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Renters Reform Bill – Whitepaper Part 2

Applying the Decent Home Standard to the Private Rented Sector

The landlords feel that they need to improve standards in private housing.  They believe that over a million properties pose an imminent risk to tenants.

Steps to raise standards so far

The white paper gives an overview of what the Government has undertaken so far.  It includes new law in respect of smoke and carbon monoxide detectors. Landlords must also do EICR’s, EPC’s and these all have minimum standards.

More enforcement tools

The white paper states that the local authority will give more tools to enforce the new standards.  They will crack down on non-compliant landlords whilst protecting the reputation of responsible ones. They will also encourage landlords to manage their properties effectively rather than waiting for the renter to complain or the local council to take enforcement.

Implementation

A review of the housing Health and Safety rating system which is the system that assesses and rates how serious the conditions are in the property is currently underway.  The review will be streamlined and the process for inspecting the property to assess hazards and is due to close in Autumn 2022.  The Government has committed to running pilot schemes with a selection of local councils to explore different ways of enforcing standards and work with landlords to speed up the adoption of the decent home’s standard.

The system could be applied to the private rented sector.

The standard’s rating system is currently in review and currently covers all social housing excluding leasehold and shared ownership.  The Government are considering extending this to private housing.  Private housing will have to meet current statutory minimum standards for housing.  They will have to do reasonable states of repair.  It has reasonably modern facilities and services and it needs to provide a reasonable degree of thermal comfort.

Ensuring a reasonable state of repair

The guidance on a decent home standard also shares homes with one or more key building components or two more other building components need replacing or major repair because they are old and won’t be classified as a reasonable state of repair.

Building components includes the home structure, other external elements such as the roof or chimneys and internal systems and amenities such as kitchens or a heating system.

Having reasonable modern facilities and services.

These criteria will require Kitchens to have adequate space and layout and to be 20 years old or less. Bathrooms will be approximately located and must be under 30 years.  There should be adequate noise insulation and space in the common entrance areas.  Some of the improvements to bring properties in line with these criteria may be challenging due to the physical or planning restrictions.  If the relevant agency or body finds it is impossible to do renovations the property won’t fail these criteria.

Providing a reasonable degree of thermal comfort

Properties will need to have efficient heating and effective insulation to meet the criteria.  The heating systems must be able to heat two or more rooms in the home and even if the system covers most of the house, the landlord needs to make sure that the home is warm enough for their tenant under the HHSRS.

If a new heating system is installed the landlord should see this as a chance to increase the property energy efficiency.

Creating a new private renters ombudsman

A new private renters ombudsman will help landlords and tenants settle disputes quickly, at low cost and without going to court.  It will make sure that the tenants in the private rental sector have the same access to redress of those living in other types of housing.

The paper goes on to explain that the ombudsman or redress schemes are set up to help protect consumer rights. They need to be fair, impartial and have binding resolutions without needing to advance the problem to a court.

The proposed service

The ombudsman will offer a streamlined service to both the landlord and tenants to use.  The service will aim to tackle the route cause of problems, address systematic issues, provide feedback and education to members and consumers and offer support for vulnerable consumers.

It will be mandatory for landlords with an agent to join the scheme.  The Government has also promised to identify ways to link the database with a proposed property portal which we will come on to later

Supporting tenants

Tenants will be able to seek redress for free if they have a complaint about their tenancy.  Legitimate complaints can be around their landlord’s behaviour, property standards or repairs that have been completed within a reasonable time frame for it.

The white paper highlights that the ombudsman will be given powers to put things right for tenants such as compelling landlords to issue an apology, provide information, take remedial action and/or pay compensation up to £25,000.00.

Potential penalties if landlords don’t comply with the ombudsman decision especially if they are repeat or serial offenders, they may be liable for a banning order.  This will mean that they will not be able to rent their property or any other property in future.  Introducing a new property portal to enhance enforcement.

Introducing a new property portal to enhance enforcement.

Landlords in the private sector will soon be legally required to register their properties on a new property portal.  This portal will deliver a single front door to help landlords to understand their obligation, give tenants more insight into their landlord’s compliance, and give local councils access to more data, so that they can target criminal landlords.

How will it work.

The digital property portal will be a trusted one stop shop for guidance on renting in the PRS says the white paper.  It will give tenants more transparency on understanding their property that they are renting and give the council more visibility when serious issues arise.

The Government has not yet put proposals forward on exactly how it will work but it will test a potential solution for the portal and will engage various receptive groups.

