with children or those receiving state benefits from renting a property.
• The Bill imposes penalties on landlords who engage in such discriminatory practices, ensuring more equitable access to housing for all potential renters, especially vulnerable groups.

6. Landlord Duties and Information Disclosure

• Landlords are required to provide tenants with detailed written information about the terms of the tenancy, the property, and the landlord’s identity (section 12). This obligation ensures that tenants are fully informed about their rights and the conditions of their tenancy agreement.
• If landlords or their agents fail to meet these disclosure requirements, they can face financial penalties, providing an incentive for transparency in rental agreements (sections 12-13).

7. Stronger Protections Against Evictions

• The grounds under which landlords can evict tenants have been reformed. Landlords will need to provide a valid legal reason to evict a tenant, such as rent arrears, damage to the property, or anti-social behaviour. The aim is to eliminate the use of “no-fault” evictions under Section 21 notices, which allowed landlords to evict tenants without cause.
• Additional protections have been introduced for tenants facing eviction due to anti-social behaviour, with courts required to consider certain factors before granting possession orders (section 5).
• The Bill strengthens the requirements for eviction notices, ensuring that tenants receive adequate notice and time to respond or contest any legal action.

8. Restrictions on “Rental Bidding” and Marketing Practices

• The Bill prohibits the practice of rental bidding, where tenants are forced to outbid each other for a property. Landlords are now required to state the rent upfront, preventing a situation where rent prices escalate based on bidding competition between potential tenants (section 55).
• This ensures a fairer rental process where all prospective tenants have an equal chance of securing a property based on the stated rent rather than engaging in competitive bidding that could disadvantage lower-income renters.

9. Financial Penalties for Landlords

• The Bill introduces financial penalties for landlords who fail to comply with the new regulations. These penalties can be imposed for a range of violations, including failing to meet rent increase procedures, not disclosing required tenancy information, or engaging in discriminatory practices (sections 15-16).
• Local housing authorities are empowered to enforce these penalties, providing a mechanism for tenants to report violations and for authorities to hold landlords accountable.

10. Decent Homes Standard

• The Bill enshrines a Decent Homes Standard into law, which will require that all rental properties meet a minimum standard of habitability. This includes provisions related to health and safety, repairs, and overall living conditions (section 98).
• Landlords will be required to maintain their properties in a decent condition, ensuring that tenants live in safe and comfortable homes. This is particularly important for tenants in the private rental sector, where some properties may have previously been let in substandard condition.

11. Tenant Fees and Deposits

• The Bill further limits the scope of tenant fees that can be charged, building on previous legislation such as the Tenant Fees Act 2019. It reinforces the prohibition on unfair fees while also ensuring that deposit protection rules are strictly followed by landlords (section 26).
• This ensures that tenants are not overcharged for basic services, such as credit checks or paperwork, and that their deposits are safeguarded.

12. Enhanced Redress for Tenants

• Tenants will have access to redress schemes, allowing them to resolve disputes with landlords more easily (sections 62-67). These schemes provide a formal mechanism for tenants to raise complaints about unfair treatment, disrepair, or other issues, without having to resort to costly or lengthy court processes.
• This gives tenants more leverage in enforcing their rights and holding landlords accountable for any breaches of their obligations.

13. Private Rented Sector Database

• The creation of a Private Rented Sector Database allows for better monitoring of landlords and rental properties. Landlords who breach regulations or receive banning orders will be listed in this database, improving transparency and enabling authorities to take enforcement action (sections 73-88).
• This database also helps tenants by providing them with access to information about landlords, ensuring that they can avoid renting from those with poor records or histories of misconduct.

14. Stronger Penalties for Unlawful Evictions

• The Bill increases the penalties for landlords who unlawfully evict or harass tenants. It also introduces stricter enforcement mechanisms to deal with abandoned properties, ensuring that tenants are not unfairly pushed out of their homes (section 57).

How Might the Renters’ Rights Bill Affect Housing Market

The Renters’ Rights Bill, with its substantial changes to tenancy regulations, is likely to have significant effects on the private rental housing market. While the Bill aims to improve conditions and security for tenants, there are potential unintended consequences that could reshape the market in several ways.

