Private Renting Sector – the Wind of Change?

Posted by Joanna Hemsley

29-11-2018

What with the Government’s Universal Credit scheme being in the spotlight recently, coupled with reports of affordability of monthly rent, plus the fact private tenancies are estimated to rise, it is no surprise that the Government is taking steps to review the regulation of the private renting sector (‘PRS’).

As recently explained by property law expert, Michelle Di Gioia, of Gardner Leader, since 1 October 2018, landlords face ever tougher new regimes for tenant protection. However, landlords may yet face the possibility of future stringent rules.

Possible Reform

Despite changes to the law over the last two years, the Government recognises that further adjustments can be made to the PRS, in particular to protect vulnerable tenants. Some organisations suggest the PRS should be overhauled.

The not for profit organisation, Generation Rent, which campaigns for secure, affordable and fair tenancies, is calling for ASTs to be scrapped entirely, with a model brought in similar to that in Scotland. ASTs were introduced 30 years ago and became standard within 10 years. However, in Scotland, from 1 December 2017, a new type of private residential tenancy was brought into force. New tenancies no longer have fixed terms and remain open-ended; rent increases occur once every twelve months, with three months’ notice; new tenancies have longer notice periods, with a model tenancy agreement published by the Scottish Government. It is reported that the new tenancies will offer security for tenants and simplicity for landlords, and only time will tell.

Back in England and Wales, to help protect vulnerable tenants, some local authorities are calling for an end of Section 21 eviction notices, referred to as ‘no fault eviction notices’. Section 21 eviction notices enable a landlord to take possession of its property under the Housing Act 1988. Concern has been raised that some tenants fear being served with what is effectively a retaliation eviction notice within six months of reporting issues, such as mould or damp.

The Lettings Industry Council, whose aim is to see standards continue to rise across the sector, suggest that a property portal, or regulation model, be brought in to protect tenants. This model may involve a checklist, to act as a mandatory property ‘MOT’ certificate to answer questions about the safety of the property.

A further notion which has been floated is the implementation of a specialist housing court, such as that which would act as an extension of the First Tier Tribunal (Property) Chamber. The intention is that it would speed up the length of the ever-increasing eviction process, which some say is no longer fit for its purpose.

Steps Being Taken

The Homes (Fitness for Human Habitation) Bill 2017-2019 (‘Fit for Habitation Bill’) is due to go through the House of Lords for the second time towards the end of November 2018, when it will be debated. The purpose of the Fit for Habitation Bill, amongst others, is to amend the Landlord and Tenant Act 1985 requiring residential rented accommodation be provided and maintained which is fit for human habitation. If it gets royal assent, the Fit for Habitation Bill may become law sometime during the first half of 2019.

Furthermore, the Tenants Fee Bill which was at its first stage in the House of Lords earlier in November, sets out the Government’s approach to banning letting fees and capping tenancy deposits in England.  Its aim is to reduce costs that tenants pay at the outset.

Conclusion

With the PRS being the second biggest housing tenure in England, and which is estimated to increase by 21% by 2021, it is clear that the PRS needs to be as suitable as possible for both tenants and landlords.  The Government has a lot to consider before any changes are made and it will be very interesting to see how the PRS is reformed.  Watch this space.


Joanna Hemsley

Trainee Legal Executive
Property Disputes

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