Renters (Reform) Bill and its rogue landlord provisions
Sam Kharabanda Groom considers three parts of the Renters (Reform) Bill (“the Bill”) which seeks to tackle issues that arise with rogue landlords: the introduction of a mandatory landlord redress scheme, of a mandatory landlord database, and of financial penalties for unlawful eviction or harassment.
The Bill, introduced to Parliament on 17 May 2023, is said to deliver on the government’s commitment to “bring in a better deal for renters”. Among other policy goals, the parts of the Bill discussed in this article aim to provide transparency for tenants and accountability for landlords. It is envisaged that the landlord redress scheme, and to a lesser extent the landlord database, will be governed by regulations. This means that the statutory framework covering these areas is quite bare. The scheme of financial penalties for unlawful eviction or harassment is, however, set out in more detail in the Bill.
Landlord redress scheme
Part 2, Chapter 2 of the Bill (clauses 24–31) provides for the possibility of landlord redress schemes. The Bill would not create a scheme as such, but would empower the Secretary of State to make regulations requiring a residential landlord to be a member of a landlord redress scheme (although this would not prevent landlords joining such a scheme voluntarily). As such, what is in the Bill is a framework rather than a full description of how a redress scheme would work.
A landlord redress scheme (“LRS”) is defined as a scheme providing for complaints by (or on behalf of) prospective, current or former residential tenants against members of the scheme. Complains are to be investigated and determined by an independent individual. An LRS may either be administered by the Secretary of State, or approved by the Secretary of State but administered by another body. If the Secretary of State makes regulations requiring a residential landlord to be a member of a landlord redress scheme, regulations must be made that set out conditions which are to be satisfied before a scheme is approved or designated.
The main characteristics of an LRS under Chapter 2 are as follows:
- Regulations may require landlords to register as members of an LRS before marketing a property for residential tenancy, and prohibit landlords from marketing a property for residential tenancy if they are not members of an LRS. Members may also be required to remain on the register after they have ceased to be a residential landlord.
- An LRS must provide for the investigation of complaints about non-compliance with any official code of practice for residential landlords, and for the power to require non-compliant members to apologise or explain, pay compensation, or take other actions in the interest of the complainant.
- An LRS may charge fees for membership.
- A local housing authority may impose a financial penalty on a person who breaches regulations by, for example, not becoming a member of an LRS when required to do so. That penalty in the first instance may be up to £5,000. If a penalty is imposed and the offending conduct does not cease, or further offending conduct takes place, then a penalty of up to £30,000 may be imposed, or the person may be convicted of an offence triable summarily only and punishable by a fine.
- Regulations may permit the administrator of an LRS to have a determination that it has made enforced as if it were a court order.
While the broad nature of an LRS can be seen from the Bill, exactly how they would work, and crucially when the rules would come into effect, will depend on regulations to follow the enactment of the Bill.
Part 2, Chapter 3 of the Bill (clauses 32–51) requires the Secretary of State to set up, or have set up, a database containing details of current and prospective residential landlords and residential rental properties. The database would be, or would support, the privately rented property portal (or property portal for short) to which the government has previously referred and which would provide information and guidance to both landlords and tenants.
The key features of the residential landlord database as outlined in Chapter 3 are as follows:
- The database may be operated by the Secretary of State or by someone appointed, and possibly paid, by the Secretary of State.
- The database would contain entries for current and prospective residential landlords and current or prospective residential rental properties. Each person or property with an entry on the database would be allocated a unique identifier code. It would also record any relevant banning orders, convictions, or financial penalties imposed on anyone.
- The Secretary of State may make regulations governing how entries are to be made on the database, including a requirement to pay a fee to be entered on the database.
- A person may not market a dwelling for the purpose of creating a residential tenancy if either the landlord or the dwelling does not have an active entry on the database. Advertisements must provide the unique identifier for both the landlord and the dwelling.
- A landlord is under a duty to ensure that both they and their property have an active entry on the database, but the Secretary of State may make regulations to reassign or negate this duty in some circumstances.
- Local housing authorities must enter on the database any relevant banning order, conviction or financial penalty imposed or secured by them, and may do so if the order, conviction or penalty was secured by someone else. This may only be done once the time for appeal has expired and any appeal has been concluded.
