Categories: Landlord Insurance

Renters Reform Bill – Whitepaper Part 1

The long-awaited renters reform bill whitepaper has now been put into the parliamentary session and will be the biggest shake up in the private renter’s sector for in excess of 30 years. We will outline in this article the various parts of the Act and when we believe it will be implemented. All tenancies will become periodic tenancies.

It has a huge number of legalisations contained within that will affect every landlord. Whether a good thing or a bad thing is down to the individual person and what their view is of the rental market.

The biggest change of all will be that all tenancies from now will be a single system of periodic tenancies in a bid to simplify the existing tenancy structure. The Government believes that this will build on the greater security and empowerment abolishing the section 21 system.

The current system.

The current system allows landlords to do fixed term tenancies which commit to both landlords and tenants to the property for an agreed period. During the fixed term a landlord cannot use a section 21 to evict a tenant until such time as the end of the tenancy. Tenants can only leave a fixed term contract with the landlords agreement and they must pay their rent for the whole of the term. At the end of the fixed term tenancies become periodic unless a new term is agreed and the notice is served.

Periodic tenancies could be weekly or monthly and will not be a fixed period of time. A landlord that has a tenant that has rolled on a month-to-month (periodic) contract can give a notice using a section 21 which is two months’ notice. The current system has a mixed of fixed term tenancies with periodic all under an assured-shorthold tenancy agreement.

The Government wish to abolish this system and bring in a new tenancy which they believe will be better for everyone.

The new system.

The new system will be that all tenancies will become periodic ie they stay on a month to month basis forever and a day. The tenant will be able to give notice to vacate the property but the landlord will only have certain grounds in which to ask the tenant to leave. We will come onto this later.

The steps of the implementation will be as follows;

Step One:

There will be a first implementation date which will mean that all new tenancies that have previously been assured tenancies or assured-shorthold tenancies will be governed by the new system. The sector will be given a minimum of 6 months’ notice for the first implementation date.

Step Two:

In order to avoid a two-tiered tenancy system the reforms will be extended to existing assured and assured-shorthold tenancies as well. These will move to the new system after a set date probably about 12 months later.

Abolishing the section 21 eviction notices.

The use of section 21 notices will be outlawed under the reforms which means a tenancy will only end if a tenant ends it or the landlord has valid ground for possession. Valid grounds for possession will be strengthened under section 8 of the landlord and tenant Act so the landlord can be confident that they can manage their assets. In the instance the tenant does not meet their obligation and they can regain their property.

The changes.

Under the periodic tenancy system tenants will be required to give landlords two months’ notice and landlords and tenants will not be able to agree notice periods longer than two months.

If a landlord wishes to evict a tenant under the new rules, they must give the tenants two months’ notice in cases where eviction occurs for reasons outside the tenants control, for example if the landlord wishes to sell or where the property has been repossessed by the lender. Notice periods differ for other grounds such as rent arrears and antisocial behaviour.

You will not be able to just give tenants a notice to quit in future because their tenancy ends. This is because tenancies will not end. They will be forever and a day unless you a particular ground which we will come onto.

Implementation.

There will be a twostep implementation as follows;

Step One:

The use of section 21 for the end of tenancy will be outlawed in two stages. This is alongside the introduction of the periodic tenancies.

These will run alongside the new tenancies.

Step Two:

After the second implementation date which will take place at last 12 months after the first implementation date. So, in effect within two – three years nobody will be able to give a section 20 notice.

Strengthening Section 8 grounds

Once the Section 21 is outlawed landlords will need to have defined grounds in order to secure possession in reasonable circumstances. This is what the landlord defined as being reasonable for landlords to gain their property back and for tenants to have some form of security.  They are trying to strike a balance between protecting tenants security and the landlords right to manage their property.  Many of the grounds will become mandatory to give more landlord certainty when going to court rather than the discretionary grounds they currently have.  Making grounds mandatory means that the judge will have to grant the landlord possession even if the landlord can prove the grounds have been met.

Landlords currently need to comply with certain safety requirements and other processes in order to be able to serve a Section 21.  However, under the new Section 8 it will only be required only a deposit will have to be demonstrated when making a claim for possession.

The Government will obviously consider which grounds that they will restrict where a landlord or agent has not protected a deposit.  The landlord will still need to follow certain relevant rules regarding the gas safety and energy performance certificates. Together with deposit protection and prohibited payments under the Tenant Fees Act.

