Rental reform Bill - a run down
You must have been living under a rock if you’ve managed to avoid hearing the words ‘rental reform bill’ recently. Landlords and Agents across the UK have been scrambling trying to get their heads around the 89 page document presented to government by Michael Gove on Wednesday 17th May.
Of course, we have a long way to go and it may all change before it receives royal assent, but until that time, here’s my summary of some of the main changes;
Assured tenancies and the demise of periodic tenancies
The bill sets out the end of the Assured Shorthold Tenancy agreement, currently the default agreement for many tenancies in the UK. Along with this, we will see the end of fixed term tenancies as all tenancies will be on a periodic basis with no specific end date. 12 month contracts will still be permissible for purpose built student accommodation, but unfortunately they haven't mentioned other student HMOs.
Furthermore, rental periods will need to be strictly monthly and tenants will be able to give two months’ notice to leave. This notice must be in line with rental due dates and the bill suggests any form of written notice from a tenant will suffice, even suggesting text messages or email.
No more Section 21 but new and amended Section 8 grounds
Its true that as promised, they have detailed the removal of Section 21 and therefore if a landlord wishes to give notice, they will need to rely on Section 8 which requires a specific reason. However, they have proposed the adding of new grounds under Section 8 and have also amended others;
Ground 1 – this is the ground you would need if as a landlord, you wish to move back into the property and this will be expanded to include other family members too. At the moment it says a landlord has had to previously live in the property before it became a rental but this requirement will be removed. Currently a landlord has to provide prior notice before a tenancy begins if they wish to rely on this in the future, however it is likely this could instead be included under the written statement of terms a landlord will need to provide all tenants.
Ground 1A – This is a new mandatory ground, this would be a ground for eviction where there's an intention to sell. Because it’s a mandatory ground a judge must award possession if used correctly. However, we have no idea what 'correctly' means yet, we expect some detail on this later down the line in the guidance notes.
Ground 7A and 14 – these are the grounds for anti-social or nuisance behaviour from a tenant or visitor convicted of serious criminal offence - the problem with these grounds has always been that the tenant must have been convicted of this previously.
The change with these grounds is that the notice period will change from 4 weeks to immediate notice. However, the caveat is that although a landlord can serve the notice on day 1, a judge wouldn’t be able to award possession until 14 days have passed. Furthermore, under Ground 14, the wording has changed from likely to cause nuisance and annoyance to 'capable' of causing anti-social behaviour and nuisance which could assist with a landlord being able to rely on this.
Ground 8 – this ground states that a tenant must be 2 months in arrears at the time of proceedings, and the notice period for this has changed from 2 weeks to 4 weeks. However, we also have the arrival of Ground 8A which is for a tenant who repeatedly falls into arrears but then resolves them. In order to rely on this ground a tenant must have been in at least 2 months rent arrears on 3 separate occasions over 3 years.
Property portal - The government also announced that they will be creating a new property portal focusing on compliance for landlords, however they haven’t provided considerable detail this stage so we assume more will be provided in secondary legislation.
Its assumed the database will include the following details;
1. Details of people who are currently or becoming a landlord
2. Details of properties that are being rented out or that are in the process of being rented
3. Details of landlords thathave received banning orders and convictions - details will include the nature of the offence, where it was committed and context.
I envisage this database will be replacing the current rogue landlord database but the exact process for this is still being deliberated.
Renting with pets – The intention for this was introduced through the private rented sector white paper last year and the government made a commitment to make it easier for tenants to have pets in rented property as they believe these lead to happier, longer tenancies.
Contained within the bill, the government is proposing that landlords will be unable to unreasonably refuse the request for a pet. However, the Tenant fees Act 2019 will be amended to make it possible for a landlord to require their tenants to obtain pet insurance or to pay the landlord to take out their own pet insurance at the property. A landlord will only be required to require payment for the part of the cover that specifically relates to pet damage.
To ask for consent for a pet, it must be in writing and must include a description of the pet. The landlord then has to reply within 42 days and if agreed, it must be detailed in writing in the tenancy agreement with specific details of the pet insurance if required.
At the moment, there is only one circumstance where a landlord will be able to withhold consent and that is when a superior landlord/leaseholder withholds consent due to the terms of the head lease. Statistics from Propertymark show that 84% of agent members said they have experienced instances where tenants are keeping a pet at a property without their landlords or agents consent so the hope is that this will mean landlords have greater clarity to whether their tenants have pets or not in their property by allowing them to feel comfortable seeking this permission.
Landlord redress
The government consider this a new mechanism to resolve complaints and disputes that a tenant has with their landlord. However, this is not vice versa and will not be able to be used by landlords about tenant complaints.
Landlord redress aims to bring more parity to all types of tenure and level the playing field between the Private Rented Sector and the social housing sector. They believe it will be a quicker, cheaper and less adversarial way of dealing with complaints. The government only intend to approve one redress scheme in the form of an ombudsman which all landlords will be required to join. Tenants will be able to seek redress for free, but can only be used when landlord has already failed to address their complaints. Complaints could be behaviour of landlord and delays with repairs.
In terms of sanctions they are intended to have, it depends on the severity of the complaint, but if they find in favour of the tenant, there are a range of options ranging from compelling a formal apology, forcing a landlord to provide more information or to take remedial action and finally, in the most serious of cases, landlords could be made to pay up to £25,000 in compensation.
Failure to join the ombudsman could be £5,000 civil penalty but could also go up to a £35,000 fine. It is believed there will be a cost associated with joining the scheme but no details yet on what the fee will be. However, the government has said any fees will be proportionate and reasonable.
Finally, a last note on Rent increases. Landlords will still be able to give these annually to market level and must be two months' notice as per new regulations (previously one month). Tenants will continue to be able to challenge any above market rent increases via the first tier tribunal.
In an ever-changing legislative landscape for landlords, its imperative you are protected with a great agent who can help you navigate through these every step of the way. Here at Andrews, we are proud of the legislative support we provide and the work we put in to helping educate landlords about their responsibilities.
Keep an eye out for future blogs where I will update you on changes as they occur as the bill makes its way through parliament.
Angharad Trueman – Group Lettings Director, Andrews Property Group and Vice President, ARLA Propertymark
