UK Tenants’ Rights Act 2024: what you need to know

The Tenants’ Rights Act 2024 proposes important changes to the UK rental market, affecting both the build-to-rent and purpose-built student accommodation (‘PBSA’) sectors.

On September 11, 2024, the first reading of the British Tenants’ Rights Act took place in the House of Commons. The Bill is a follow-up to the Renters (Reform) Bill 2023 introduced by the previous UK Government and, if successfully passed, will represent a number of significant changes relevant to the build-to-rent and privately rented sectors. Some key takeaways from the bill include:

Abolition of fixed-term lease

Insured short-term lets (“AST”), which have long been a mainstay of the rental market, will be abolished. ASTs will be replaced by periodic leases which will continue for an indefinite period unless validly terminated. Tenants will be able to terminate the periodic lease agreement with two months’ notice, in any written form. Landlords will only be able to terminate the contract for specific specified reasons (see below).

Abolition of no-fault evictions

Section 21 of the Housing Act 1988 currently allows landlords to evict tenants on two months’ notice (at the end of the contract period) without having to give any other reason – i.e. no-fault eviction. The bill would abolish no-fault evictions and instead require landlords to prove grounds for eviction before a property can be repossessed.

Arrears basis

The bill will enable the termination of periodic tenancies where a tenant is in arrears, but landlords will have to give four weeks’ notice in writing (currently two weeks) and tenants must be at least three months or 13 weeks in arrears (currently two months or eight months). weeks). As a result, tenants can be expected to accrue at least four months of arrears before the landlord can end the lease.

Rent increases

The bill introduces new regulations regarding rent increases; landlords will be able to increase the rent only once a year and at the market level. Tenants can challenge any increase in the Tribunal and no new rent will be payable until the decision is made. Time will tell how long it will take for the Court to make such determinations.

Other changes

The bill will introduce other changes that are not included in this summary Alarmsuch as the introduction of a new ombudsman and the extension of ‘Awaaba Law’ to the private sector (a law requiring landlords to remove serious health hazards within a set timeframe).

Some parts of the bill, in particular its application to PBSA, remain unclear. The explanatory notes suggest that since PBSA does not guarantee tenancy, the PBSA sector will be exempt “as long as suppliers are registered to government-approved codes”. However, many PBSA providers are not registered and currently grant AST credentials to their students. Therefore, it is uncertain whether PBSA leases will be generally exempt or not. This issue may be clarified during the government’s consideration of the bill.

Introducing the bill is a priority for the new Labor government and we can expect it to become law in the near future. For now, however, the bill is subject to amendments by the House of Commons and the House of Lords. We will continuously analyze the development of the situation as the government works on the bill and provide detailed information Comment will be published after the project enters into force.