Is The Private Rented Sector Really ‘Levelling Up’ For Landlords And Tenants?
On 16th June 2022, The Department for Levelling Up, Housing and Communities published its long anticipated White Paper, ‘A Fairer Private Rented Sector’, outlining how the Government aims to fulfil its pledge to ‘level up the quality of housing in all parts of the country and reform the private rented sector while providing clarity and support to the UK’s 2.3mn private landlords.
The White Paper proposes significant reform in the private rented sector concerning, tenants, landlords and even pets. To summarise, the key proposals include:
- To abolish Section 21 Housing Act 1988 ‘non fault’ evictions
- New grounds for possession to be introduced
- Introducing the ‘Decent Homes Standard’ to improve housing conditions in the private rented sector – enforceable by tenants possible by way of rent repayment orders
- Introducing a Property Portal for landlords & a private rented sector ombudsman
- Stronger enforcement powers for Local Authorities to tackle rogue landlords
- An end to rent review clauses – introducing restrictions on rent increases
- Illegalise blanket bans on ‘no DSS’ / no children
- Introducing the legal right for tenants to keep pets (and recourse for tenants whose Landlord ‘unreasonably withholds consent’ for
- Lifetime deposits
Abolition of Section 21:
A significant feature of the White Paper and the topic headlining is the abolition of Section 21 and ‘no fault’ evictions with many Landlords concerned with how they will be able to regain control of their property, if tenants are granted an indefinite right to remain when a fixed term ends, with the introduction of a single system of periodic tenancies. Overseas investors in UK Property are also amongst those with apprehensions, as abolition of a landlord’s legal right to regain control of their properties promptly and effectively may make the UK market less attractive. Additionally, buy-to-let investors in the UK have also raised concerns arguing that such changes may inadvertently increase rents and shrink the rental property market.
Whilst the Government’s overall objective of supporting tenants to ensure a safe and secure home is a notion that is championed and supported across the board, we are of the view that provisions should still be in place to avoid an adverse effect on the private rented sector as a whole as a significant source of investment for the UK.
New grounds for possession
As it stands, the White Paper makes little mention of what the grounds for possession will be but indicates that a new ground will be introduced for Landlords who wish to sell the property or wish to occupy the property themselves, or for their family, with the caveat however that they are prevented from re-letting the property for 3 months ‘following use of the ground’ The criteria for establishing this is yet to be clarified and certainly, clarification is required on when that 3 month runs from. Further, it is unclear what evidence will be required to prove a sale of a property and so, it may be the case that Landlord may simply indicate their intention to sell by listing their property with a local agent, but indeed not proceeding with said sale once the possession order has been granted and vacant possession is delivered. Landlord’s will need to be particularly cautious when pursuing possession under the new grounds as again, similar to the penalties in place for s.21 prerequisites (i.e., gas safety certificates, deposit protection, how to rent guide etc.), Landlords may indeed attempt to find loopholes which could result in civil penalties. The White Paper provides that, “misuse of the system or any attempt to find loopholes will not be tolerated” and the Government will look to extend the “power for councils to issue Civil Penalties Notices for offences relating to the new tenancy system”.
Whilst the Section 21 procedure is more commonly portrayed as the ‘non fault’ eviction, many Landlords use s.21 to evict tenants in significant rent arrears. Whilst they are able to use the Section 8 procedure, s.21 tends to prove to be more effective and prompter in order to regain possession of their properties and not suffer continued losses at the hands of non-paying tenants. To ensure Landlords are still able to pursue action for non-payment of rent, the Government has proposed to strengthen rent arrears grounds, including a new mandatory ground for tenants who repeatedly fall into serious arrears suggested to be ‘at least two months of rent arrears, three times in the last three years’.
The proposed changes are, indeed, serious, ambitious, and substantial. Landlords, Tenants, and professionals will no doubt need to be well equipped on what is required of them once the paper has passed through to be enacted as an Act of Parliament – which we do not anticipate being the case for at least another year. Once the Renters Reform Bill is published, practitioners, landlords and tenants will be clearer as to their upcoming requirements.
We at Longmores welcome, what we hope is a clearer system for both Landlords and Tenants to ensure transparency and fairness for both parties to level up the private rented sector.
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Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.