1. Private Landlords Leaving the Market

One of the most immediate effects of the Bill may be the exit of private landlords from the rental market. Many landlords rely on the flexibility of Assured Shorthold Tenancies (ASTs) to manage their properties, but the Bill abolishes ASTs and mandates periodic tenancies. The inability to regain possession of their property without a valid legal reason could deter landlords who prefer more control over their rental arrangements. Additionally, the stricter rules around rent increases and the enhanced rights for tenants to challenge rent hikes could reduce the profitability and attractiveness of letting properties.

As landlords sell off their properties, the overall supply of rental housing may shrink, leading to an increase in rent prices. With fewer rental properties available, the demand will outweigh supply, driving rents higher, particularly in high-demand areas. This could result in a rental market that becomes more competitive and less affordable for many tenants, counteracting the Bill’s intention to provide greater affordability and security.

2. Landlords Increasing Rents to Avoid “Undesirable” Tenants

Although the Bill includes provisions to prevent discrimination against tenants based on factors like children or benefits status, these measures may be difficult to enforce at the decision-making stage. While landlords cannot legally advertise discriminatory preferences, such as “No DSS” or “No children,” they still retain the freedom to choose their tenants without needing to disclose the reasons behind their decision. This discretion allows landlords to exercise bias indirectly, for instance, by rejecting applicants based on credit checks, payslips, or other pretexts that mask underlying discriminatory preferences.

Landlords may also raise rent prices as a filtering mechanism to exclude tenants they perceive as “undesirable” or financially unstable. By setting higher rent thresholds, landlords can effectively price out lower-income renters, those on benefits, or individuals with poor credit histories, using the rental price itself as a form of selection. This strategy, though subtle, could become more widespread as landlords seek to minimize perceived risks associated with tenants who have greater legal protections and are harder to evict.

3. Shift to House in Multiple Occupation (HMO) Properties

Another potential shift in the market could involve landlords moving away from traditional multi-room dwellings and converting properties into House in Multiple Occupation (HMO) units. HMOs are shared properties where each tenant rents a single room, often with shared facilities. These arrangements provide several advantages for landlords under the new rules:

• Shorter tenancies: HMO properties are less likely to be used for super long-term rentals in the same way as an apartment or a house would be, as tenants tend to move out as they form relationships and start families, thus seeking more suitable living arrangements.
• Multiple rent payers: With several tenants contributing rent for the same property, the risk of non-payment by one tenant is mitigated by the payments from others. This spreads the financial risk, making HMOs a more attractive option for landlords concerned about tenant default.
• High turnover: Since HMOs are typically not conducive to long-term occupancy, landlords are less affected by the new tenancy rules that make it harder to evict long-term tenants. This high turnover allows landlords to adjust rent more frequently and keep a flexible approach to tenant selection.

These factors may lead to an increase in HMO properties, particularly in urban areas where there is high demand for affordable, short-term accommodation. However, this shift could result in fewer family-sized properties or long-term rental options being available, pushing families and couples further out of the rental market.

4. Migration to Short-Term Letting Markets

Some landlords may respond to the Renters’ Rights Bill by exiting the long-term rental market altogether and moving into the short-term letting market, such as Airbnb. Short-term lets are not governed by the new tenancy rules, meaning landlords retain full control over their properties and can avoid the restrictions on rent increases, tenant protections, and eviction procedures.

Airbnb and similar platforms allow landlords to:

• Maximise income by charging higher nightly rates compared to long-term rent.
• Maintain control over their property, as short-term lets provide greater flexibility in managing occupancy.
• Avoid tenant protections such as the inability to evict or increase rent during a tenancy, making the property more liquid and adaptable to market conditions.

This migration could further reduce the supply of long-term rental housing, exacerbating housing shortages in certain areas. Popular tourist locations or urban centres may see a proliferation of short-term rentals, making it harder for local residents to find stable, long-term accommodation.

