In an extraordinary week for UK politics, the (now soon-to-be former) Prime Minister confirmed her commitment to implement the Government's manifesto pledge to end no fault evictions during this Parliamentary session. The abolition of section 21 of the Housing Act 1988 is part of a wide range of proposed reforms to the private rented sector, set out in the White Paper 'A Fairer Private Rented Sector'. The extent to which the proposals advocated in the White Paper will actually come into force is not yet clear.
It now seems likely that no-fault evictions will be abolished before too long and this will mark one of the greatest changes to the private rented sector in several decades.
In this article we have summarised the key proposals from the White Paper published in June 2022. At this stage we just have the bare bones of the proposed reforms, although these are far-reaching: the end to fixed-term tenancies, the extension of the Decent Homes Standard to all private rental properties, the introduction of a new Ombudsman and controls on rent increases.
The end of no-fault evictions
At present, many of the tenancies in the private rented sector are for a fixed term of six or twelve months. The proposed reforms would put an end to that and would move all those with an Assured or Assured Shorthold Tenancy to one system of periodic tenancies. Under the terms of these new tenancies, only the tenant would have a right to end the tenancy for no reason, on giving two months' notice.
As part of this change, a landlord's right to end the tenancy for no reason would be abolished. It would be necessary for the landlord to give a reason(s) and if challenged, to prove its case in order to recover possession of the property. This would include reasons such as the landlord intending to sell or re-occupy the property. The White Paper suggests that the existing grounds for recovering possession under section 8 of the Housing Act 1988 would be strengthened and it would be easier to obtain a possession order where the tenant has significant arrears or has been persistently late in paying rent.
One of the current problems for landlords is the delays in the court system. It can take several months from the issue of proceedings before a landlord can obtain a possession order, even using the no-fault procedure. If a landlord has to prove the reason why it is entitled to possession then this will inevitably delay things further. The White Paper recognises the current difficulties with the court system and suggests that the Government will seek to make the process more efficient (see below), but it remains to be seen whether there are the funds available to do so.
The Decent Homes Standard
The Decent Homes Standard ('DHS') currently already applies to social housing accommodation, but the White Paper proposes this be extended to the private rented sector. The DHS sets out four criteria that a property must satisfy:
- Meet the minimum standard for housing
- Be in a reasonable state of repair
- Have reasonably modern facilities and services
- Provide a reasonable degree of thermal comfort
Failure to comply could mean that the landlord is ordered to repay rent received whilst the property didn't meet the required standard. Enforcement would be through local councils' enforcement officers.
The proposed Ombudsman
The White Paper envisages a single Ombudsman to enable disputes between private renters and landlords to be settled quickly, at low cost and without going to court. The scheme would be compulsory for all private landlords and is intended to strengthen a tenant's ability to hold its landlord to account. There is little detail at this stage, but this is expected to include complaints relating to the condition of the property and behaviour of the landlord. The Ombudsman would have wide-ranging powers, including the ability to award damages of up to £25,000, to order rent rebates and to restrict the landlord's ability to rent their properties. In return, it is suggested that landlords could expect a more streamlined dispute resolution service.
Restrictions on rent increases
The reforms also include proposals to prevent landlords from relying on contractual rent review clauses, "preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price". The reasoning is that landlords have traditionally used rent increases to secure consistent returns, irrespective of market trends.
Landlords will still be able to increase rent once a year, by giving two months' prior notice. Tenants will have the ability to challenge the proposed new rent and refer the matter to the First-tier Tribunal (Property Chamber).
Other proposals set out in The White Paper
Landlords would also be prevented from having blanket bans on pets (without good reason) or from refusing to rent to those in receipt of benefits.
The White Paper also suggests reforms to the court system including the introduction of a new online process and increased use of mediation. The reforms also envisage a digital property portal, the intention being that tenants use this online system to find all relevant information relating to a tenancy and the condition of the property.
The reforms detailed in the White Paper are ambitious and it is possible that many of the proposals will be pushed back or abandoned altogether when the Bill is drafted.
Mishcon de Reya's Property Litigation team is able to provide specialist advice and assistance to both landlords and tenants.
We will continue to closely monitor developments so please look out for further updates.