Residential Update: Fairer Private Rented Sector White Paper

Posted by Strettons on 8th July 2022 -

The UK Government has published a Fairer Private Rented Sector White Paper claiming it will rectify the balance between landlords and the private rented sector (PRS).

This forms part of the Department for Levelling Up, Housing and Communities' (DLUHC) more comprehensive reform agenda to improve lives and level up the country.

 

12-Point Action Plan

Increased Security and More Stability:

1. Abolish Section 21 'no fault' evictions and deliver a simpler, more secure tenancy structure

2. Reform grounds for possession to make sure landlords have effective means to gain possession of their properties when necessary

3. Work with the Ministry of Justice (MoJ) and HM Courts and Tribunal Service (HMCTS) to target areas where there are unacceptable delays in court proceedings

4. Rent increases allowed once per year end the use of rent review clauses and improve tenants' ability to challenge excessive rent increases through the First Tier Tribunal

A Positive Renting Experience:

5. Make it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits

6. Give tenants the right to request a pet in their property, which the Landlord must consider and cannot unreasonably refuse

7. Monitor the development of innovative market-led solutions to lifetime deposits for tenants

Safe and Decent Homes:

8. PRS homes must meet the Decent Homes Standard

9. Accelerate quality improvements in the areas that need it most

Improved Dispute Resolution:

10. Introduce a new single Ombudsman

Better Compliance and Robust Enforcement:

11. Introduce a new Property Portal to make sure that tenants, landlords and local councils have the information they need

12. Strengthen local councils' enforcement powers and ability to crack down on criminal landlords

 

A bit more information on what this means for Landlords:

Increased Security and More Stability

Tenants will have to provide 2 months' notice instead of the current 1 month notice. This will give the Landlord more time to market the property and hopefully reduce void periods.

There will no longer be rent review clauses in the tenancy agreements, and they will not specify how much rent can be increased. Annual rent increases will be completed by Section 13 Notices. If the tenant is not happy, they will need to be referred to FTT (First Tier Tribunal). The FTT will no longer be able to offer more than the Landlord is proposing, even if they think the property is worth a high rent. They will only be able to reduce the rent, keep it the same or agree with what the Landlord is offering.

It will now be mandatory for all private rented sector properties to have a written tenancy agreement. The Landlord can add special clauses providing this does not contradict anything else in the agreement. If the Landlord/agent is struggling to gain access to the property, they can apply for an injunction.

Any current grounds under Section 8 Notice which are 14 days (2 weeks) will double to 1 month notice period.

If a Landlord would like to sell their property, a new mandatory ground has been drafted; however, this cannot be used within the first 6 months of a new tenancy. Also, if you use this ground for eviction, you cannot relet your property for 3 months after this date has passed. It must be clear that the property is up for sale.

Another new mandatory ground will be repeated for serious arrears. If you go to court using a Section 8 Notice for rental arrears, the judge has the right to throw it out of court if on the day the tenant pays £0.01 less than 2 months of the arrears. With this new ground, the Landlord needs to go to court twice, and it will be thrown out. On the third time, the judge cannot throw the possession order out of court under the new grounds. However, this does not apply to rent arrears accumulated from benefit payments.

They are removing the Deregulation Act, which requires Landlords to serve required documents on a tenant before Section 21 Notice is served. The documents were EPC, GSI, How to Rent Guide and Deposit Protection Information Guide.

The notice period for anti-social behaviour will change from 2 months to 2 weeks.

Unfortunately, there will be no new housing courts; however, they are looking to digitise the court system to speed up the process.

A Positive Renting Experience

Tenants can challenge through the FTT if they do not agree with the Landlord's decision not to allow a pet. They will change the Tenant Fees Act and mark Pet Insurance as a permitted fee so that a landlord can request this when they move in.

The Landlord should also allow the tenants to make modifications and cannot unreasonably withhold consent.

Safe and Decent Homes

It is believed 21% of Private Rented Sector are not decent properties. In order to be decent, they must be free from serious hazards, warm and dry, have good noise insulation, adequate kitchens and bathroom and clean useable facilities.

Rightmove believes they are proposing all of this in line with the Landlord having to obtain a property MOT from the council to let their property out.

Improved Dispute Resolution

There will be a new single Ombudsman, which governs Landlords and agents. They will have the power to make the Landlord apologise and provide information. They can take further remedial action, facilitate the rent reimbursement or ask the Landlord to pay compensation of up to £25,000. Failure to comply could also result in a Banning Order Offence. 

Better Compliance and Robust Enforcement

All landlords will need to register on a new property portal and failure to do so could result in a fine from the local authority. 

This is still going through the House of Commons, so there will no doubt be amendments during this process. UK Government has advised that it will be introduced as a 2 phase approach. In the 1st phase, any new tenancies will become periodic for day 1 and the 2nd phase will be all existing tenancies. However, you cannot renew on a fixed term between these 2 phases. There will be 12 months between the 2 phases, and Rightmove believes that in the worst case scenario, this could come in for 1st April 2024. However, it will more likely be 1st October 2024.

 

More information can be found here.