New Legislation in the pipeline

The Government is planning to make important changes to the law related to the private rented sector. A white paper entitled A fairer private rented sector has been published which will form the basis of legislation to be introduced later this year.

The key principle behind the white paper is that everyone deserves a secure and decent home. This means a home that is not a risk to the health and safety of the tenants and that provides reasonable security of tenure.

The proposed legislation is wide-ranging and both landlords and tenants may wish to refer to the white paper itself to get the full information, but here we are highlighting what we think are the most significant aspects.

The Government is intending to introduce a legally binding Decent Homes Standard (DHS) in the private rented sector and to give local authorities enhanced powers to take action against rogue landlords. They are also considering establishing an independent regulator and a system of regular, independent checks of rented property.

The new legislation will phase out the current assured tenancies and assured shorthold tenancies and introduce a single system of periodic tenancies for the whole private rented sector. The intention is to provide greater security for those tenants who want it, while retaining flexibility so tenants can leave without remaining liable for rent if, for example, their circumstances change or the quality of the property is poor.

Further measures include:

  • Blanket bans on renting to families with children or to people in receipt of benefits will be made illegal.
  • Tenants will be able to request a pet in the property which landlords cannot unreasonably refuse.
  • Rents will not be able to be raised more than once a year and rent review clauses will be prohibited.
  • Tenants will have more scope to challenge rent increases and the notice of an increase will be extended to two months.
  • The power to limit the amount of rent landlords can charge in advance of tenants moving into a property will be included in the legislation.
  • Landlords will be encouraged to allow reasonable changes to the property such as redecoration or the hanging of pictures.
  • The Government also wants to find a solution to the issue of tenants having to pay a deposit for a property they are moving into before the deposit on their previous property has been returned — the so-called ‘passporting’ of deposits.

In order to give tenants further security, Section 21 of the Housing Act 1988 — which allows landlords to evict tenants without providing a reason — will be abolished. Landlords will only be able to end tenancies in specific circumstances which will be defined in law, although this is balanced by a commitment to strengthen the ability of landlords to gain possession of their property where necessary. The Government has set out the circumstances it considers reasonable for a landlord to seek possession of a property in Annex A: Grounds for possession of A new deal for renting.

The grounds for possession include a landlord wishing either to sell a property or to move into a property (both of these only after at least six months of the tenancy). There will be a number of adjustments to notice periods for possession and eviction to ensure fairness to both tenants and landlords. When a tenant has been in at least two months’ rent arrears three times or more during the previous three years, eviction will be mandatory, regardless of the arrears balance at the time of a hearing.

A key measure in this proposed legislation is the introduction of a new single Ombudsman which all private landlords renting out property in England will be obliged to join. The intention behind this is to provide a fair, impartial and binding resolution to many issues in a quicker, cheaper and less adversarial way than the court system.

The Ombudsman will have the powers to compel action from landlords, including providing information, taking remedial action and/or paying compensation of up to £25,000.

The Ombudsman will also be empowered to address systemic issues and tackle the root cause of problems which a court is unable to do. Tenants will be able to use this service without charge.

The final measure of key importance to landlords and tenants is the introduction of a new property portal which it will be mandatory for landlords to use to register their property. (The details are given in Section 5.1 of the white paper.)

The portal will have guidance and information to assist both landlords and tenants. For example, ‘tenants will be able to access necessary information in relation to their landlord’s identity and compliance with key legislative requirements’ (p.51 of the white paper). A written tenancy agreement that sets out clearly the responsibilities of both tenants and landlords will be required (p.52).

These Government proposals will mean significant changes in the private rented sector and they impose added responsibilities on landlords, so we will be watching the developments with interest.

 

 

 

 

 

 

 

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