Renters Reform - What does this mean for Legacy Property?

On 10 May 2022, the Queen's Speech set out the proposed legislative programme for the 2022/23 Parliamentary session including the Renters Reform Bill.  The proposed bill will deliver on the manifesto commitment to abolish "no-fault" section 21 evictions, as well as introducing an Ombudsman to settle disputes in relation to short residential tenancies without the need to go to court.

The abolition of s.21 notices will be a concern for many landlords worried that (despite mitigation measures, it may be more challenging under the new regime to obtain possession from tenants who do not pay their rent or breach the terms of their tenancies).  It may also be a particular worry for charities concerned that this could create challenges in relation to obtaining vacant possession of legacy property.  

Whilst the Bill itself is due to be published soon, the white paper proposes that s.21 notices may still be permitted where vacant possession is required for the purpose of a sale. As such, charities can rest assured that legacy property will still be able to be sold with vacant possession if this best ensure maximum value is obtained.

The changes, as proposed, could equally create potential difficulties for Diocese and religious charities.  Religious charities have traditionally rented out residential accommodation as private property when not in use by members of the clergy but will often require it back upon the appointment of a clergy member. 

Under legislation as it stands, notice can be served prior to entering into the tenancy confirming that the property may be required for a minster of religion and possession can then be obtained on this ground. Churches have, however, been able to fall back on s.21 where the notice procedure was not followed or could not be evidenced.  Religious charities will need to be scrupulously careful with this procedure in the future.

Despite concerns, the government's reforms are intended to ensure that landlords will still have recourse to gain possession of their properties where 'necessary'. The government defines necessary possession as; "tenants who commit anti-social behaviour or have persistent rent arrears or, where the landlord requires sale of the property, with the latter requiring two months' notice but less notice shall be required for rent arrears or serious tenant fault".

The appointment of a new, single private housing Ombudsman which all private landlords must join hopes to further bolster landlord and tenant protections. Mandatory membership and access to binding arbitration is proposed to mitigate expensive court proceedings and will allow landlords access to a cheaper and faster resolution in many cases. Time will tell how this plays out.