As promised in the King’s speech in July, this week has seen the publication of this Government’s proposals for reform of the residential rented sector. Much of the content of the new Renters’ Rights Bill is as expected; the introduction of a private rented sector ombudsman system, ‘Awaab’s Law’ to speed up repairs and a Decent Homes Standard for private sector properties etc. Undoubtedly, these fundamental changes to the sector will be the focus for many, and they are undoubtedly issues that landlords need to be aware of.
It is however the subtle changes being proposed in this new Bill that caught our eye.
· All existing private sector ASTs will disappear when the Bill becomes law – the Government proposes that to avoid a two-tier system (where new tenancies are granted as periodic assured, but where historic ASTs still exist), all existing ASTs will become period assured tenancies from day 1. That means the ability to serve current AST tenants will end and there will be no grace period in respect of existing ASTs, which many in the sector were assuming would be put in place.
· The new ground re-sale – the good news is that the proposals made in the previous Bill for there to be a new mandatory ground for possession if a landlord wishes to sell a property are adopted in this new Bill. But the bad news is that the Government are proposing that landlords give a 4 month notice to the tenant before proceedings can then be issued on this ground. If a tenant fails to vacate in accordance with the order, and proceedings have to be issued, it could take many months for a landlord to finally obtain vacant possession.
· Longer notice periods – the Bill is also proposing to extend the notice period required when a section 8 notice is served in respect of several of the existing possession grounds. Of particular note is the proposal re the rent-based possession grounds (grounds 8, 10 and 11) – landlords will have to give 4 weeks’ notice, as opposed to the current 2 week notice, before proceedings can commence.
· Change to mandatory rent arrears ground 8 – not only does the Bill propose a change in the notice period for the mandatory ground 8 rent arrears ground, but the Bill is also proposing that a ground 8 notice can only be served once a tenant is in 3 months of arrears - currently notice can be served where 2 months of arrears have accrued. When combined with the longer notice period, that means a tenant could well be 4 months in rent arrears before proceedings can even be issued. It is difficult to see how that can be anything other than problematic for landlords.
This Bill is in its infancy. It will be subject to scrutiny and debate and the provisions may change. But the take away for landlords at this stage is that the private rented sector is likely to face even bigger changes than had been expected 6 months ago. Landlords need to be prepared for what is to come.
How can Tozers help?
Our team of experienced legal professionals can provide guidance on the implications of the new legislation and help you navigate the complexities of the private rented sector. We offer tailored advice on how to manage your rental properties effectively, ensuring you remain compliant with the latest regulations.
