The Renters (Reform) Bill – What does it mean for charities?

The government describes the Renters (Reform) Bill (the Bill) as the "biggest shake-up of the private rented sector in 30 years". Introduced to Parliament on 17 May 2023, the Bill intends to fulfil the 2019 Conservative manifesto commitment to abolish 'no fault' evictions in England.

The Bill seeks to find the balance between remedying the precarious lack of security that England's eleven million private renters face, whilst also celebrating the overwhelming majority of England's roughly two million responsible landlords by ensuring that they can quickly repossess their property where they have a legitimate reason for so doing.

What key points should charities be aware of?

The changes introduced have the potential to affect a broad range of stakeholders operating within the private rented sector. The charity sector is no exception, given its historic reliance on the flexibility afforded by section 21 evictions in both their capacity as landlords and beneficiaries of gifts in wills.

Previously, charities have made use of 'no fault' evictions to achieve vacant possession in three key areas:

1. As providers of social housing including supported housing and homelessness provision.

2. As landlords, where individuals had been provided with accommodation by the charity due to their employment, which has since been terminated. In this situation, vacant possession can be required for a number of reasons, for example in order to ensure the incoming employee can be appropriately accommodated by the charity.

3. As beneficiaries under a will, where charities have been bequeathed a gift of a specific property or are the residuary beneficiaries of an estate containing a property. In these circumstances, selling the property without a tenant in occupation is often preferable in order to receive the greatest possible return on the sale of the property and maximise the value of the estate.

Key reforms

The reforms the Bill seeks to introduce which are worthy of particular note for the charity sector are as follows:

1. Abolishing section 21 'no fault' evictions.  The government believes that the lack of security tenants face as a result of 'no fault' evictions has left them feeling unable to enforce their rights, resulting in unreasonable rent increases and an increasing number of homes which do not meet basic standards of decency.

2. Introducing more comprehensive possession grounds so landlords remain able to recover their property despite the abolishing of section 21 Notices. These grounds include circumstances where landlords wish to sell the property or where the property was let to the tenant in consequence of the tenant's employment, and in cases of homelessness, supported housing and other need as referred to further below.

3. Introducing a new Private Rented Sector Ombudsman which will provide fair, impartial and binding resolutions to a multitude of issues. All private landlords must join the Ombudsman and the government expects that this will ensure issues are resolved by in quicker, cheaper and less adversarial method than in the current court system.

Are the reforms a cause for concern for charities?

Since their introduction in 1988, section 21 'no fault' evictions have allowed landlords to end a tenancy without establishing fault on the part of the tenant. This form of eviction is to be entirely abolished, with the result that landlords will only be able to evict a tenant in particular circumstances set out in the legislation. 

Whilst this development may appear to swing the pendulum of control overly towards tenants, the Bill also ensures that landlords' other rights of possession are strengthened. New mandatory grounds for possession have been introduced which allow landlords to recover their properties when they need to and these will assist charities in the key scenarios referred to above. 

The following list details the most significant reforms to the grounds of possession which are likely to be useful to charities. Landlords are entitled to regain possession in the following circumstances:

When will Section 21 be scrapped?

At its first introduction to Parliament, Housing Secretary Michael Gove stated that he hoped to see the Bill in place "as quickly as possible". However, it is still in its infancy, currently undergoing its second reading in the House of Commons and so Royal Assent is unlikely to be received before Spring 2024.

The government has confirmed that at least six months' notice will be given ahead of the first implementation date, after which all new tenancies will be periodic and governed by the new rules. All existing tenancies will transition to the new system on the second implementation date, with the government further confirming that there will be at least twelve months between the first and second date. It is worth charities considering their tenancy arrangements now to decide if any changes should be made ahead of the bill being passed.