Residential Property Update

What is proposed

Following the Queen’s speech on 19 December 2019 the Rented Homes Bill (“the Bill”) was published together with supporting documentation.  The purpose of the Bill is purported to be: –

1. Improving security for tenants in the rental sector, delivering greater protection for tenants and empowering them to hold their landlord to account
2. Strengthening the rights of landlords who need to gain possession of their property when there are valid reasons to do so
3. Improving the experience of those living in the private rented sector and the affordability for tenants when moving from one tenancy to the next by introducing a new lifetime deposit
4. Improving standards in rented accommodation, driving out rogue landlords and helping to professionalise the sector, with all tenants having a right to redress if their rented properties are not safe and healthy
5. Professionalising letting agents, to the benefit of tenants and landlords.

The main elements of the Bill are:

1. Abolishing Assured Shorthold Tenancies and the use of no-fault evictions by removing section 21 of the Housing Act 1988 (“S21”)
2. Reforming some of the existing grounds for possession and adding some new ones.

In the supporting papers to the Bill reference is also made to:-

1. Giving Landlords more rights to regain possession and providing for an improved court process for Landlords.
2. Introducing new lifetime deposits so that tenants do not need to save for a new deposit every time they move to a new house.
3. Implement measures to widen access to and expand the scope of the database of rogue landlords and letting agents.

What’s Important here?

For Landlords it is undoubtedly the abolition of Assured Shorthold Tenancies & no-fault evictions via service of s21 notice.

Currently if using S21, a Landlord does not have to show that a Tenant is in breach of their agreement or in some way at fault in order to obtain possession. Many Landlords prefer to serve a S21 notice, even though the notice period is two months as it is possible at the first hearing to obtain an order for possession and rent arrears, rather than using the fault grounds under S8 of the Housing Act 1988 (“S8”).

What about the plan to strengthen the rights of Landlords?

The plan appears to lightly amend of S8 and to add a couple of new grounds. There is insufficient detail at the moment to form a view.

What all the grounds for possession set out in S8 have in common is that they place an obligation upon the Landlord to prove their case.  That could mean a trial where evidence is put forward and where it can be challenged.  This is likely to result in delays in recovering possession and increased costs.

Where a Landlord requires possession to sell or substantially refurbish a property, they can only utilise the appropriate ground for obtaining possession if they gave notice to the tenant of these plans before the tenancy started.  In addition, in either of these situations the court will require clear evidence of the Landlord’s intention for example signed building contract.

Currently if a Landlord decides to sell or refurbish a property, they know that they can recover possession in a matter of months once the fixed term of the Tenancy comes to an end.  By using S21 there is no need to have given notice before the tenant moved in and the Landlord does not have to prove anything to the court.  In fact, the Landlord does not have to give the tenant a reason as to why they want the property back.  When s21 is abolished Landlords will lose a degree of their flexibility in respect of their property.

There is not a great deal of confidence that the government will introduce a set of measures that will in any way see an improvement to the current position from a Landlord’s perspective. The courts are already unable to cope efficiently with cases before it.

Of course, we have not seen the detail of proposed legislation yet.  There is currently a consultation exercise underway so things could change.  We will keep an eye on this legislation as it progresses.

In addition to abolishing S21 it is possible the Act that receives Royal Assent might contain some of the following: –

• A specialist court for possession proceedings and possibly an online tribunal
• Some further rights for tenants if their homes are in disrepair
• No detail yet but will there be some form of rent control?
• Will there be an obligation to register every let property annually with the local authority, which will attract a fee?
• Might we see Landlords facing increased fines and obligations to pay compensation when a property is found to be in disrepair?