In June, the government published an early draft of its long-awaited white paper, “A fairer private rented sector.” The report outlines the government’s thinking on how to level up the quality of private rental homes across the UK. As with all papers of this nature, and notwithstanding the delays in policy development caused by changing Prime Ministers, going from the draft stage to becoming law can take some time, even years, and involve some change to the wording, but we can still form reliable opinions of what this is likely to mean for landlords.
Well, the review is designed to tackle some of the weaknesses currently within the private rental system that can leave tenants and landlords exposed.
Ultimately, the government is pledging to provide tenants (renters) with a “secure and decent home,” while also protecting responsible landlords and communities.
We’ve read through the white paper, and although there are some significant changes being proposed, a lot of it makes sense and should be beneficial to both tenants and landlords.
Let’s take a closer look at the government’s recommendations and what they could mean for you.
Increased stability and security through indefinite tenancies
Life has a funny way of changing when you least expect it. You may have had a long-term tenant who looks after your property, but if they decide to move elsewhere, you could need to find new tenants at short notice.
The most popular form of tenancy in the UK is assured shorthold tenancies that start with fixed-term agreements followed by monthly periodic tenancies. However, they have become increasingly complex and difficult to manage for all parties.
Under the Fairer Private Rented Sector white paper, the government is proposing that the concept of fixed-term contracts should be scrapped. Instead, they should be replaced by a single system of periodic tenancies, whereby effectively the tenant does not need to assume they may have to move again at a fixed point in the future whilst giving the landlord easier ways to end the arrangement if their plans change for the property. Section 21 eviction notices will be abolished.
This should be seen as a positive reform. For tenants, the two-month notice period offers additional security, while for a landlord, it reduces the risk of your property being unoccupied before new tenants arrive. What’s more, “With a single tenancy structure, both parties will better understand their rights and responsibilities.”
Annual Rent Increases
The white paper is recommending that landlords give tenants two months’ notice of their intention to end an agreement, which is no change from what we’ve been implementing for years. It is also proposed that rent review clauses cannot be written into a tenancy agreement and that rents can only be reviewed once a year. As we work with our landlords to balance the market value with fair, affordable, rents, in the interests of long-term tenants, this won’t have much effect.
Written tenancy agreements will define expectations
Although we work very hard at Concord Property to avoid any misunderstandings between tenant and landlord, the same cannot be said for the lettings sector as a whole.
Misunderstandings occur when it is not clear from the outset what the tenant and landlord responsibilities, or indeed expectations, are.
To prevent this, the government proposes to create a new, digital property portal to “help landlords understand, and demonstrate compliance with their legal requirements.” Landlords will be legally required to register their properties on this portal. Failure to do so could put you at risk of enforcement action from your local council. With Concord involved, this of course won’t be an issue for our landlords, as compliance is already part of our role, and we’ll help ensure the portal is up to date. The portal can therefore be used to show to prospective tenants that statutory requirements are being met. With all documentation readily available in one place, both “tenants and landlords understand their rights and responsibilities.”
Beyond this, more emphasis will go on stipulating detailed expectations within the tenancy agreement, special terms or requirements, in order to ensure greater clarity between parties. White goods, loft access, shared access, that sort of thing. Again, this is something we’ve already included in our agreements, but the reinforcement of it, and possible template development, should be helpful.
We will work with you to create written tenancy agreements that protect you and your property, as well as the rights of your tenants to enjoy their home.
Reforming Grounds for Possession
The government recognises that there are many scenarios where a landlord may want to regain possession of their property. Circumstances can change, and it’s essential that landlords have a fair way to take back their properties.
There will be new Ground for Possession if you wish to sell your property, or you want to move into it yourself. Like the current Section 21 notice, you will not be able to use these grounds within the first six months of a tenancy agreement, but it does give greater flexibility if your personal circumstances change.