The proposed changes that allow landlords to get their property back will be as follows: –

Moving into the property

Under the current law a Section 8 Notice can be served if the landlord wants to move into the property to live in as their own home but not if their children and other family members wish to move into the home.  The Government will therefore introduce a new ground to allow landlords and their close family members to move into a rental property. However, the landlord won’t be able to use these grounds in the first six months of a tenancy and will need to give the tenants a minimum of two months’ notice of their intentions.

Selling the property

Landlords wishing to sell their property have previously relied on a Section 21 to ask the tenants to leave.  The Section 21 will be banned.

Landlords will be encouraged to consider selling to their tenants as a faster and easier solution for all.  Landlords will be able use mortgage repossession as grounds for this purpose and a new ground will be created for other circumstances where the landlord wishes to sell.

However, landlords again will not be able to apply on these grounds for the first six months of the tenancy under the new periodic tenancy rules, and will need to give two months’ notice.

Repeated serious arrears

Landlords can currently regain control of their property if the tenant is over the prescribed period of outstanding rental payments currently eight weeks.  Landlords have found these grounds to be difficult. Tenants can currently reduce their arrears to just below the prescribed threshold to avoid appearing at court.

A new ground will mean that eviction will be mandatory if a tenant has been in at least two months arrears. This is at least three times within the previous three years.  It will not need to have the balance of two months at the date of the hearing.

Notice periods on existing rental arrears eviction ground to increase

Notice periods for existing rental arrears eviction grounds will increase to four weeks.  The current mandatory threshold of two months arrears at the time of serving notice here will not be changed.

However, tenants that receive schedule welfare payments will be given more protection from eviction.

This mandatory rent arrears ground should also be used if the tenant abandons the property. New abandonment ground will be required.

Changes to evictions for anti-social behaviour

In the instance of serious anti-social behaviour notice periods will be lowered to two weeks. Landlords will be able to make a claim in the court immediately.

Improving court proceedings for possession

One of the main areas that landlords have complained about is the dissatisfaction with the courts. Not to mention the complexity of the system.

The proposed changes to the court process

Rather than introducing new housing core which would be too costly. The Government will focus on its efforts in reforming areas that hold up possession.

The new measures deal with county court bailiff capacity. Payment-based processes, limited advice about court and tribunal process and a lack of prioritisation of cases.

A new ombudsman will help free up time in the court.  A new private renters ombudsman will address redress earlier in the process. Helping tenants and landlords avoid the need to escalate their issues to the court.  This will help free up time for the courts to focus on the more serious cases. Helping to also resolve cases more quickly.

Processes will go digital.

As many of the courts and tribunal processes will be digitised to offer better guidance and reduce errors.  These changes will take place with the reform in this area in any event.

Renters will receive legal advice earlier in the process.

Along with the new ombudsman the Government will help tenants access more effective legal advice on debt, housing and welfare.  This will be through a new housing possession court duty scheme.

The scheme will create new advice for both tenants and landlords.  It will expand the scope of legal aid for people who receive eviction notices.

Contracted legal experts to help upskill providers.

Mediation services will become an established part of the process.

In order to have a fairer private rented sector the white paper will include an automatic mediation service. Essential for when it comes to landlords and their disputes.

There will be a Property Redress Scheme and a National Residential Landlords Association. Currently working on a mediation pilot and other providers will also start to offer mediation services.

This will be the most important part for the Government in sustaining tenancies. Also avoiding costly and time-consuming court possession proceedings for both parties.  The Government will soon publish the results of a nine-month rental mediation pilot scheme. This will allow landlords and tenants to access free and independent mediation of possession proceedings.

Privatisation of cases will be strengthened

The Government will explore whether it can start to label certain cases as urgent and expedite these.  These are such as serious harm and anti-social behaviour.

It will also begin a new trial system in the first-tier tribunal. This will streamline cases and create a single judicial forum for cases with split jurisdiction. Commonly between the civil courts and the property tribunal.

The housing court consultation response

Consideration will be made for a housing court.  At this moment in time the Government don’t necessarily believe that this is required. However, it is still under consideration as this is a white paper.

They may introduce online process for possession claims making it easier for landlords to make a claim. Following this they will review and improve bailiff capacity.

They will reduce the time it takes to list at first hearing.

Part 2 coming soon…

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