5 ways the Rental Reform Bill could save you money

5 ways the Rental Reform Bill could save you money

author: Helen Fox

By Helen Fox

With the average rent in the UK now costing in excess of £1,000 per month, many tenants may be questioning whether this represents good value for money.

Research by the government has found that sadly, for many private tenants, it doesn’t. 21% of privately rented homes fell short of established “Decent Home Standards” in 2021, meaning tenants were – and probably still are – spending a substantial portion of their income on rent for a home that requires modernisation or significant repair work, and in some cases may be a health and safety risk.

The Rental Reform Bill aims to remedy this as well as other issues with the private rental sector that could be costing tenants unnecessarily. While the Bill is yet to come into law, the government have released a white paper on what we can expect.

We’ve rounded up the aspects of the Rental Reform Bill that could help save you money, so you can see what’s in store.

Please note: the Rental Reform Bill will only cover the private rental sector in England. Different laws are in place in Northern Ireland, Scotland and Wales.

Extending the Decent Homes Standard

One of the main things the Rental Reform Bill will do is officially extend the Decent Homes Standard to the private rental sector. This already applies to social and council housing, but it’s not currently a legal requirement that privately rented properties meet the standard. The Decent Homes Standard requires landlords to ensure homes they rent:

  • contain no serious health or safety hazards
  • are in a reasonable state of repair
  • have relatively modern facilities
  • don’t get too hot or too cold

A property that doesn’t meet this standard is not just poor value for money rent-wise. It could be costing the tenant more in utility bills, and they may also be spending their own money on repairs and renovations that are their landlord’s responsibility - the government white paper reports that some tenants have paid for repairs themselves when their landlord was slow to make arrangements. But, that’s not good at all!

How could this save you money?

Extending the Decent Homes Standard to privately rented properties means that renters can rest assured that they’re getting a good quality of home for their money. If you're not, then you may be able to negotiate a discount on your rent until any issues are resolved. You may also save money by not paying for repairs and other work that are your landlord’s responsibility. We’ll talk about why this is and how it’ll work next.

The Private Renters’ Ombudsman

A new Private Renters’ Ombudsman will be created as part of the Rental Reform Bill. This will be separate to the existing Housing Ombudsman Service, which can only help private renters if their landlord has membership with them, and most don't.

When the Private Renters’ Ombudsman is set up, membership will be mandatory for all private landlords.

The Private Renters’ Ombudsman will provide a quick and cost-effective way to come to a binding resolution on disputes, without having to go to court. This will benefit both tenants and landlords. But, where it’ll be particularly useful for tenants is in challenging poor practice by landlords to obtain a rent repayment order (RRO) and get some of the rent they’ve paid refunded to them.

Currently, the circumstances under which a tenant can obtain an RRO are limited. But, under the Rental Reform Bill, these circumstances will be expanded to include where a property doesn’t comply with the Decent Homes Standard. With so many properties falling short of this standard, this could mean a large number of people are able to get an RRO and be refunded some of their rent.

How could this save you money?

Because the Private Renters’ Ombudsman will offer an alternative to court to settle disputes you may have with your landlord, you’ll be able to avoid potentially expensive court fees if you end up in this situation.

You may also find that, as failing to comply with the Decent Homes Standard becomes a reason for an RRO to be granted, your landlord becomes much quicker to act when repairs are needed. If they’re quick to organise repairs, then you won’t need to shoulder the responsibility to pay, so will save money.

If your landlord doesn’t become quicker to sort out repairs, then you may be able to use the Private Renters’ Ombudsman to obtain an RRO. This will enable to you to get rent refunded for the time you were left to live in a home that didn’t meet the Decent Homes Standard. How exactly this will work remains to be seen, but could mean getting hundreds, or even thousands of pounds back if your claim is successful.

The end of blanket bans

Seeing a property advertised as “No DSS”, “No benefits” or “Working professionals only” is a sign that the landlord has banned a certain group of people from renting from them.

Such bans limit the rental options available to people who belong to these groups. They may be forced to live in a non-decent home, or to pay a higher rate of rent that’s less affordable. They might also have to live far away from family, friends and schools to find a property that’s safe, affordable, and suits their needs.

