The government has published its Fairer Private Rented Sector white paper, setting out proposals for the biggest changes to the private rented sector in the last twenty years. But what does it mean for landlords, and what can they do now to get prepared? Guy Evans explores in an article for Propertywire.
The headline proposal is to end to section 21 ‘no fault’ evictions, which have been a feature of most residential lettings since 1997. At the same time, the government proposes to end fixed-term tenancies and make all tenancies periodic. That change will offer renters much greater security and flexibility, but gives landlords much less certainty. There will be an implementation period, lasting 18 months for existing tenancies, during which existing fixed terms will still apply and section 21 notices can be used.
What changed are being proposed?
By way of quid-pro-quo, grounds for possession are to be broadened. A new mandatory ground for possession is proposed, where tenants are in at least two months of arrears three times in the past three years. That will help deal with cases where tenants in arrears try to play the system by paying down arrears just before a possession hearing to bring themselves below the current mandatory possession threshold. A new ground is also proposed to allow landlords to recover possession if they or their family want to occupy the property, or if they need possession in order to sell the property. That will go some way to addressing private landlords’ concerns that they will not be able to sell properties if they need to. Landlords will also be glad to hear that the government intends to make it easier to recover possession from anti-social tenants. The relative difficulty of recovering possession for anti-social behaviour was brought into sharp focus during the lockdowns, with increased complaints of antisocial behaviour arising due to people living cheek-by-jowl for extended periods. The government’s proposals in this regard are still vague, though, so it awaits to be seen how this will work in practice. The government will also work to improve delays in possession proceedings (particularly delays in getting bailiff appointments).
What will the Decent Homes Standard mean to the private rental sector?
A key proposal that landlords will need to start preparing for is the proposal to roll out the Decent Homes Standard out to the private rented sector. The Decent Homes Standard is a minimum standard for housing quality, which currently only applies to social housing. It ensures a basic level of safety and comfort in rented accommodation. Homes must meet the current statutory requirements, be in a reasonable state of repair, provide a reasonable degree of thermal comfort, and have reasonably modern facilities and services. Landlords should be reviewing their properties to ensure that they will meet the Standard, and bringing them up to scratch where they do not: tenants whose homes do not meet the Decent Homes Standard will be entitled to have rent repaid to them (similar to existing rent repayment orders for breaches of HMO legislation and certain other offences).
How will local authorities help these enforcements?
Local authorities will have stronger enforcement powers. A new regulator, the Private Renters’ Ombudsman, will be empowered to resolve disputes quicker and at lower cost than court proceedings. That is likely to be of mutual benefit to both landlords and tenants – long-established dispute resolution processes for dealing with deposits have helped keep those disputes out of court, saving time and expense.
The government will be controlling rent increases by banning rent review clauses and increasing the notice period for rent increases under the Housing Act 1988. Tenants will continue to be able to challenge rent increases by referring ‘unreasonable’ rents to the First-Tier Tribunal (there is no suggestion that landlords will not be able to charge a market rent, though).
Are there any changes for landlords?
Last, landlords will not be able to unreasonably refuse to allow pets in their properties, and ‘No DSS’ policies will be banned, prohibiting landlords and agents from blanket refusal to let properties to people who receive benefits.
While the changes are significant, they should be seen in context: landlords will still be able to recover possession if there are breaches of tenancy agreements or arrears of rent, or if they need possession in order to sell the property. Grounds for possession are being strengthened, particularly for antisocial behaviour. In practice that may mean that the removal of ‘no fault’ evictions is less consequential than it first looks. Greater enforcement powers for local authorities (and more ‘direct enforcement’ by tenants) will not bother the vast majority of landlords, who already comply with their obligations. The biggest changes are the removal of fixed terms, and the additional burden on landlords from the expansion of the Decent Homes Standard, which may necessitate costly improvement works. Landlords should look to review their portfolios now, to identify which properties will need works, and decide whether to improve those properties, or dispose of them before the changes are introduced.