The Rent Act 1977 was introduced against the backdrop of unscrupulous and exploitative landlords in order to provide greater security of tenure for private tenants. The Act also introduced the concept of ‘fair’ rents, and rules on succession, allowing properties to be passed on to relatives following death. Statutory restrictions led to many private landlords selling up as tenanted properties substantially diminished the value of their investments, at the time as making it difficult for them to recover their properties.
The 1988 Housing Act was passed to correct perceived unfairness in favour of tenants: diluted rent protection and security of tenure measures were introduced in an effort to tip the balance back towards landlords, who had become far less willing to let their properties over fears they would eventually lose control. Combined with the mass sell-off of Council properties resulting from Margaret Thatcher’s Right to Buy policy, this led to a shortage of housing.
The 1988 Act sought to address these issues by introducing Assured Shorthold Tenancies (‘ASTs’) and, in particular, section 21 notices, allowing landlords the comfort of knowing they could regain possession of their properties without having to prove ‘tenant fault’.
The Deregulation Act 2015 introduced changes to prevent ‘retaliatory evictions’. All tenancies now require landlords to comply with strict guidelines as to how and when a section 21 notice can be served, to include providing tenants with ‘Prescribed Information’ relating to protection of their deposit; issuing Energy Performance Certificates (‘EPCs’) ; annually updated Gas Safety Certificates; and serving “How to Rent” guides etc. Failure to comply with these requirements will invalidate a section 21 notice.
Proposals to abolish section 21 notices
To address the current housing crisis, the Government is planning to abolish ‘no fault’ evictions, blamed as a major cause of the surge in homelessness in the UK. This will have a massive impact on private landlords, who are already discouraged from entering, or remaining in the market, as a consequence of challenging and less advantageous tax changes. Many landlords (including developers and investors) are likely to consider the current proposals as either limiting or prohibitive.
The bottom line – be careful what you wish for?
Providing security of tenure to existing tenants is of course commendable, but it could have detrimental effects on the rental market as a whole, such as:
- Reduced housing stock
- Increased rents due to limited supply of short term lettings
- Increasing – or deflating – the cost of private housing
Assuming that the proposals are implemented, it will still take considerable time to assess the real impact of the changes, which could dramatically affect commercial and private landlords as well as existing (and new) tenants. Many interested parties are watching the prospect of further impending legal changes with intense interest; such changes as ever prompted by political expediency.