This is the next article in our short series, aimed at understanding the important legislative reforms put forward by the Renters’ Rights Bill, where we discuss the proposed reforms to rent review provisions and Rent Repayment Orders.

Rent Review Reforms

The intention of the Bill in regulating rent reviews is to prevent landlords from making unfair rent increases, and to enable tenants to challenge such increases without risking being evicted from their home.

The Bill proposes to make the following changes:

  1. Annual rent increases only. Landlords will only be able to raise rent once per year, in line with the open market rate.
  2. Mandatory two-month notice for rent increases. Landlords will have to provide tenants with two months’ notice before any rent increase takes effect.
  3. Tenants will have a right to challenge rent increases. If landlords and tenants cannot agree on the proposed rent increase, tenants will have the ability to challenge the increase at the First Tier Tribunal (a specialist court). The Tribunal will not have the authority to impose a rent in excess of the rent sought by the landlord.
  4. Rent increases cannot be backdated. The rent review will only take place from the date of the First Tier Tribunal’s determination as above. This is to prevent landlords retrospectively charging tenants.

The proposed abolition by the Bill of Assured Shorthold Tenancies makes it more likely that tenants will feel more comfortable in challenging rent increases, because landlords will no longer be able to end tenancies on the basis of ‘no fault’. Meanwhile, landlords will have to ensure that they adhere to more standardised procedures for adjusting rent, and that any adjustments are reasonable, otherwise, they run the risk of rent being determined outside of their control.

Rent Repayment Orders

A Rent Repayment Order (“RRO”) is an order of the court which requires a landlord who has committed a specific offence to repay rent. Currently, a RRO can be sought for various offences (such as illegal evictions or having control of/managing an unlicensed property) and can only be made against an immediate landlord (i.e., the person or company who receives the rent). Tenants, and Local Authorities in certain circumstances, can apply for a RRO to the First Tier Tribunal and the maximum penalty that can be ordered is up to 12 months’ rent.

The Bill proposes to broaden the scope and impact of a RRO so that claims can be brought against superior landlords (e.g., the property owner), as well as company directors in their personal capacities, where the landlord of the property is a company and an offence has been committed with the director’s consent or complicity.

The Bill also proposes to widen the range of offences covered by a RRO, such as landlords misusing a possession ground or providing false information to the Private Rented Sector Database. If landlords commit an offence, the Bill also seeks to increase the maximum penalty for doing so to up to 24 months’ rent, with landlords who are “repeat offenders” potentially being subject to the maximum repayment penalty.

The proposed reforms to Rent Repayment Orders are clearly quite troublesome for landlords. Landlords will have to be particularly mindful of their own compliance, as well as the compliance of others who act on their behalf, with regulations to avoid substantial financial penalties.

Stay tuned for our next and final article in the series which concerns how the Bill is proposed to be regulated and enforced.

Read the previous articles:

  1. Navigating the Renters’ Rights Bill
  2. Renters’ Rights Bill: The changes at a glance
  3. Renters’ Rights Bill: Obtaining possession
  4. Renters’ Rights Bill: Private Rented Sector Database and Decent Homes Standard

 

The above article is for illustrative purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any part of the information given.

Furthermore, the information contained is accurate and up to date as of the date of publication. Readers should be aware that legislative frameworks may have been amended since the original date of publication.