When will it come in?
The Renters Reform Bill is now in its final stages before becoming law. The Bill will likely come into force before the General Election as:
- It is a legacy piece for the Secretary of State
- Labour will not obstruct its passage
- The Bill is ready – there is a concern that, if there is a change in government, Labour will be able to claim success for this legislation by implementing it in the first hundred days after it had been promised for years by the current Conservative government
A HUGE number of new Statutory Duties
Section 96 – “Enforcement by local housing authorities: general duty” imposes statutory duties on local authorities to issue a Civil Penalty capped at £5,000 in the first instance, then rising to £30,000, every time the following offences/breaches of law are discovered:
- Discrimination against benefits recipients
- Discrimination against families with children
- Failure to comply with the new Decent Homes Standard (see underneath)
- Breach of a Prohibition Order
- Not being a member of the landlord redress scheme
- Private Rented Sector Database offences (not being registered, not having a property registered, registering false information)
- Unlawful Eviction or Harassment (PFEA 1977) – (note that a prosecution can be pursued instead for this offence. A Civil Penalty for this offence starts with a £30,000 cap)
- Giving a fixed-term tenancy agreement
- Not giving all the required tenancy terms in writing
- Using a ground of eviction not listed in the tenancy agreement
- Telling a tenant to leave using anything other than the most up-to-date correct eviction notice
- Abusing the new no-fault grounds (selling, moving landlord’s family into the property)
The Decent Homes Standard will likely, as a minimum, impose a duty to issue a Civil Penalty whenever a Cat 1 hazard is observed. Each Cat 1 hazard will have its own Civil Penalty. Landlords can pre-emptively register their property on an exemption register if a restriction prevents the property from being free of Cat 1 hazards (such as being a listed building).
What do the new statutory duties mean for local authorities?
In 2022/2023, 1651 Civil Financial Penalties were levied by 317 local authorities. To comply with this statutory duty, there will need to be 30,000 – 50,000 CPNs per annum.
Local authorities will need to implement efficient and streamlined Civil Penalty policies and embrace a way of working that is centred around Civil Penalties rather than informal action.
Criticisms will be levelled at local authorities where discretion is retained over whether to carry out formal enforcement for more severe offences such as operating or managing an unlicenced HMO or non-compliance with an Improvement Notice, when they have to issue a CPN where the landlord breaches the law less severely, such as listing a property for let when they are not yet registered with the landlord redress scheme.
Notably, many of the new breaches have no reasonable excuse defence, which means that carrying out enforcement should not be too resource-intensive if CPN policies are fit for purpose and Notices are drafted swiftly. Please get in touch if you would like to use the free 10-minute CPN Generator.
Justice For Tenants provides free support for local authorities to update CPN policies and provide free tools and training to help local authorities streamline CPN processes to meet the duties the Renters Reform Bill will impose. Please get in touch with Al McClenahan at amcclenahan@justicefortenants.org
Mandatory Reporting of enforcement actions to central government
Section 99 – “Duty to report” Requires all enforcement action for the new breaches and offences above to be reported to central government. The reported data will highlight local authorities failing to comply with the new Statutory Duties.
Funding for these new duties
It is unclear what funding will be provided, and to what extent there will need to be bidding for the funding. A significant amount of the funding for these new burdens will likely come from the revenue recovered from Civil Financial Penalties. JFT will set up a non-profit solicitors firm to assist local authorities in enforcing unpaid Civil Penalty Debts in the second half of 2025. The current collection rate for Civil Penalties nationally is 47.3%.
It may be problematic if legal teams do not have the resources to carry out debt enforcement action cost-effectively for the massive increase in civil penalty debt.
Changes to s.72 and s.95 of the Housing Act 2004
It can be challenging to prove that someone is a “person having control” or “person managing” an HMO or house.
Section 94 – “Unlicensed HMOs and houses: offences” of the most recent version of the Renters Reform Bill amends these sections. The following people/companies commit the offence of operating an unlicenced property or house:
- Any person having control or managing the house or HMO
- Any person who is the landlord or licensor of any occupant
- Any person who is a landlord who, under a tenancy or licence, has an estate or interest in the HMO that is superior (either directly or indirectly) to anyone further down the chain
These amendments clarify that when a landlord rents a property to a Rent-2-Rent company, which rents it to another individual who then rents it to other individuals, all the stakeholders other than the tenants occupying commit the offence.
Power to demand information from anyone
Section 104 – “Power of local housing authority to require information from any person” allows local authorities to demand information from those not involved in committing the offence. This power can be helpful in compelling those who would otherwise not be willing participants in an investigation.
Where the person is suspected of committing the offence, s.16 LGA or s.235 HA Notices are still the appropriate course of action. However, this will be useful when gathering evidence from a previous agency; the occupants and anyone else who can support the investigation.
Rent Repayment Orders – Massive boost
The maximum amount of rent tenants and local authorities can now recover has doubled from 12 months to 2 years of rent.
Superior landlords can now be named as Respondents in Rent Repayment Order proceedings. This amendment allows local authorities and tenants to take action against the landlord who owns the property asset.
Obtaining Universal Credit Data for RROs
Work is going on, which should, in the next year or so, lead to the DWP releasing data to local authorities for the purpose of housing law enforcement. This change will make it a relatively straightforward process to recover the housing element of Universal Credit from the following criminal landlords:
- Unlicenced HMO immediate or superior landlords
- Unlicenced house immediate or superior landlords in selective licensing areas
- Those that have not complied with an Improvement Notice
- Those that have unlawfully evicted or harassed an occupant.
This data will also help to provide evidence that property was occupied as a main residence by a critical number of tenants to prove the s.254 HMO test criteria.
This all sounds like a lot, and I’m already busy – what do I need to do
There are a few elements that are worth considering
- Ensure you have a compliant, streamlined Civil Penalty Policy. Over 75% of local authority CPN policies are still not compliant with the Morjaria precedent.
- Ensure your team is trained on Civil Penalties.
- Discuss whether Housing Options should fund your team to carry out Civil Penalties and prosecutions for Unlawful Eviction and Harassment. There is a concern that Unlawful Evictions and Harassment will increase with the abolition of Section 21 Notices. It will be a glaring omission if the mandatory data reporting shows only a handful of enforcement actions for Unlawful Eviction and Harassment.
Most Housing Options Teams have little experience with Civil Penalties, and it will be an area that is under close scrutiny as there are fears that the impending abolition of Section 21 notices will lead to an increase in Unlawful Eviction and Harassment.
Many local authorities JFT works with are discussing an arrangement where Housing Options funds the PRS enforcement team to carry out CPNs for Unlawful Eviction and Harassment.
- Discuss with Trading Standards if they can deal with the volume of referrals for cases where a Civil Penalty has to be served for lack of tenancy terms or the existence of a fixed-term tenancy. It may make sense for Trading Standards to fund the PRS enforcement team to carry out these CPNs.
- Be creative and realistic about sourcing stuff. There are several 1-year courses around the country for part-time training in housing inspections. You may find capable staff working in other areas suitable for this. There is central government funding for apprenticeships. There is a shortage of officers who can carry out enforcement, so think about where there are transferable skills and people with the right mindset who can learn the necessary skills.
Al McClenahan – 15 May 2024
Local Authority Financial Penalty Training and Support Lead