As the Renters’ Rights Bill proceeds through Parliament, this is one of a number of articles we are publishing looking at the proposed changes. The article addresses reform of the English private rented sector only.  

A stated aim of the Renters’ Rights Bill is to re-balance the landlord/tenant relationship in favour of renters.   Detailed enforcement provisions have been included in the Bill. 

Under the Bill: 

• A new Private Rented Sector Ombudsman will be introduced
• Joining the Ombudsman service will be mandatory for landlords, who will also have to pay a “small annual fee” which has not yet been determined
• The Ombudsman service will be free for tenants to use 
• Tenants can escalate complaints about their landlord to the Ombudsman
• Landlords and their properties will have to be registered on a new Private rented Sector Database - and a fee to do so will be payable. The government has not yet announced the fee
• Local councils will have enforcement and investigation powers. Both the Ombudsman and local councils will be able to levy civil penalties.
• Non compliant landlords face sizable civil penalties - £7,000 for a first or minor non-compliance, up to £40,000 for serious or repeat offenders
• Rent repayment orders are being strengthened and extended - the maximum amount of rent a landlord can be ordered to repay will double to 24 months' worth
• Civil penalties and rent repayment orders are not mutually exclusive - the Bill envisages that landlords who commit offences under the Bill and are convicted or receive civil penalties in respect of them will also have to repay 24 months' worth of rent to the tenant.

Will the enforcement measures work? 

The majority of landlords will operate in accordance with the Bill if enacted, simply because it is the law.   How effective the Bill’s enforcement measures are in respect of the small minority of hard cases is likely to be directly impacted by:

• how well funded the enforcement bodies are
• whether local councils have the right people in place as well as the right funds as some of the enforcement and investigatory functions they are expected to perform will need specific training and skill sets
• whether the Ombudsman scheme is able to run simply and efficiently, as some ombudsman-type schemes can be unnecessarily complex.  

The government is making efforts to address the resource issue by mandating landlord buy-in and enabling councils to retain penalties they levy.  Recognising that retained penalties may not provide sufficient council funding, the government has said that, where necessary, the net additional costs that fall on local councils as a result of the proposed reforms will be “fully funded”.  Whether that is practicable remains to be seen. 

Any unintended consequences? 

Potentially some of these developments could lead to higher rents.  The charges that will levied against landlords for registration and for the Ombudsman scheme need to be  sufficient to fund the costs of running the registry and scheme.  They are a landlord cost and cannot be directly passed on to the tenant as an expense, due to the Tenant Fees Act 2019.  But that doesn’t prevent a trickle-down effect on rent - increasing landlords' costs in general terms leads to higher rents.  

Items in this series:

Renters' Rights Bill 1: Residential tenancy changes proposed by the Bill, Maddie Dunn

Renters' Rights Bill 2: How to obtain possession if section 21 notices are abolished?, Maddie Dunn

Renters’ Rights Bill 3: Children, Benefits and Pets, Maddie Dunn