All change - The Renters Rights Bill

The changes include:

1. All tenancies being periodic from the outset; there will be no fixed term and a tenant can terminate it on two month’s notice.
2. No more so called “no fault evictions” under s21 of the Housing Act 1988. Instead, the landlord will need to prove a ground for possession (a s8 notice Housing Act 1998).
3. The grounds upon which a landlord can recover possession will be changed under s8 – introducing new grounds and changing others by, for example, increasing the notice period or the amount of arrears.
4. Any rent increases will also be restricted to once per annum and only to market level.  Tenants will still be able to challenge the proposed rent if they think it’s unfair and, if they do, the determined rent will not be payable until the date of determination.  Tenants could, therefore, deliberately frustrate the whole rent review process and benefit from a lower rent for much longer.  Its also unclear how long the Tribunal will take to determine such an application.
5. Tenants will be able request a pet in the property, which the landlord must consider and cannot unreasonably refuse. However, a landlord can insist on insurance being provided.
6. Landlords and agents will not be able to offer/accept offers above the advertised rent and to publish an asking rent for their property.
7. The local authority enforcement power will be expanded including civil penalties, introducing a package of investigatory powers and bringing in a new requirement for local authorities to report on enforcement activity.  Rent repayment orders will be extended to superior landlords, doubling the maximum penalty and ensuring repeat offenders have to repay the maximum amount too.
8. Other changes include a new Private Rented Sector Landlord Ombudsman and a Private Rented Sector Database; applying the Decent Homes Standard to the private rented sector and applying ‘Awaab’s Law’, all of which are aimed at improving the standard of housing and to ensure repairs are carried out promptly.  It will also be illegal for landlords and agents to discriminate against prospective tenants in receipt of benefits or with children.

Most will recall that it wasn’t that long ago when the default position with respect to tenancies was, in fact, that they were assured tenancies and not assured shortholds (“AST’s”) unless a term was included to the contrary within the tenancy agreement or a notice served beforehand.  That position changed on 28 February 1997 and, since then, if all requirements of an assured tenancy are met then they are automatically an assured shorthold tenancy unless they come under a limited number of exceptions.  The benefit of such tenancies being that the tenant could be evicted by a landlord without them being at fault (hence the name “not fault evictions”) by serving a notice pursuant to s21 of the Housing Act 1988. As a result, this has become the most common type of tenancy in England. Landlords could now offer properties to let for short periods of times knowing that it would be fairly easy to obtain possession when they needed it.  Since then, the position with AST’s has only become increasingly legally technical and mostly at the expense of many good landlords due to the many legislative changes and case-law which has been passed in this area, and which restricts the use of s21 notices including:

1. The protection of deposits and the provision of prescribed information;
2. Gas Safety Certificates;
3. Energy Performance Certificates;
4. The How to Rent Guide; and
5. Houses in Multiple Occupation including mandatory, additional and selective licencing regimes.

Each change was supposed to enhance tenants’ rights and improve their standard of living. However, for landlords, it’s lead to very technical errors preventing a landlord from potentially never recovering possession, and this could not have been the intention of Parliament.

In some ways, the proposed abolishment of s21 notices should assist landlords as some these technical issues may no longer be a bar to eviction itself (all landlords should comply with any legal requirements imposed on them). However, on the other hand, it’s highly likely that landlords will just sell their properties and exit the market entirely as they cannot guarantee when they will obtain possession, if needed, in the future, and do not want to take the risks associated with that.

To try and assist landlords, the other changes proposed in the Bill include changing the grounds on which a landlord can obtain possession based on s8 of the Housing Act 1988. However, these grounds are still very limited and have, in fact, increased the notice period from two weeks to four weeks with regard to rent arrears. Most landlords will know that the Court process in itself is very slow, so this just prolongs the period in which the tenants remain in occupation not paying rent, which is not sustainable for landlords, especially for those who only have a small letting portfolio.  Together with a potentially higher administrative burden of renting property in the residential sector, it’s highly likely that landlords will sell up before the changes come into force which, in turn, will push up prices – the complete opposite of what the Government was aiming to do in the first place.

If you need help to understand the Renters Rights Bill, or any other changes to landlord and tenant agreements, get in touch with our expert real estate disputes lawyers or call +44 (0)3333 231 580.