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Renters’ Rights Bill – the headlines Part 2

13/09/2024

Part 2 of a quick initial look at the Renters’ Rights Bill draft, concentrating on what has changed from the late Renters (Reform) Bill that forms its basis. Part 1 of the headlines look is here, and our previous views on the Renters (Reform) Bill – much of which remain current – are here and here.)

First an erratum – the first version of Part 1, since amended, said that private providers of purpose built student housing would be outside the new assured tenancy regime, on a par with university owned accommodation. This was what I understood would be the case, but on closer examination, it is not in the draft Bill. So, the only student tenancy bit at the moment is the student ground for possession, which only applies to HMOs. Purpsoe built accommodation may or may not be HMOs, depending. There is also something odd in Schedule 1 to the Bill which refers to HA 1988 ground 4 as a student ground, when it isn’t, as well as the new ground 4A. It is bit of a muddle, and I expect there is more to come here.

Now onwards!

Rental Bidding – now this is an interesting one. The aim is to prevent an unpleasant practice that has emerged in certain high pressure rental areas where landlords and/or agents encourage prospective tenants to enter into bidding the rent they’d be willing to pay to secure the tenancy.

As was pointed out to me by a journalist, themselves a renter, this has an onward impact on everyone, as the highest bid is then portrayed by agents as the market rent for the area and used to raise current tenants’ rent, based upon what one particularly well off or desperate prospective tenant would pay.

So, first, landlords and/or agents are banned from inviting or encouraging anyone to offer more than the advertised rent, and, more interestingly, banned from letting at more than the advertised rent.

I gather this is a model recently introduced in parts of Australia, as oppose to a New Zealand model which just banned encouraging higher offers, not accepting them. I don’t think there is any research on how this has worked, because it is recent.

My sense – and it is no more than that – is that initially this may lead to properties being listed at a higher rent than the landlord reasonably expects to get, as the landlord can accept a lower offer and can then chose the best lower offer. But I don’t think this would last very long, as a) diminishes potential tenant pool, possibly to nil if the landlord gets it badly wrong, b) excessive initial rents can be taken to the FTT for determination of market rent (and this is likely to happen more often once the s.21 threat is removed. See below on rent determination), and c) it relies on a change of behaviour by tenants to do highest underbidding. In less high pressured rent areas, it may even work to prevent speculative high rent listings, as rent would have to be pitched at a realistic maximum. Nonetheless, it is an interesting move and we will see how it plays out.

Rent – initial and increases

Rent increases during a tenancy – can only be annual and via the section 13 Housing Act 1988 procedure, including service of proper notice with a proper notice period.

The tenant can challenge these by application to the First Tier Tribunal, who can determine whether the proposed rent meets or exceeds market rent. The big change here, and it is a good one, is that the Tribunal determined rent can only be the lower of a) the market rent, or b) the landlord’s proposed rent. Currently, the FTT can determine a market rent that is higher than the landlord’s proposed rent.

If the tenant applies to the FTT, the new rent will take effect from the date of determination or date given by the FTT.

The second change, for which I will claim a little credit for getting in there, is that the FTT will also be able to determine whether a section 13 notice is valid (form, date of effect, etc.). Currently the FTT can’t do that – see here for the problem.

Rent at start of tenancy – as far as I can see, the initial rent can be challenged in the FTT as over market level for the first 6 months of the tenancy.

Awaab’s Law

Awaab’s Law – AKA section 10A Landlord and Tenant Act 1985 – will also apply to the private sector as well as the social sector. While section 10A is in force, the underlying regulations have not yet been made. For those in the PRS who didn’t pay attention, this was the consultation on Awaab’s Law, No response to the consultation has yet been published. But in short, it will specify defects and a timescale for responding to those defects. It does not impose new repairing obligations above section 9A and 11 Landlord and Tenant Act 1985, just the timescale in which a complaint of relevant defects must be responded to. Breach of section 10A is actionable by the tenant. But the timescales are likely to inform local authority enforcement action as well.