Enhanced Enforcement

The new portal will dramatically increase the ability of the local council to enforce against criminal landlords.  The Government will consider incorporating some functionality of the existing database of rogue landlords. To include property agents in the new portal.

Under the new white paper proposals, it will be mandatory for councils to enter all eligible offences in the database and that offence data will be made publicly available.

Improving communication

The white paper recognises that there are many rules and regulations for landlords to follow which can be overwhelming particularly for first time landlords.  Landlords are already required to share How to Rent guide with tenants at the start of a tenancy.  In future landlords will also need to provide a written tenancy agreement which sets out all the basic information and responsibilities for the parties involved.

Portal or register

At this moment in time no one knows whether a property portal rather than a landlord register will actually be put in place but we will keep you updated.

Improving Tenants rights

With rents increasing and the cost-of-living crisis growing it has become more important, the Government believe, to have a more positive housing experience.

Notice periods for rent increases to be doubled

The Government has decided to increase the notice period in relation to a rent increase.

At the moment the paper confirms the Government does not support the reduction of rent controls at the outside of a tenancy.  Instead, it will move to combat the cost of living and rent increases will be limited to once a year and the minimum notice a landlord must provide of any change of rent will be increased to two months.

The landlord will need to use the existing Section 13 Notice to increase the rent during a tenancy. So that tenants can choose to challenge the first-year tribunal if they think that the increase is unjustified.

Where the cases are disproportionate the Government will make sure that tenants have the confidence to challenge an unjustified rent increase before the first tier Tribunal.  The Tribunal will prevent increasing rents beyond the amount landlords initially asked for when they proposed a rent increase.

It will also end the use of rent review clauses. Any attempts to evict tenants who had unjustified rent increases will be unacceptable.

Tenants’ rights for rent repayments bolsters

Removing the Section 21 will allow tenants to seek rent repayment orders where appropriate.  The Government highlights that in rent-to-rent cases it may be difficult to know which landlord should repay the rent and the tenants could also be timed out when making an application for an order.  The government will therefore boost the current system and expand rent repayment orders to recover repayment on non-decent homes to. The shift to periodic tenancies will also help the tenants leave a property without being liable for the rent.

If the landlord charges multiple rents up front, as the case may be with overseas tenants or those without guarantors – they will need to repay any of the rents if the tenancy ends earlier than the period the tenant has paid for.  The amount of up front rent the landlords can ask will also be limited.

Tenants given more rights to keep pets in properties

The Government will not hesitate to ensure that landlords do not unreasonably withhold consent where a tenant requests to have a pet in their home, with the tenant able to challenge the decision. At the same time the Government will amend the Tenant Fees Act 2019 to include pet insurance as a permitted payment.  This means that landlords will be able to require pet insurance. To cover certain damage to their property caused by pets.

It will be interesting to see how much opposition there is to the pet proposals.

The Government will also encourage landlords to allow reasonable requests for tenants to redecorate. To include hanging pictures and changing appliances. Provided they return the property in a reasonable state when they leave.

Obviously where the landlord has a leasehold flat this is not always going to be easy or potentially agreed.  We wait to see what the Government will do in this regard.

Bans on renting to families with children or those on benefits to be outlawed

The paper has outlined that it will become illegal for landlords or letting agents to have blanket bans on renting to families with children or those in receipt of benefit.  The white paper will say that whilst most landlords provide a professional service to their tenants, there is evidence that some landlords and agents are actively discouraging or even prevent people in receipt of benefits or with children from renting their property.

The Government will also explore whether action is needed to support other vulnerable groups that may trouble struggle to access PRS accommodation such as prison leavers.

Opinion:

The proposals from the Government within the white paper are hugely wide ranging. This will change the landscape for landlords quite dramatically. Whilst tenants will have the ability to leave their property what happens if a landlord has a student property.  The tenants move in, in the normal August/September new intake. They don’t like where they are staying so they give two months’ notice. Then they find somewhere else to move to and the landlord has to try and re-let it.  This could cause a huge problem for the landlord.

The tenant could stay at the property indefinitely.  The landlord may never be able to take his property back.  There are various different circumstances which this could happen which could cause problem to landlords. What if a friend wants to move in rather than a member of his family?

The white paper is still at extremely early days. With the change of leadership in the Conservatives it might be changed again. However, it does have cross party support. We would anticipate that most of the provisions, it not all of them, will go through. The implementation we believe, will be at the earliest, end of 2023/2024.

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