RENTERS’ RIGHTS BILL: AN UPDATE

INTRODUCTION

On 9^th October the Renter’s Rights Bill [“the Bill”] had its 2^nd reading in the House of Commons.The previous administration’s long-mooted Renters (Reform) Bill fizzled out in the lead up to July’s General Election. However, the new Bill – which is firmly based on its predecessor – is expected to make relatively rapid progress to Royal Assent. The headline change is the end of section 21 evictions. The introduction to the 2^nd reading confirmed that removing the threat of “no fault evictions” was at the heart of the proposed legislation.

THE BIG CHANGE

The Bill wastes no time in getting to work: section 1 provides that there will no longer be fixed term tenancies – all tenancies will be periodic, with a rent period of 28 days (or less) or a month. For the avoidance of doubt, section 2 is titled “Abolition of assured shorthold tenancies” and deletes Chapter 2 Part I of the Housing Act 1988 [“HA ‘88”], including section 21.

Section 142 (8) provides for a single day, to be appointed by regulations, on which all existing private Assured Shorthold Tenancies will become Assured Periodic Tenancies. The only exceptions will be tenancies in relation to which possession proceedings based on a valid section 21 Notice had already commenced prior to enactment of the Bill, [Sch 6, para 3]. Some observers have suggested that this could result in a surge of pre-emptive section 21 Notices, as landlords attempt to avoid the automatic conversion to a periodic tenancy.

GROUNDS FOR POSSESSION

Grounds for possession under the Bill are dealt with at sections 4 – 6, and the changes are set out in Schedule 1, which amends Schedule 2 of the HA ‘88. Section 6 states that regulations may provide for a new form of section 8 notice.

As well as abolishing section 21, there are substantive changes to Ground 8. To rely on this ground, there will have to be arrears of either 13 weeks (for weekly rent) or 3 months (for monthly rent).

OTHER CHANGES TO GROUNDS INCLUDE:

• • In addition to Ground 1 (occupation by the landlord or landlord’s family) a new Ground 1A applies where a landlord seeks possession in order to sell the property;
  • To rely upon Ground 2 – sale by mortgagee – the mortgage will no longer need to pre-date the tenancy;
  • A new (mandatory) Ground 6A applies where a property is subject, for example, to a banning or improvement order. In other words, a tenant could face a mandatory possession order because their landlord is at fault.
  • Ground 16 (possession of property relating to employment) becomes Ground 5C, thereby becoming a mandatory ground pursuant to section 7(3) HA 1988.

OVERVIEW OF NEW PROVISIONS

Rent increases may only happen once a year and must follow the procedure in section 13 HA ‘88 (sections 7 – 8). A new section 13B is introduced, giving the First Tier Property Tribunal jurisdiction to determine the validity of a section 13 Notice. Further, where a tenant challenges a rent increase, the Tribunal may only set the rent either at the amount stipulated in the section 13 Notice or at the open market rate, if lower. The Tribunal cannot set the rent at a higher level.

• • Section 9 inserts a new section 14ZC into HA ’88, entitling a tenant to repayment of any rent paid in advance which relates to days falling after the end of the tenancy.
  • Section 10 inserts into HA ’88 new sections 16A to 16C on the right to request permission to keep a pet. Section 16A implies a term into every assured tenancy that a tenant may keep a pet if the landlord consents, and that consent should not be unreasonably refused. Section 16C implies a term that tenants will have insurance covering pet damage or agree to indemnify the landlord for having such insurance.
  • Tenancies of more than 7 years cannot be assured tenancies, section 30. Therefore, possession for rent arrears of a shared ownership property could become subject to forfeiture rather than HA ‘88 possession proceedings.
  • Sections 32-34 contain prohibitions on discriminating against prospective tenants on the basis that they have children or are on benefits; with breaches subject to financial penalties (section 39). However, section 40 makes clear that there is no prohibition on taking into account whether a tenancy is affordable for a prospective tenant.
  • Rental bidding wars are prohibited pursuant to sections 55 – 56. Landlords must not encourage or allow prospective tenants to attempt to outbid each other: the rent payable must be as advertised. Penalties of up to £7000 may be imposed for a breach.
  • The requirement to remedy hazards within a specific period pursuant to section 10A of the Landlord and Tenant Act 1985 is extended to private tenancies by section 59.
  • A new Landlord Redress Scheme for the independent investigation and determination of tenants’ complaints is introduced by sections 62 – 72. Sections 73 – 94 provide for a new database of landlords and rental properties. Many of the specifics of both the Redress Scheme and the Database are to be detailed in regulations.
  • Rent Repayment Orders [“RPO”] will apply to a wider range of offences, pursuant to section 96. In addition, tenants will have two years, rather than 12 months, to make an application for an RPO.

PRACTICAL CONSIDERATIONS

In addition to raising the rent arrears threshold for Ground 8, a new notice period applies pursuant to section 4. A 4-week notice period will apply to proceedings based on Grounds 8, 10 or 11. If different grounds with different notice periods are relied upon, the longest notice period will apply. A further significant change arises pursuant to paragraph 23 (d) of Schedule 1, which inserts the following words into Ground 8:

When calculating how much rent is unpaid for the purpose of this ground, if the tenant is entitled to receive an amount for housing as part of an award of universal credit under Part 1 of the Welfare Reform Act 2012, any amount that was unpaid only because the tenant had not yet received the payment of that award is to be ignored.    

A court cannot make a possession order on Ground 8 – or any Grounds other than 7A and 14 – unless there has been compliance with the tenancy deposit provisions (section 25(5)). However, there is no similar restriction in relation to provision of the gas safety certificate, EPC and How to Rent Guide.

Grounds 1 and 1A cannot be relied upon during the first 12 months of a tenancy and a 4-month notice period applies before proceedings may be started. In addition, reliance on either of these Grounds prevents a landlord from re-marketing or re-letting a property for a period ending 12 months after either expiry of the notice or from the date of the Particulars of Claim, if possession proceedings are issued. Breach of the restrictive period may be punished by a fine of up to £7000

WHAT HAPPENS NEXT

On 22 October the Bill entered the Committee Stage, which is scheduled to continue until 28 November. Changes to the Bill are likely, and many of the new provisions require regulations before they take effect.

There is broad cross-party support for an overhaul of the current laws on residential tenancies, and the Bill puts the interests of tenants at the forefront of the debate. However, the fact remains that a large proportion of the UK population relies on private landlords for housing – the homelessness charity Shelter recently estimated that there were 11 million private renters in England alone. Therefore, it would make little sense to create an environment that was prohibitively harsh towards private landlords. Whether the Bill is the fresh start that renters desperately need or an attack on the entire property market, it is clear that big changes lie ahead.

Author: Charlotte Walker, Barrister