Renters’ Rights Revamp – Key Points for Landed Estates

The RRB will abolish the ability to evict a tenant on a “no-fault” basis by serving a notice under section 21 of the Housing Act 1988 (HA 1988) in the case of both existing and new tenancies. The change will mean landlords will need to provide a reason to be able to evict a tenant.

It will also abolish assured shorthold tenancies (ASTs) altogether and fixed-term assured tenancies (residential tenancies which only end when the fixed-term expires or by a landlord serving a section 8 notice under HA 1988) of less than 7 years and make all these tenancies periodic (i.e. month to month). The practical effect of this is that tenants will be able to stay in a residential property until they decide to end the tenancy by giving two months’ notice (aside from where a landlord seeks to evict them under one of the remaining grounds under section 8, HA 1988).

To evict a tenant and obtain possession landlords will need to rely on mandatory and discretionary grounds.  A judge must award a landlord possession where they can evidence a mandatory ground, whilst discretionary grounds allow a judge to consider whether it is reasonable to award possession.  The RRB introduces some new grounds and also makes changes to existing ones.

Some changes and additions to the mandatory grounds particularly relevant to landowners are set out below:

• Ground 1 – The RRB retains the ground allowing a landlord to evict a tenant where they wish to move into their rented property, or they wish to move close family members into their property. However, it extends the notice period from 2 to 4 months and the landlord is prevented from using this during the first twelve months of a tenancy. Landlords which use this ground to evict a tenant will not be permitted to re-let the property for 12 months from the notice date or will risk a fine.
• Ground 1A – A new mandatory ground introduced by the RRB which will allow a landlord to evict a tenant if they wish to sell a property (or let it for more than 21 years). It will not be available in the first 12 months of a tenancy, and 4 months’ notice will need to be given to the tenant. Landlords which use this ground to evict a tenant will, similarly to Ground 1, not be permitted to re-let the property for 12 months from the notice date or will risk a fine.
• Ground 6 – The RRB retains the ground allowing a landlord to evict a tenant where they wish to demolish or substantially redevelop the property, and this cannot be done whilst the tenant is living there. However, the RRB extends the notice required from 2 to 4 months.
• Ground 8 – Provides the landlord with the right to evict a tenant from a property due to rent arrears. The RRB extends the arrears necessary to evict under this ground from 2 months to 3 months and the notice period required from 2 to 4 weeks.

Estate managers and owners should also be mindful of the changes proposed by the RRB with specific relevance to the agriculture sector including:

1. The introduction of new mandatory ground 5A which allows a landlord to evict a tenant on 2 months’ notice where they require a property for the purposes of housing a person who will be employed by the landlord in agriculture (as a seasonal or permanent employee);

2. A new mandatory ground 5C “employer’s ground” which ensures possession is granted of a property which was let to a tenant as a consequence of their employment when that employment contract ends, or the property is needed to house a new employee and the tenant’s current tenancy hadn’t been intended to last the full duration of their employment;

3. Introducing additional grounds of possession which apply to agricultural tenancies where a superior lease ends (i.e. where the person who has granted the tenancy agreement is also a tenant and their tenancy has ended) and/or the superior landlord becomes the tenant’s direct landlord (i.e. where the person who has granted a tenant a lease is also a tenant, gives up that lease and its landlord steps into its place); and

4. The fact the RRB retains the equivalent of the existing “form 9” notice, which allows landlords to contract out of security of tenure when housing an agricultural worker, and therefore preserve their right to repossess the property when their job is over by having a qualifying worker occupy a property on a periodic tenancy (as opposed to an assured agricultural occupancy).

These points indicate there is an awareness by the Government of the unique nature of the agricultural sector and how it operates.

The RRB will also only allow for rents to be raised once a year at two months’ notice to a tenant using the existing section 13, HA 1988 procedure and will prevent them from being increased by any other means (subject to very limited exceptions).

At present tenants can challenge a notice via the first-tier tribunal (FTT) which determines whether the proposed increased rent is excessive. However, the RRB will give the FTT the power to determine rent that is the lower of either (a) the market rent or (b) the landlord’s proposed rent. It will also be given the power to determine the validity of the notice.

Those with residential properties in their portfolio will therefore want to consider carefully current rental levels and their plans for increases in the future prior to these changes.

All private rented sector landlords will also be required to register with a new independent Private Rented Sector Landlord Ombudsman, likely for a small annual fee. Tenants will be able to make complaints to the Ombudsman who will be able to make binding decision which will be enforceable through both civil penalties and criminal prosecution. The Ombudsman is intended to support quicker and cheaper dispute resolution outside the court process.

A Private Rented Sector Database will also be introduced, in which landlords of assured and regulated (under the Rent Act 1977) tenancies will also be legally required to register. The Database will be an information centre for landlords, communicating compliance obligations and any changes to their responsibilities. It will also be used by tenants prior to selecting a rental property and streamline local council administration.  Landlords who fail to register on the Database may be subject to enforcement action and, except in limited circumstances, will not be able to get a possession order to evict a tenant.

It will be important to gain an understanding of the new Ombudsman process and additional Database requirements as more details of these are released to help protect against any enforcement action.