5. Potential Market Consolidation

As individual landlords exit the market or convert properties to HMOs or short-term lets, we may see a consolidation of the private rental market. Larger corporate landlords or Build-to-Rent (BTR) companies may step in to fill the gap, as they are better equipped to navigate the new regulations and absorb the associated costs. These larger operators are often more accustomed to providing high-standard, professional rental services, but their presence could lead to higher rents across the board due to their profit-driven models.

While this consolidation could improve the quality of rental stock, it may also reduce the variety of rental options available and increase the commercialization of the rental market. Small landlords, who often provide more affordable housing options, may find it difficult to compete with large institutional landlords that can manage regulatory compliance more efficiently.

6. Increased Vigilance and Caution Among Landlords

Given the enhanced tenant protections and difficulty in evicting tenants without cause, landlords may become more cautious in selecting tenants. Although formal discrimination is prohibited, landlords can still exercise indirect forms of selection through credit checks, references, and income verification. By increasing the rigour of tenant vetting processes, landlords may inadvertently be forced to discriminate more against certain groups, such as those with lower incomes, unstable employment, or poor credit histories, as a way to mitigate the higher risks for landlords that the Bill imposes.

This heightened caution could lead to a more competitive rental market, where only the most financially secure and stable tenants are able to secure rental properties. As a result, vulnerable tenants, including those with fluctuating incomes or unconventional employment arrangements, may face much greater barriers to finding accommodation.

What Landlords Can Do

The Renters’ Rights Bill introduces a host of new regulations that could significantly impact how landlords manage their properties. Faced with tighter restrictions on tenant evictions, rent increases, and increased tenant protections, landlords may need to reconsider their strategies for operating within the rental market. Here are several options landlords might explore in response to the new law:

1. Increase Rents

With the introduction of stronger tenant protections, many landlords may choose to raise rents as a preemptive measure to mitigate the risks of non-rent payment and the longer and more expensive eviction processes. 

By setting higher rental prices, landlords can also aim to attract tenants who are more financially secure, potentially avoiding risks associated with tenants who might struggle to pay rent. This strategy could also help offset future limitations on the frequency and amount of rent increases.

2. Apply Higher Levels of Scrutiny to Tenants

Given that landlords will have less flexibility in evicting tenants, they may opt to increase the level of scrutiny when selecting new renters. This could involve conducting more thorough credit checks, asking for detailed employment verification, and reviewing rental history to ensure that prospective tenants meet strict criteria. Although direct discrimination is prohibited by the Bill, landlords can still exercise discretion in choosing tenants based on financial stability and employment status, indirectly filtering out higher-risk tenants.

3. Migrate to House in Multiple Occupation (HMO) Properties

Landlords looking for more flexibility and financial security might consider converting their properties to HMOs. In an HMO, multiple tenants occupy individual rooms within the same property, reducing the risk of a single tenant failing to pay rent. HMOs are typically rented by younger, more transient tenants, so the turnover is naturally higher, making it easier for landlords to adjust rents and manage tenant changes. Additionally, HMOs tend to be shorter-term tenancies, which are less affected by the new eviction restrictions.

4. Switch to Short-Term Lettings Like Airbnb

Another viable option for landlords is to move into the short-term rental market, such as listing properties on Airbnb. Short-term lets are not governed by the new restrictions on tenant rights, meaning landlords retain more control over their properties. This allows them to adjust rental rates frequently, avoid long-term tenancy agreements, and maintain flexibility in managing who occupies their properties. While this may require more hands-on management, the potential for higher rental income could make it a lucrative alternative for some landlords.

5. Exit the Rental Market and Sell Property

For landlords who feel the new regulations make it too difficult or risky to continue renting out properties, selling their property may be the most straightforward solution. Some landlords may not wish to navigate the complexities of HMOs or short-term lets and instead prefer to liquidate their assets and exit the rental market altogether.

If you are considering selling, a quick and efficient option could be working with Property Rescue. We specialise in quick property buying. We achieve speed by buying the property from you directly, for cash. We will buy any residential property even if it has tenants, so you won’t need to evict them.