Thankfully, we do not see many tenants fall into arrears at Concord Property, but if a tenant fell into a pattern of repeated arrears, the proposed changes would give landlords more Grounds for Possession. To protect landlords from any unfair financial burdens, there will be a new mandatory ground for serious repeated arears. For example, “Eviction will be mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years, regardless of the arrears balance at hearing.”
Again, we very rarely see any unsocial behaviour from our tenants, but if you are concerned about serious antisocial behaviour or criminal behaviour, the government will make it easier to evict problem tenants by lowering the mandatory notice period to two weeks. They will also “explore whether further guidance would help landlords and tenants to resolve issues at an earlier stage.” In principle, this is welcome, because anti-social behaviour can cause such problems for people yet take so long to sort out through the courts in the current system.
Some positive news
A huge positive about the Grounds for Possession reforms is that the government is setting out the proposed rules as clearly as possible. By clarifying the grounds in unambiguous terms, landlords can be sure whether grounds have been met when going to court. “This means judges must grant possession if the landlord can prove that the ground has been met.” This is a big improvement on the current “Section 8” element of the law.
Court reforms will speed up proceedings
Although we can count on one hand the number of times that a tenant/landlord disagreement has gone to court, we are painfully aware that there is nothing more frustrating or costly than lengthy court proceedings. It’s positive to see that the government are recognising the stress that this can bring.
Where there are “unacceptable delays,” the government will be working closely with the Ministry of Justice and Her Majesty’s Courts and Tribunal Service (HMCTS) to speed up proceedings. Through the creation of a new Ombudsman, and focusing heavily on mediation at an earlier stage, the government believes that courts will only need to “deal with the most serious cases, and we expect those cases to progress through the courts more quickly as a result.” Courts and tribunals will be digitised, which should reduce any common errors and provide a better experience for everyone involved.
What’s more, certain cases will be prioritised. If you have significant concerns about anti-social behaviour or “where grounds are critical to the functioning of sectors such as temporary accommodation,” cases will be expedited.
We see this as a positive step for the lettings sector – and combined with the greater clarity over grounds for possession, it should make the process much easier for all involved.
Creating a positive rental experience for all
The introduction of a single Ombudsman for all private landlords in England should mean that any disputes are settled far quicker than the current system. With their new powers, and the compliance documentation uploaded to the new digital property portfolio, the Ombudsman should be “less adversarial, and more proportionate than the court system.”
We all want to have a positive experience, and although disputes are a rarity within our tenancies, this again sounds positive.
It is natural to want long-term tenants that pay their rent on time and take good care of your property, and in turn, tenants want to feel that they can live in your house as if it is their home.
The draft does suggest that The new reforms will make it easier for families to rent, especially if they have children or are in receipt of benefits and the ability to impose. Blanket bans on categories of people will become illegal, but the government is recognising the worry that can cause landlords and will offer more support, including direct payments through Universal Credit if benefits are involved. This is a positive step from legislation some years ago, which resulted in many landlords not receiving rent that could have been paid directly.
Right to request a pet
Something else that’s made the news is that Tenants will also have the right to request a pet – but there are conditions, for example, landlords can request that tenants only do so if they have purchased pet insurance.
It also says Tenants should also be allowed to “redecorate, hang pictures or change appliances – provided they return the property to its original state when they leave.” Again, because of the way Concord works with landlords and tenants, we do not see this as a difficult requirement, as it implies people should feel at home, which lends itself to long-term rental. The key is ensuring the quality of what is done to bring the property to its original state.
Let’s have a chat
So overall, although it sounds like a lot of changes, and some of it could raise anxiety, this draft bill should improve weak areas of the existing legal tenancy framework and reinforce good practice that we’re already promoting with our landlords and tenants.
If you have any questions about the reforms suggested within “A fairer private rented sector,” please give us a call. We can talk through the various recommendations and explain how they could affect you. Whether you’re an existing landlord with us or not, we’ll always give you our honest, balanced and professional opinion.