Pets, benefit and children discrimination

This is pretty as per the R(R)B (though also extended to Wales and Scotland). The only significant difference on pets is that the tenant having pet insurance will be an implied term in the tenancy agreement (assuming that they have a pet), and a failure to insure would be a breach of tenancy.

The discrimination clauses are, as before, a prohibition on any blanket policy on prospective tenants on benefits, or with children, unless the discrimination can meet a legitimate objective. Any clauses in insurance or mortgages that would exclude benefits or children will be void.

But it is emphasised that

Nothing in this Chapter prohibits taking a person’s income into account when considering whether that person would be able to afford to pay rent under a relevant tenancy.

Rent repayment orders

RROs are generally extended to cover a 24 month period, rather than 12 months, and the tenant now has two years to make the application from the last date of offence/tenancy, rather than 12 months.

There are new RRO offences:

Mis-using a possession ground

Breach of a letting restriction

Continued breach after imposition of a civil penalty

Breach of Landlord Redress Scheme (see below)

Provision of false information to Landlord database

Previous RROs or civil penalties to be considered in an RRO award.

There are provisions for personal liability on directors of a landlord company where the offence was committed with their ‘consent or connivance’ – well overdue.

And, as noted in part 1, superior landlords will also be liable for RROs, overturning Rakusen v Jepsen.

(While on Rent 2 Rent, David Smith made an interesting point in his first note on the Renters’ Rights Bill. The change to assured periodic tenancies also make any clause in a landlord’s own lease requiring return of the property with vacant possession ineffective. This means that any rent 2 rent agreement for a fixed term can no longer require the property to be returned to the owner with vacant possession at the end of the term. There will be sitting sub-tenants. This effectively kills the private sector rent 2 rent model. It is only with housing associations/registered providers as rent 2 rent tenants that return of the property with vacant possession at the end of the term could be achieved. So Rakusen v Jepsen/superior landlord issues may become academic anyway. Frankly, given the state of the private sector rent 2 rent field, this can only be a good thing.)

Landlord Redress Scheme

Largely as per the R(R)B – landlords will need to be members of a redress scheme.

Landlord database

Again, largely as before and much will be in regulations. But the Secretary of State can by regulations specify what information in the database is to be available to the public. Councils get access.

What information will be required is to be set by regulations. One would anticipate it would include gas safety certs, EICRs and suchlike. But it will include banning orders, and convictions and civil penalties relating to banning order offences.

No possession order can be made if the landlord is in breach of the database requirements on them, and there are civil penalties of up to £7,000, or up to £40,000, depending on the breach, or prosecution for a criminal offence in the breach.

Decent Homes Standard

There will be a decent homes standard applying to social tenancies and private sector tenancies. For social it will be enforced by the Regulator of Social Housing. For the private sector, it will be local authorities. It will not be directly enforceable by tenants. It may, it appears, also apply to some kinds of Part VII homeless temporary accommodation.

The content of the decent homes standard is yet to be seen (it is not the existing one).

Enforcement

There is a general duty on local housing authorities to enforce landlord legislation in its area. There may be a ‘lead authority’ nationally.

New powers to require information and documents from landlords, and from other parties in relation to particular offences, with court enforcement.

Entry without warrant to business premises and indeed residential premises (where a suspected offence) on notice. And assorted powers of access to information.

A definite strengthening of powers for enforcement.

Of course, enforcement has been a weak point of the current regime for many councils, so a lot of this may depend on both will and funding. We shall see.

And that is, broadly, that. This is the draft Bill. I expect there will be changes, tweaks and additions, possibly before second reading, and/or during its passage through Parliament. But the direction of travel is clear and this time not hobbled by rebellious Tory backbenchers. This is going to be the biggest change in English housing law since 1988 and I for one am thoroughly excited.

 

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

9 Comments

  1. Ben Reeve-Lewis

    “This effectively kills the private sector rent 2 rent model”………To quote Chief Grey Owl “My heart soars like a hawk”..

