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Reforming Renting16th June 2022 Commercial Litigation
The Renter’s Reform White paper has finally been published. This has been long awaited and there has been a great deal of speculation. It now looks like things will move quite fast as the White Paper appears to essentially be the first draft of the Renter’s reform Bill mentioned in the recent Queen’s Speech. Ultimately this is likely to be the biggest upheaval in private renting in England since the introduction of the Housing Act 2004.
Just to give an idea of how long this has been in the gestation, at the same time as the White Paper was published the government also published responses to three previous consultations and calls for evidence:
- A 2018 call for evidence on the case for a housing court;
- A 2019 call for evidence on tenancy deposit reform and;
- A 2019 consultation on abolishing section 21.
So the big changes being talked up int the white paper and elsewhere are as follows. The government has called it a 12 point plan but I have reduced it a bit because some of the promises are basically the same thing in different ways:
- The long-awaited abolition of section 21. However, the White Paper seems to be going further than this and simply abolishing all fixed term tenancies altogether. This seems to have echoes of Private Tenancies in Scotland. All tenancies will be essentially periodic from the start, leaving tenants reasonably free to give notice and exit when they wish. Landlords will not have the same luxury and will only be able to evict tenants with cause. Those causes are to be added to, to allow for property sale and moving back in. The detail of the actual legislation will be important here.
- Blanket bans on renting to children and to those on benefits. These are pretty unsurprising. I have long said that refusal to rent to people on benefits as a blanket policy was unwise and that every tenant should be looked at on their own terms. More than likely this will lead to private landlords adopting the same approach as some social landlords and simply telling tenants that their income (less benefits) is too low and that they cannot afford the property. It is likely to lead to a surge in efforts to “pre-qualify” tenants to avoid wasting time with applicants who are unlikely to meet criteria. This however has data protection implications.
- Rent review changes. This is unclear but it seems likely that all rent review will have to be by way of the statutory s13 mechanism with a longer notice period and The white paper says that increases will only be allowed once annually but this is part of s13 already and few landlords use increase clauses that push rents up more often.
- Allowing pets. This really seems like a bit of a crowd-pleaser as the desire for pets by tenants does not seem to be all that large, albeit that it has a vocal lobby. In fact, this is almost certainly going to have to be riven with exceptions which is likely to make it unworkable in practice. It appears that one of the main barriers to pets which was caused by the Tenant Fees Act is also to be reduced by allowing landlords to require pet-owning tenants to buy pet insurance.
- A private-renter’s Ombudsman. Inevitably as a solicitor I am bound to say that I think it would be far better to make the existing court system more accessible. However, there has already been a huge growth in this form of privatised justice in the sector and it is clearly going to continue. There appears to be a wider commitment to increasing the use of Rent Repayment Orders by tenants.
- Decent homes. It is illogical not to apply the Decent Homes Standard to the private sector. Even more bizarrely the English Housing Survey does apply the standard and measures PRS property based on it. However, it is a pretty low bar and having yet another standard alongside the existing structures does not make much sense, especially if it is not going to achieve much.
- The portal. The DLUHC seems determined to say this is not a landlord register. But if it is compulsory then it is hard to see how it is anything else, however it is dressed up. However it now looks more like an advice portal for landlords but with some information from the register of rogue landlords and agents included.
- Recovering possession. There is to be new powers to recover possession from ant-social tenants and grounds on rent arrears are to be improved. Bailiff resources are to be improved and there is to be a drive to list initial hearings sooner in ASB cases. But the reality is that the legislation is not really the problem here. It is the total lack of funding for the court system that is the real bar to obtaining possession.
- More enforcement. It will be interesting to see the upgrades to council powers. I suspect that fines on civil penalties will be increased but the detail will be important. However, again the problem is more one of lack of funding and a shortage of experienced EHOs rather than a lack of powers. It appears that this will be started by running pilot schemes. Ironically, this is likely to increase, at least temporarily, what has been referred to as the “postcode lottery” on enforcement.
- Deposits. There remains a commitment to develop some form of deposit passport to avoid tenants having to have to pay a second deposit when they move home with the first one being returned later. However, this is practically very difficult and I suspect it will continue to be more of a commitment than action.
This is a bit of a “grab bag” of reforms. Clearly some are huge, such as an end to s21, but others are likely to end up being a bit of a damp squib. The elephant in the room however is that most of this stuff will only apply to Assured Shorthold Tenancies. There are long-standing ways to avoid the AST regime and it is likely that some landlords will look to dust these off to continue operating as they are.