So, the King’s Speech today (17 July) and the legislative programme of the new government. What does it hold for housing?
There were few surprises, I suppose, given the Labour manifesto commitments, but we can now be sure that two housing/leasehold related things will be happening.
First, there will be a Renters Rights Bill. From the description in the briefing to the Speech, (below), this unsurprisingly largely resembles the late Renters (Reform) Bill (abandoned by the Tories in the dying days of the last Government) in the headlines, but with some key differences. The most notable being the extension of Awaab’s Law (currently awaiting the regulations to put it into force) to the private sector as well as to social tenancies. If the regulations resemble the consultation proposals (our note) this will be a bit of a challenge to both practices and mind sets of social and private landlords. The other major difference is a statement that ‘we will empower tenants to challenge rent increases designed to force them out by the back door and introduce new laws to end the practice of bidding wars’. The shape of both of these will be important.
However, what will be really interesting to see is the detail of the Bill. Labour proposed quite a few amendments to Renters Reform. Will those amendments shape the Bill?
The briefing paper says the Bill will carry out:
o abolishing Section 21 ‘no fault evictions’, removing the threat of arbitrary evictions and increasing tenant security and stability. New clear and expanded possession grounds will be introduced so landlords can reclaim their properties when they need to.
o strengthening tenants’ rights and protections, for example we will empower tenants to challenge rent increases designed to force them out by the backdoor and introduce new laws to end the practice of rental bidding wars by landlords and letting agents.
o giving tenants the right to request a pet, which landlords must consider and cannot unreasonably refuse. Landlords will be able to request insurance to cover potential damage from pets if needed.
o applying a Decent Homes Standard to the private rented sector to ensure homes are safe, secure and hazard free – tackling the blight of poor-quality homes.
o applying ‘Awaab’s Law’ to the sector, setting clear legal expectations about the timeframes within which landlords in the private rented sector must make homes safe where they contain serious hazards.
o creating a digital private rented sector database to bring together key information for landlords, tenants, and councils. Tenants will be able to access information to inform choices when entering new tenancies. Landlords will be able to quickly understand their obligations and demonstrate compliance, providing certainty for tenants and landlords alike. Councils will be able to use the database to target enforcement where it is needed most.
o supporting quicker, cheaper resolution when there are disputes – preventing them escalating to costly court proceedings – with a new ombudsman service for the private rented sector that will provide fair, impartial and binding resolution, to both landlords and tenants and reducing the need to go to court.
o making it illegal for landlords to discriminate against tenants in receipt of benefits or with children when choosing to let their property – so no family is discriminated against and denied a home when they need it.
o strengthening local councils’ enforcement powers. New investigatory powers will make it easier for councils to identify and fine unscrupulous landlords and drive bad actors out of the sector.
And then there is leasehold reform.
There is a welcome commitment to bring into force the provisions of the Leasehold and Freehold Reform Act 2024 at speed. This is entirely a matter of regulations so can be done without any significant burden on parliamentary time. (It is worth noting that there are a lot of Bills in the Kings Speech – this will be a very busy parliamentary session.) This is a necessary move, one that will give certainty over aspects of lease extensions and enfranchisement, on rules on information about service charges and administration charges, on extension of right to manage and so on. A commitment to a speedy introduction is to be welcomed.
On further leasehold reform, there is a promise to lay a draft Leasehold and Commonhold Reform Bill before Parliament.
Now, for clarity, this is not saying that the Bill will be introduced this session. I very much doubt that it will. I think it is unlikely before 2025.
But putting forward a draft Bill, particularly on what is likely to include some highly contentious changes (capping/removing existing ground rents for example) is both practically sensible and legally astute – the more consideration Parliament has given, the less successful potential legal challenges are likely to be. Plus, the apparently proposed changes are complex and will need time and considerable thought to turn into a Bill.
A draft Bill is also a form of promise for the future…
The briefing document says this:
The Government will take steps to bring the feudal system of leasehold to an end and reinvigorate commonhold by:
- ○ enacting remaining Law Commission recommendations to bolster leaseholders’ fundamental rights to extend their lease and buy their freehold (enfranchisement), and take over the freeholders building management functions (Right to Manage).
- ○ reinvigorating commonhold by modernising the legal framework. We will also restrict the sale of new leasehold flats. The Government will consult on the best way to achieve this, so that generations to come will benefit from absolute homeownership.
- ○ tackling existing ground rents by regulating ground rents for existing leaseholders so they no longer face unregulated and unaffordable costs.
- ○ bringing the injustice of ‘fleecehold’ private estates and unfair costs to an end – the Government will consult on the best way to achieve this and implement new protections for homeowners on private estates in the Leasehold and Freehold Reform Act 2024.