    R2R scamming has been a cancer on private renting for too long, as well as being the main attraction for criminal operators to get involved.

    Reply
    • Giles Peaker

      Oh I’m sure it will go on, as people won’t realise what has happened. But if you can’t have a R2R tenancy that includes providing vacant possession at the end of the term, who is going to sign over their properties?

      Reply
      • John (not Jon)

        Didn’t HA 1988 already provide for the sub-tenants of an intermediate landlord to become the tenants of the superior landlord if the middleman were to drop out of the equation? In practice, as many of these R2R intermediaries would routinely avoid obtaining HMO licences and fail to secure deposits, they would not easily have been able to return the property with vacant possession anyway, except by illegal means. Normally they would have just folded the company, owing any non-collusive (unicorn?) landlord several months of collected rent and a load of bills outstanding in fake names and left him to unravel the remaining unholy mess.

        Reply
    • Ian Narbeth

      Given that many Councils are approaching private landlords to do R2R, I assume this will be even less of an attractive proposition than it is at present to private landlords.

      I doubt that tenants’ hearts will soar like a hawk when reality kicks in. Rents might well soar as decent landlords stop renting and those that remain become choosier and factor in all the additional risks and costs they must bear.

      Ask yourself: Are tenants better off today than in, let’s say, 2015 (when Osborne caused trouble with s24)? Answer: No. And this is despite all the pro-tenant, anti-landlord legislation and regulation in meantime.

      Then ask: “Do I think that doubling down on anti-landlord legislation will make things better?” I have seen nothing in the RRB to encourage tenants to behave better or to help landlords with rogue tenants (of whom there are many). Good tenants will end up subsidising the bad. Rents will rise across the board. More CCJs will be registered. Tenants with poor credit history and less than stellar references will find it harder to rent. Some tenants will not be able to rent at all. Councils and housing associations who currently accept tenants who have received a s21 notice will be less than enthusiastic when the real reason for the eviction (massive arrears or anti-social behaviour) is apparent.

      Is that really the result you want or is it sufficient that landlords are treated harshly?

      Reply
      • Giles Peaker

        Ian, it isn’t a problem for social landlord R2R. Quite the reverse. As David Smith put it

        The only context in which a traditional rent-to-rent arrangement can work under the Bill is where the landlord lets to a housing association or other registered social housing provider as they will be able to obtain vacant possession before returning a property let on a rent-to-rent arrangement.

        As for the rest, are you seriously suggesting that stopping the chancers, scammers and grifters of private sector R2R is ‘anti landlord legislation’? It is usually the landlords who are the victims of it, in costly ways.

        Reply
  2. Ben Reeve-Lewis

    Oh yeah of course the chancers will stay in the game for as long as they can but at least it wont be an open door like it is now AND £40k CPNs for PFEA Part 1 breaches, AND concomitant powers of entry without warrant for the same breaches (Makes reinstating illegally evicted people much easier), AND extending trading standards powers to seize files and computers where landlord is a limited company AND……….with contractor outfits like Safer Renting in mind, Equivalent local authority powers extending to “Persons accompanying” under warrant A whole new regulatory landscape which may help attract people back into the work and end the current recruitment crisis.

    Reply
    • Scott Carpenter MCIEH

      Could not agree more Ben. When I worked in South London there were a fair number of chancers doing the R2R model and burning landlords then doing a runner. Not to mention “London Lockdown” model as well deliberately trying to avoid both planning law and the HA04.

      Reply
  3. Jennie Bibbings

    Thanks for these ‘headlines’ posts, they’ve been very useful. Can I offer one minor correction – Wales is included in the provisions for benefits and children discrimination, but not for pets. Instead there is a very broad regulation-making power (section 46) for Welsh Ministers to ‘prohibit discriminatory rental practices’. We haven’t heard yet how the Welsh Government intends to take this forward.

    Reply
    • Giles Peaker

      On the correction – yes, sorry I was shorthanding.

      Reply

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