Landlords : Legislation update
The UK Government has published a white paper which seeks to completely overhaul the private rented sector. Although still in consultation phase, some of the proposals could have a significant impact on landlords.
Our lettings team have all been through the 80 page white paper to ensure they understand the potential impact of the changes on our clients. We have summarised some of the most prudent key points.
The Government are driving for all tenants to have access to a good quality, safe homes and that no one should pay rent to live in a sub-standard, or even dangerous, property. Landlords should also have a clear benchmark for standards in the homes they let. We agree, homes are the most important thing in people’s lives.
Here is a summary of how the Government are proposing they get there:
Increase Security and stability of the Tenant
- Section 21 to be abolished
- No fixed term tenancies
- All tenancies will be a rolling periodic contract from day 1.
- Tenants will have to give 2 months’ notice to vacate (currently one month on periodic)
- To include the student market but not purpose built accommodation
Rent increases
- Only one increase per year
- 2 month notice on increase (currently 1 month)
- Ban auto increases
- Tenants can still appeal the increase by going to a tribunal but the power of the tribunal has been decreased so they cannot increase the rent to above when the proposed increase is.
- Tribunal will take into consideration the following facts
- They can inspect the property
- Quality and condition
- State of repair
- If the state of repair is poor, the landlord will have to prove that this is down to tenant neglect
Tenancy agreements
- Written agreements will be mandatory
- Basic information can be adapted
- Property must be in a good condition at start of the tenancy ( Signs of a “Property MOT” looming )
- Tenants will have to allow access for maintenance and repairs
- Landlords will be able to apply to the courts for access to carry out repairs
What do Sandersons think? We are fully supportive of improving the safety and legislation and the start of the tenancy is a good opportunity to ensure that is in place. Our fear is that the landlords & agents who currently do it properly will continue to do so and the problem landlords who do everything under the radar will continue to not meet the requirements. It is the minority that make it difficult for the majority.
Grounds for possession
- Possession for breaking clauses in agreement doubled from 14 days to 1 month
- Rent arrears – extended to three months arrears.
- If intention is to sell or move back into the property then two months’ notice must be given and the property cannot be offered for re- rental before three months had elapsed after tenant has vacated
- None of above can be used the first three months of the contract
Repeated and serious rent arrears
- Have to be 2 months in arrears and prove it has happened at least three times in the last three years
- In short if they pay to clear the arrears at the Court door then the proceedings are stopped. However, if this happens three times in three years then this is taken into consideration.
- Implications are huge with repeated court costs
- If the cause of the late rental payments are a direct cause from late benefit payments then this cannot be used as a reason to evict.
What do Sandersons think? This is going to be very costly for landlords and tenants may quickly become savvy to their rights. Why should a landlord be penalised and potentially miss their mortgage payments and not be able to get possession after incurring costs going to court because tenant benefit payments have not been made on time?
Holiday Lets
You will not be able to switch between the two easily. You will not be able to let on a long term basis then evict to change the use back to a holiday let.
Anti Social and rioting
Notice Period reduced to 2 weeks and court proceedings can start immediately
Court reforms
- No new Housing Court
- Courts will prioritise social housing
- Aim is to strengthen mediation
Ban on Tenants
- Restrictions on no DSS/families/children will be formally lifted
- Mortgage companies will not be able to put this restriction in the terms and conditions of the Mortgage
- Direct Payments for benefit claimants may return
What do Sandersons think? Most landlords would be happy to accept these groups. The only reason they tend not to is based on the advice the councils give tenants around staying in the property until there is a court order for possession which ends up costing landlords more money and often properties left in a poorer condition. Is that likely to change?
Tenants right to Pets
- Landlords cannot refuse a reasonable request from the tenant to have a pet or use this as a grounds to evict
- Tenants can challenge any refusal
- Pet rents can still be charged
- Amendment to Tenant fee ban that allows for the charge of Pet Insurance
Decoration and replacement of appliances
Tenants will have the right to “Make it their home” to decorate and replace appliances as long as returned to the original on exit
What do Sandersons think? If a landlord had the property professionally decorated at the start then the tenants have decorated themselves not to a professional standard (filling, sanding, straight lines on skirtings etc) this is likely to cause discrepancies at the end of the tenancy
Lifetime Deposits
No plans to implement this under this reform and Government intend to monitor this.
Safe and Decent Homes
The Private Rental Sector (PRS) will have a legally binding obligation to provide decent living accommodation :
- Free from hazards
- Warm and dry
- Free from damp and mould
- Decent noise insulation
- Must not be allowed to deteriorate
- Landlord should update the facilities at the end of the life
In addition to the following:
- Rent repayment orders if the property is not up to standard
- Regular independent checks a property MOT scheme in effect being introduced
- Government will work with selected authorities to improve quality and living standards
- Improved dispute system with all private Landlords and agencies covered under a single ombudsman.
- Landlords could be made to pay up to 25K compensation as well as refund rent.
- Landlords must register on Landlords portal and upload minimum standard certs for compliance. Will be a centralised hub. ALL properties must meet min standards before being let.
- Local Authorities will be given the power to enforce nonregistered Landlords.
- Any civil proceeding against a landlord will also be listed on the Landlord Portal.
- Council will have the right to financial information from a landlord
- Min Fines
- National Framework to enforce the PRS
How and when will this be implemented ?
Implementation
This will happen in two stages, one year apart. We hopefully will have a 6 month notice of this. Depending on Royal assent.
First Implementation
This will apply to all new tenancies
Second implementation
Existing tenancies
During the 12 month gap no tenancies renewals will be permitted and on the second implementation date all tenancies will become periodic.
How long have we got ???
This paper has taken three years to draft. It will take approximately a year to go through Parliament, which will start Autumn 2022. Worse case first implementation will be April 2024, second April 2025. However its estimated that this will become Law in October 2024.