The Rental Reform Bill will make it illegal for landlords to apply a blanket ban on renting to people who:

  • receive benefits
  • have children
  • have pets

At the same time, the bill will provide more support to landlords who rent to people who they may have previously banned, so both sides will benefit from the changes that are coming. The Rental Reform Bill will also give tenants the right to ask to have a pet in their property, and the landlord cannot unreasonably refuse. 

How could this save you money?

These changes should give more people access to a wider choice of affordable rental properties. They may also be able to move closer to their family and friends or to their children’s schools. So, not only could you save on rent if this applies to you, you may also be able to cut other costs like travel and childcare to save money.

The Rental Reform Bill, combined with laws already in place like the Tenant Fees Act, should prevent landlords from imposing other fees like bigger deposits or rent paid up front to dissuade people they’d prefer not to rent to. However, as part of the Rental Reform Bill, the Tenant Fees Act will be expanded to include pet insurance as a reasonable fee. This will allow landlords to require that pet owners pay for insurance that covers property damage that their pet may cause. Depending on the policy you choose, this could outweigh any other savings you get from cheaper rent or other reduced costs.

Challenging rent increases

The Rental Reform Bill will change the way landlords can increase the rent on their properties. Under the Bill, a landlord will only be able to increase rent once per year, and with at least two months’ notice.

On top of this, the Rental Reform Bill will also outlaw the use of rent review clauses in tenancy agreements. These clauses can be used to lock tenants into automatic rent increases that may not always reflect the market rental value of the property.

If a tenant feels their landlord is suggesting a disproportionate or unjustifiable rent increase, they will be able to challenge it through the First-tier Tribunal to make sure that any rent increases they accept are fair and justified.

How could this save you money?

By limiting how often a landlord can increase rent on their property to once per year, changes to rent payments should become predictable for tenants. The increased notice period required will also allow you more time to consider your options and negotiate with your landlord to minimise the increase. This policy may not save you money, but will allow you to plan your finances and budget for annual rent increases, so that nothing comes out of the blue.

Abolishing Section 21 “no fault” evictions

Section 21 refers to one of the sections of the Housing Act 1988 that lays out the circumstances in which a landlord can evict their tenants. Under Section 21, a landlord can evict their tenants with at least 2 months’ notice, provided the fixed term of their tenancy agreement has expired. They don't have to give a reason for the eviction, which is how this type of eviction got its nickname: the "no fault" eviction.

The government believe that "no fault" evictions may be causing some tenants to sit on issues they have with their landlord, like unreasonable rent increases, or failing to make essential repairs, because they worry the landlord may evict them rather than address their concerns.

The Rental Reform Bill will introduce a new, simpler system for arranging tenancy agreements that will replace existing Assured Tenancy and Assured Shorthold Tenancy agreements, abolish Section 21 evictions, and retain the benefits of Assured and Assured Shorthold Tenancies, like flexibility to leave at relatively short notice. It'll also make both tenants’ and landlords’ rights and responsibilities easier to understand.

Getting rid of Section 21 won’t make evictions impossible. But, landlords will only be able to evict a tenant in reasonable circumstances that will be set out by law.

How could this save you money?

The government’s hope is that by abolishing “no fault” evictions, renters will feel empowered to challenge their landlord, ask them to pay for repairs, and even take them to tribunal or seek RROs to get money back. If this is the case for you, then you could save or recoup hundreds of pounds.

The end of Section 21 also means that renters should be able to move home less often, and on their own terms. While this may not save you money directly, it will make it less likely that you’ll need to fork out for a deposit or moving fees – which can cost well over £1,000 – when you weren’t expecting to.

The new, simpler tenancy structure will also allow tenants to leave poor quality homes without remaining liable for the rent. This could save you from paying double rent if you do need to move mid-tenancy because of maintenance or health and safety issues with your home.

 

Next, read up on how your rights and responsibilities as a tenant could cost you money.

Disclaimer: All information and links are correct at the time of publishing.

author: Helen Fox

By Helen Fox

5 ways the Rental Reform Bill could save you money 5 ways the Rental Reform Bill could save you money