Rural dwellings: A residential revolution
In what is being described as “the biggest change to the private rental sector for a generation” the Government has recently reported that it intends to abolish the use of section 21 Notices, seeing an end to the so called “no-fault” eviction process for assured shorthold tenancies (“ASTs”).
At the same time, the Homes (Fitness for Human Habitation) Act 2018 and the Tenant Fees Act 2019 have recently come into force - the latest in a whole series of statutory restrictions introduced since 2015. It appears that the statutory freedom enjoyed by landlords since 1989 is well and truly coming to an end.
Section 21 proposal
Currently, under Section 21 Housing Act 1988, landlords may terminate a periodic AST without providing a reason for doing so and with as little as 8 weeks’ notice.
The procedure for ASTs has historically been criticised by tenants’ associations and more recently by the Prime Minister, who has labelled it “unfair and ‘wrong”. Its abolition is therefore welcome news for tenant groups, however will remove certainty and autonomy from property owners, in what is otherwise a highly regulated area.
Although “no-fault” evictions will end, landlords will still be able to terminate ASTs provided they establish a legitimate reason for doing so, eg wanting to move into the property themselves or wanting to sell the property.
In a bid to level the playing field between landlords and tenantes the wider reform package also includes proposals to improve the Section 8 eviction process (the process for obtaining possession, where a tenant is in default) including speeding up the court process. This is welcome news for landlords as currently the Section 8 process is costly and time consuming, with cases being drawn out over long periods due to oversubscribed court lists.
It is unclear when the proposed changes will come into effect, but until they do Section 21 will remain in force. Landlords wishing to regain possession in the near future, would therefore be well advised to press on and serve a Section 21 notice soon, before it is abolished.
Homes (Fitness for Human Habitation) Act 2018
Under this Act a new covenant will automatically be implied into most new residential tenancies of less than 7 years, granted after 20th March 2019 (including those which continue as statutory or contractual periodic tenancies after that date) a covenant that the dwelling is fit for human habitation throughout the tenancy. For tenancies caught by the Act and created before 20th March 2020 the implied covenant starts as from 20th March 2020. If a dwelling is not up to the appropriate standard a tenant will be able to take action in the courts for breach of covenant. Further details are available on the Government website.
Tenant Fees Act 2019 (“TFA”)
The TFA applies from 1st June 2019 to the grant of all new ASTs, licences to occupy and student accommodation. For existing tenancies there is a period of grace until 1st June 2020.
The TFA imposes a ban on requiring any payments from tenants or their guarantors, apart from certain “permitted payments”, set out in schedule 1 to the TFA. The Act also prohibits landlords and letting agents from requiring tenants to enter a contract with a third party for a service or insurance, although there are a number of limited exceptions.
Sanctions are imposed for non-compliance, including restrictions on using the s21 eviction procedure, if a Landlord has taken prohibited payments and not returned them. For further details see the Government website.