Residential Landlords; beware of planned changes

The government is consulting on planned changes to the way residential tenancy agreements can be terminated by landlords, which would end ‘no fault’ evictions, and could effectively make open ended tenancies a reality.

Agricultural Holdings Act and Farm Business tenancies, and Assured Agricultural Occupancy tenancies, will not be affected by the proposals, but any landlord currently letting residential properties on an assured shorthold tenancy basis, will need to be aware of the changes should they come to fruition. This will include property owners who are letting farm and estate houses or cottages on an Assured Shorthold Tenancy (AST) basis.

At the moment, a tenant and their family can be given just two months notice to leave their rented home, if their landlord serves a valid notice.  To be considered valid, the landlord must have first met all criteria including having provided an Energy Performance Certificate to the tenant before the start of the tenancy, an up to date gas safety record, a copy of the governments ‘How to Rent’ checklist, and prescribed information with regards to where the tenants deposit has been lodged in accordance with deposit protection regulations.  If the landlord has failed to do any of these things, has failed to protect the tenants deposit within 30 days of receipt, or has served the notice too soon (within the first four months of the tenant moving into the property), a court may not grant an order of possession.  However, if all of the necessary boxes have been ticked, the court will have no discretion and the landlord must be granted an order to take back possession of the property. 

This has left many of the four million people who are privately renting homes in the UK feeling insecure; after all, they are living with the knowledge that they could be asked to move their whole family with as little as two months notice, even if they are model tenants who look after the home and pay their rent on time.

The government has therefore announced that it will open a consultation around the proposal to abolish section 21 – often referred to as ‘no fault’ – evictions.  Communities Secretary James Brokenshire MP said that by “abolishing these kinds of evictions, tenants in the private rented sector will be empowered to make the right housing choice for themselves” as opposed to having it made for them, but that this will be balanced by making sure responsible landlords can get their property back when they have “proper reason to do so”.

So, where does this leave you, the responsible landlord?  Well, it will mean that you won’t be able to evict a model tenant because you do not particularly like them or you’d rather rent the property to a family member or another preferred party.  You will also be unable to evict a tenant who has complained about the condition of the property and has asked for repairs to be made.

There will be changes made to current legislation, so that landlords who need to take their property back in order to sell it, or because they would like to move into it themselves are able to terminate a tenancy.  

The meat on the bones of the proposals is yet to be finalised and confirmed, so it is not clear whether a property let on an AST could be taken back from a model tenant in order to house an agricultural worker employed by your farming business, nor to transfer the property into the farm estate business.  It is hoped that further clarity will be forthcoming once the consultation process has come to an end, and thereafter we can offer advice to suit your circumstances. 

However, it is important to remember that tenants of Assured Agricultural Occupancies (AAOs) already have greater security than tenants of ASTs. Landlords of AAOs cannot evict an occupant unless suitable alternative accommodation is made available, or unless the Landlord can apply one of the very limited grounds for possession. Even once the farm worker’s contract of employment comes to an end (e.g. if they retire or are dismissed), they can still benefit from the security of an AAO. Also, the farm worker’s family members may benefit from a right to succeed the tenancy on the death of the farm worker.

Whilst the proposed changes to ASTs may appear to favour the tenant, the vast majority of landlords are responsible landlords, and will not suffer from the changes.  To offer balance to the proposals, the government are also planning to expedite court processes, in a bid to end lengthy eviction proceedings in cases where the tenant is in arrears with rent, or has damaged the property.  This will give landlords some comfort that disputes will be resolved much more quickly.

The plans were announced shortly before the Tenant Fees Act came into effect on 1^st June this year; the Fees Act will save tenants across the country millions per year, by banning unfair letting fees, and capping tenancy deposits at five weeks rent.  Landlords should be aware of the Fees Act, as it is possible that letting agents – who are now no longer able to charge the tenant unreasonable fees for credit checks and for the drafting of a tenancy agreement, including renewal fees – will look to pass these fees onto the landlord.

In short, the housing sector is changing and the government is responding to protect tenants, whilst trying to ensure balance for landlords.  A landlord can no longer rely on a several year old tenancy agreement precedent, just because it’s what they’ve always used.  Being a landlord brings with it great legal responsibility and now more than ever, you are urged to seek legal advice to make sure that you enter into an agreement with your eyes open, and that you do all you can to protect yourself and your property from any potential future problems. 

For further information or to discuss your particular circumstances, please call Adele Holliday or one of her colleagues, on 01653 600070.