- The Secretary of State may make regulations authorising or requiring local housing authorities to enter on the database any offence, penalty or regulatory action in respect of someone who was at the time a residential landlord or prospective residential landlord.
- The Secretary of State may make regulations governing how the public must be able to access the database. Lead enforcement authorities, local housing authorities, local weights and measures authorities, mayoral combined authorities and the Greater London Authority must be able to access the database.
- A local housing authority may impose a financial penalty on a person who advertises a dwelling for residential tenancy without the property and the landlord both being registered on the database. That penalty in the first instance may be up to £5,000. If a penalty is imposed and the offending conduct does not cease, or further offending conduct takes place, then a penalty of up to £30,000 may be imposed, or the person may be convicted of an offence triable summarily only and punishable by a fine. Further, if a person knowingly or recklessly provides materially false or misleading information to the database operator, they commit an offence and may be subject to a financial penalty of up to £30,000.
Like with the LRS above, much detail is left for the Secretary of State to determine through regulations once the Bill has been enacted. We may, however, be able to get a sense of how this might operate by looking the documents, information and public register available through Rent Smart Wales. Rent Smart Wales, a service hosted by Cardiff Council, was set up following the enactment of the Housing (Wales) Act 2014 to assist those who let or manage properties for rent in Wales to comply with their duties under the 2014 Act. Under the 2014 Act, a licensing authority, designated by the Welsh Ministers, had to establish and maintain a register for its area containing information set out in Part 1 of Schedule 1 of that Act. In 2015, the Welsh Ministers designated Cardiff Council as the licensing authority for the whole of Wales.
Financial penalties for unlawful eviction or harassment
Part 1, Chapter 3 of the Bill (which is composed of only clause 22) introduces a scheme for the imposition of financial penalties by local housing authorities as an alternative to prosecution for unlawful eviction or harassment. It introduces a new section 1A of the Protection from Eviction Act 1977 setting out the basics of the scheme, a Schedule A1 to the 1977 Act providing for procedure, and a subsection 1(7) providing that a person may not be convicted of a section 1 offence if a financial penalty has been imposed in respect of the relevant conduct.
The scheme under the proposed section 1A is similar to previous schemes such as under section 249A of the Housing Act 2004. In summary:
- the local authority must be satisfied beyond reasonable doubt that an offence under section 1 of the 1977 Act has been committed;
- no penalty may be imposed if the person has already been convicted in respect of the same conduct, if criminal proceedings are still ongoing in respect of the same conduct, or if the person has been found to be not guilty of an offence in respect of the same conduct;
- the penalty may not be more than £30,000, although the Secretary of State may amend this figure to reflect inflation; and
- the Secretary of State may give guidance to local authorities as to how to exercise these functions, which authorities must have regard to.
The procedure, to be contained in a new Schedule A1, again, is familiar when you look at Schedule 13A to the 2004 Act. There are notices of intent, representations, final notices, appeals, and recovery of unpaid penalties. The differences in the new procedure are:
- both the notice of intent and the final notice must state the date on which that notice is given;
- an appeal must be brought within 28 days of the giving of the final notice (this is not in Schedule 13A but already applies to Housing Act 2004 cases by rule 27(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013); and
- a local authority is expressly permitted to put the proceeds of a penalty towards meeting the costs and expenses incurred in either carrying out any of its enforcement functions either under the 1977 Act or generally in relation to the private rented sector (this power already exists in other schemes such as in the Tenant Fees Act 2019).
By clause 67(10)(a) of the Bill, clause 22 will not take effect upon the enactment of the Bill, but on a day specified by the Secretary of State in regulations.
The introduction of financial penalties for unlawful eviction should provide local housing authorities with a more efficient means of enforcement than prosecution. Acorn has called these provisions “vitally important”. In the context of other parts of the Bill seeking to abolish assured shorthold tenancies and fixed-term assured tenancies, the implication is that the tightening of opportunities for landlords to obtain possession could cause a rise in unlawful evictions and harassment by landlords seeking a shortcut. Further, it appears that these penalties could be imposed in addition to any rent repayment order secured by a tenant in respect of unlawful eviction, meaning that a landlord who has committed an offence could be on the hook for two fines, one punitive and one compensatory, as long as criminal proceedings have not been pursued.