- ○ ending the injustice of forfeiture so that leaseholders are protected against losing savings they have in their home for potentially small unpaid debts.
Being able to see detailed proposals in a draft Bill will be very helpful in ironing out potential issues.
So, lots to look forward to. Not enough for some, inevitably (and those calling for private sector rent control, like the 4 Green MPs, have yet to identify the model of rent control that they consider actually works – when they actually do, we might take them seriously on this, but not before), and doubtless there will be a need for further legislation in the future. But for a first Parliamentary session, this is a pretty exciting programme on housing law.
On rented properties, rents charged to renters must not be a way for the owner of the property to have the renter to buy the property for the landlord and not ever “enjoy” the benefits of owning the property or receiving a percentage of the profits from the sale of the property.
Well that is just ridiculous. Unless we do away with the private sector, which would only need another 4 million or so social homes.
Obviously a government that is prioritising a return to strong economic growth would do well to encourage productive forms of wealth creation at the expense of passive, rent-seeking activities – but that is surely a longer-term project. In the meantime, as NL points out, people still need homes.
I am concerned to see they still support in some fashion, the expanded possession grounds. Presumably this also means the completely bonkers Ground 6A.
Safer Renting’s recommendations to DLUHC as was, were to amend grounds 1 and 1A with a 6 month gap before re-letting and making breaches an RRO matter, not one for local authorities plus unequivocally dropping ground 6A.
I think the pets concept is going to prove really problematical, particularly in HMOs. I’m a massive dog lover but completely allergic to cats and get asthmatic just walking into a room where a cat has been plus many people are either uncomfortable around animals for a variety of personal and cultural reasons. I can see this turning into a very, very tedious battleground in advice world.
If the various enforcement agency clauses survive I will be more than happy. All public eyes have been on the big ticket stuff like s21 but there are quite a few good enforcement developments that people dont comment on because of the niche and technical nature. Long may that continue.
I think we’ll have to see what the new grounds for possession look like. I don’t anticipate a straight replication of the Renters (Reform) ones, as they ended up.
Lets hope. When the 3 month prohibition on reletting came up in the first draft on grounds 1 and 1A I immediately turned to online landlord fora (where I regularly test the temperature) and saw on more than one site, talk that losing out on 3 month’s rent was an acceptable price to pay for mandatory possession. Extending that to 6 months might not be such an acceptable option and then there is also s12 Housing Act 1988, that long dormant facility will be dusting off its coat and stepping not the stage I would imagine. Well it will for us!
The Green’s housing strategy at large will forever remain incoherent; the Party’s internal conflict between need to build social homes and the inevitable environmental impact of the same will see to that…
From what I can see, there is every reason to be positive about the likely shape of housing law reform over the next few years. Though the ‘devil will be in the detail’ and we’ve all been disappointed before.
Thanks as always Giles for a top write up!
thanks for the summary – most helpful. For a number of years there has been a consensus (bar a few landlords’ friends in the Tory Party) supporting the introduction of security of tenure in the private rented sector. Of course S21 will be replaced by (necessary) new, no-fault possession processes, (e.g. sale of property, landlord’s family use, etc.,) – it is essential that these new grounds are drafted so that landlords face biting sanctions in cases of misuse. The Renters(Reform) Bill did not do this.
@Tom. Yes indeed, the loopholes must be closed down as much as possible to allow for genuine cases. You’ll never close them 100% but it is important to disincentivise for the chancers
I apologise for my original post causing the subsequent debate. My post was based on my experience in A N Other country. A friend of mine sought my advice on a potential purchase of a property he and his family rented. That property was being sold and he had the opportunity to purchase it under a “Deed of Sale”. If he signed up to the “Deed of Sale” all the monies he paid as rent for 2 years counted towards the deposit. He could during that 2 year period and the monies would be “lost” as rent. At that time, I told him that if he could afford the Capital Repayments plus the Interest (@25%+) then he should “go for it”. I do not see why it cannot be possible for owners of residential properties cannot offer properties purely for rent or on the potential of sale being completed two years or more subsequent to the intending purchasing tenant signing on the “dotted line”. That could become part of legislation could it not? My friend took the opportunity. Unfortunately I do not know where he is.
Oops! “He could during that 2 year period and the monies would be “lost” as rent” should read “He could opt out during that 2 year period and the monies would be “lost” as rent”. Apologies!
“we will empower tenants to challenge rent increases designed to force them out by the backdoor” – wow! – is there hope for current housing association tenants stuck in “intermediate market rent” assured tenancies, with annual above-inflation rent increases?
>>There is a welcome commitment to bring into force the provisions of the Leasehold and Freehold Reform Act 2024 at speed<<
Could there be an advantage for leaseholders wanting to buy a share of the freehold, to wait until the provisions of this act are in force?
Possibly so, yes.