The Renters (Reform) Bill proposes a shift to a 'single system of periodic tenancies'. Here's what agents and landlords need to know.
The Renters (Reform) Bill is the largest change for the private rented sector in the last 30 years. One of the proposed major changes is to simplify tenancy structures by abolishing fixed-term tenancies (e.g. 6, 12 or 24 month contracts). Instead, all tenancies will be on rolling contracts with no fixed end date.
These terms were an unexpected addition to the Renters' Reform Bill proposals included in the A Fairer Private Rented Sector white paper in 2022 and were further built upon in the bill's 2023 publication.
In October 2023, the government added further clarifications on what this would mean for the student market - a market that is especially reliant on seasons.
- What's the difference between a fixed-term and periodic tenancy agreement?
- How will tenancies change under the Renters (Reform) Bill?
- What protections will there be for landlords?
- Why has the government proposed moving to this single system of periodic tenancies?
- When will the new tenancy system start?
- How will the single system of periodic tenancies affect students?
- What else is excluded from the bill?
What's the difference between a fixed-term and periodic tenancy agreement?
In England, most tenancies in the private rented sector are Assured Shorthold Tenancies (ASTs). These can be either fixed term or periodic:
- A fixed-term tenancy is where a tenant is liable to pay the rent for a predefined period of time - normally six or 12 months. At the end of a fixed-term tenancy, the landlord and tenant can agree to renew it for another defined period of time, the tenancy will move to a rolling, periodic contract, or notice can be served.
Landlords can't use section 21 to evict a tenant during a fixed-term tenancy, but they can use other grounds for possession. A landlord may also use a break clause to allow either party to give notice to end the tenancy early. - On a periodic contract, if a tenant wishes to leave, they would need to give the required notice. This is usually one month, and they would be liable for the rent until this time has passed. Landlords can use section 21 to end a tenancy with 2 months' notice under a periodic agreement.
How will tenancies change under the Renters (Reform) Bill?
The government will move all tenants on ASTs or Assured Tenancies onto a "single system of periodic tenancies". This means that tenants will need to give two months' notice if they wish to leave.
Section 21 will also be abolished under the Renters' Reform Bill, so this will no longer be an option for a landlord to regain possession of their properties. Landlords can instead use strengthened section 8 grounds to reclaim possession - but only after a tenant has been in a property for six months.
What protections will there be for landlords?
Section 8 is being strengthened to allow landlords to be able recover their property, in certain circumstances.
This includes cases of evicting a tenant on the basis of anti-social behaviour, and if a landlord wished to sell their property or allow a close family member to move in.
However, a tenant must have been in a property for six months before this clause can come into force.
Why has the government proposed moving to this single system of periodic tenancies?
The government highlights the cost to landlords of renewing tenancies on a yearly basis as one reason for its decision. The white paper also outlines the inflexible nature of ASTs on a fixed term, which don't allow tenants to easily move if they need to.
Break clauses are one way to currently balance this, yet the white paper says that "tenants may still find themselves locked into unsuitable, unsafe or unaffordable housing" in the interim.
The new system therefore aims to introduce more flexibility for tenants, allowing them to "move when circumstances require them to."
When will the new tenancy system start?
The bill must pass through parliament, so timelines are unclear at this stage. However, the government has proposed a two stage system, as follows:
- Stage one: After the bill has been implemented, any new tenancies, which would have previously been Assured Tenancies or Assured Shorthold Tenancies, will be governed by the new system. This means all new tenancies after the Bill is introduced will be periodic.
- Stage two: To avoid a two-tier tenancy system, all existing tenancies will transition to a new date, which will be appointed by the Secretary of State. This date has not yet been revealed, but the A fairer private rented sector white paper, published in 2022, indicated this would take around a year.
How will the single system of periodic tenancies affect students?
The Renters (Reform) Bill shares that all purpose-built student accommodation will be exempt from these changes "as long as the provider is registered for government-approved codes."
This exception will still enable universities to let accommodation to visitors and non-students during the academic holidays - such as conference guests during the summer months.
Private rented student properties were expected to convert to the new system of periodic tenancies. However, this raised concerns among landlords and letting agents due to the cyclical nature of student renting.
In October 2023, the government stated its commitment to protect the student market - recognising the "cyclical model is critical for landlords' business models" to ensure a "timely and robust supply" of student accommodation.
Although private student housing will still be under periodic tenancies, the government has said its commitment to set a new ground to help with the yearly cycle of short-term tenancies to allow students to sign up for a property in advance.
What else is excluded from the bill?
As well as purpose-built student accommodation, the government has confirmed that these changes will not apply to temporary accommodation or supported housing.
This article is intended as a guide only and does not constitute legal advice. For more information, visit gov.uk.
