Report stage commences for the Renters Rights Bill

The Renters Rights Bill marches on, today being the commencement of the House of Lords Report Stage, which will take place on the 1, 7 and 15 July. During the report stage, the marshalled list of 126 amendments (HL Bill 103—I and HL Bill 103—I(a)) will be considered and debated in detail before the Bill then moves on for a third (and final) reading. Thereafter, and following hot on the heels of the Wimbledon finals, there may be a period of Parliamentary “Ping Pong”, where the Bill is physically walked from one house to the other in a process where the provisions of the Bill must be agreed by both the House of Commons and the House of Lords.

Commentators are on tenterhooks to see whether the third reading and ping pong match can all be concluded before 22 July, when the House of Commons break for summer. If this can be achieved, when can we expect Royal Assent? Perhaps early September, with the legislation most likely then coming into force in early 2026.

What then of last week’s government’s amendments to the Bill, that caught our eye?

The introduction of transitional rules in respect of rent in advance

This is (potentially at least) good news for both landlords and their agents who manage letting portfolios. As presently drafted, landlords are prohibited under the Bill from demanding that their tenant pay rent in advance (we are familiar under the current system with tenancy agreements requiring six monthly or quarterly rental payments in advance from tenants). The government’s recent amendments seek to introduce a transitional arrangement that will apply for all existing tenancy agreements in force on the “commencement date” of the Renters Right Act (possibly early 2026). The provisions will allow landlords to demand payment of rent in advance under existing tenancies, until that fixed term tenancy ends. This will mean that amendments to terms of existing tenancy agreements together with changes to rental demand and collection practices for these tenancies, will not be necessary.

Pet insurance

The government’s amendments to pet insurance has caused quite a stir. The Bill as drafted provides that during the time that a tenancy is in place, and for the duration that a pet is at a dwelling, the tenant must have in place insurance that covers the risk of pet damage to a level that is reasonable having regard to the pet and the dwelling, or otherwise that the tenant will pay the landlords reasonable costs of having in place insurance that will cover the risk of pet damage in respect of the time the pet is at the dwelling. The intention had always been to give landlords comfort that the responsibility of preventing damage or resolving any damage caused to a landlord’s property by a tenant’s pet, would rest firmly with the tenant. Without any indication as to why, the government has however proposed that the entire section of the Bill relating to the indemnity and insurance for pets be removed. This has however been quickly followed by Lord de Clifford proposing, by way of supplementary note to the marshalled list of amendments, a new section be inserted into the Bill, allowing for a pet damage deposit to be charged. This would provide as an implied term of a tenancy that where at the time of the landlord consenting to the tenant having a pet at the premises, the landlord may inform the tenant that the payment of an additional pet damage deposit is required as a condition of the consent, which the tenant must comply with. The pet damage deposit can then be used to make good pet damage, the sum of the deposit being the equivalent of up to three weeks rent.

Introduction of regulations to supplement s13 Housing Act 1988

Under the Renters Rights Bill, landlords will only be able to increase rent by following the statutory procedure as set out at s13 Housing Act 1988. Given that there is little risk to a tenant of challenging a landlord’s demand for an increased rent before the First Trier Tribunal, it is likely that the Tribunal will face a significant and overwhelming surge of applications following the new legislation coming into force which will lead to inevitable process delays. This is of concern to landlords because where an application is made by a tenant to challenge the landlord’s proposed rental increase, the new rent as eventually determined by the Tribunal will not be backdated and due from the date as originally demanded in the landlords’ notice. Instead, the new rent will apply from the date of the Tribunal’s determination. This could result in landlords facing rents being artificially capped for many months whilst an application makes its way through the clogged judicial system. The recent government amendments to the Bill, do not seek to make any changes to the statutory process or judicial procedure but rather propose to give power(s) to the Secretary of State to amend the effective date of the rent increase by subsequent secondary regulations which may provide a statutory mechanism for rental increases to be backdated to the date as demanded in the landlords’ notice.

Notice to quit for joint tenancies

Currently, the Bill provides that a tenant can terminate their tenancy at any time after having given their landlord two months’ notice and this applies to joint tenancies as well as sole tenants. In the case of a joint tenancy, a notice to quit given by one tenant will bring the tenancy to an end for all tenants. The Renters Rights Bill also makes provision for a landlord and tenant to agree between themselves, a notice period less than two months. The government amendment proposes that in the case of a joint tenancy; all joint tenants must agree to a notice period less than two months. Similarly, where a joint tenant wants to withdraw a previously served notice to quit, they may do so with the agreement of all joint tenants.

Further rent increase restrictions

Lord Hacking has proposed that where a landlord has obtained possession of their property on grounds that the property is either to be occupied by the landlord or a family member, or where the property is to be sold on the open market, in the event that the landlord is unable to place a family member in the property or sell on the open market as anticipated, the landlord will be unable to raise the rent for the property for twelve months from the date of the notice to quit as served on the original tenant.

The next two weeks will be critical as the amendments to the Bill will be carefully discussed in advance of its third reading. We will be keeping a careful eye on Parliamentary commentary and will continue to update you on developments as they unfold.