Although the government’s declared focus in this Bill is, in the main, to increase home ownership by building more affordable housing, giving more people the chance to own their own home, and improving housing management, there are a number of proposed changes to the laws relating to the rented sector. The original consultation paper from August 2015 noted that the private rented sector is still an important part of the housing market, comprising 4.4 million households in England. Although surveys indicate that 84% of private renters are satisfied with their accommodation, and stay in their homes for an average of 3.5 years, the paper also asserted that a small number of rogue or criminal landlords knowingly rent out unsafe and substandard accommodation. According to the Citizens Advice Bureau, there are 740,000 households in England living in privately rented homes that present a severe threat to their health, including 510,000 families with children and 180,000 households with a disabled person. The CAB believes that these unsafe homes are earning their landlords £5.6bn in rent including £1.3bn in housing benefit payments.
The aim of the new proposals is to:
- Support good landlords who provide decent well maintained homes, and avoid further regulation on them.
- Crack down on rogue landlords so that they either improve the service they provide or leave the sector.
Although the government notes that unnecessary regulation increases costs and red tape for landlords, can stifle investment, pushes up rents and reduces choice for tenants, the new Bill contains new rules and regulations which will affect good and bad landlords alike.
1. Rogue landlords and letting agents
The most draconian part of the Bill gives local housing authorities (LHAs) the ability to apply for banning orders against letting agents or rogue landlords. Banning orders, which will be imposed by the First-tier Tribunal, will prevent a person from:
- Letting housing in England;
- Engaging in English letting agency work;
- Engaging in English property management work;
for at least six months. Failure to comply can result in a financial penalty of up to £5,000. Rogue landlords and letting agents will be placed on a database maintained by the LHAs. It is not clear how a person comes off the register once they have been placed on it and the Local Government Association has already expressed concerns that the administration of such a database might not be properly resourced.
2. Rent repayment orders
The First-tier Tribunal will be able to make rent repayment orders where landlords have let housing in breach of a banning order or committed certain specific offences including
- failing to comply with an improvement notice or prohibition order under the Housing Act 2004;
- controlling or managing an unlicensed House in Multiple Occupation; and
- carrying out unlawful evictions under the Protection from Eviction Act 1977.
Some of these offences have been in place for decades but the ability to enforce the rules has been limited. The Residential Landlords Association supports the need for better enforcement of the wide range of powers already available to local authorities. Whether LHAs will have the resources available to take improve their role as an enforcer remains to be seen.
3. Recovering abandoned premises
To encourage more efficient recycling of rented property, the Bill proposes that in certain cases a landlord in the private rented sector will be able to recover possession of an abandoned property without the need for a court order. A private landlord will be able to give a tenant notice which immediately ends the tenancy if:
- rent above a certain level is unpaid;
- the landlord has given at least two warning notices; and
- neither the tenant or a named occupier has responded in writing to those warning notices before the date specified in the notices.
The rent that must be outstanding will depend on how often it is paid.
- If the rent is payable weekly or fortnightly then at least eight consecutive weeks’ rent must be unpaid;
- If the rent is payable monthly then least two consecutive months’ rent must be unpaid;
- If the rent is payable quarterly then at least one quarter’s rent must be more than three months in arrears;
- If the rent is payable yearly then at least three months’ rent must be more than three months in arrears.
The warning notices provisions contain a number of traps for the unwary. Although the first warning notice may be given even if the unpaid rent condition is not yet met, the second notice may be given only once the unpaid rent condition has been met and can only be given at least two weeks, and no more than four weeks, after the first warning notice. Also, the date on which the Landlord intends to recover possession must be at least 8 weeks after the date on which the first warning notice is given to the tenant
Taking the provisions together, the earliest that a tenancy can be recovered under this procedure is therefore 12 weeks and that is assuming that rent is not paid sporadically. A tenant with limited resources can effectively block the entire procedure by making one rent payment of not even a full week’s rent every seven weeks.
In addition, even if the Landlord does reclaim possession the tenant will be able to apply to the county court within six months of the notice bringing the tenancy to an end for their tenancy to be reinstated if they had a good reason for failing to respond to the warning notices. If experience from the commercial property world is anything to go by, this will effectively sterilise the property for that six month period since, presumably, a successful claim for reinstatement will inevitably mean the eviction of the blameless replacement tenants. The Bill gives no guidance on what is to happen in these circumstances.
Commentators seem at present to be keeping quiet on this proposal but it can easily be seen how a fast track procedure that can result in blameless families having their tenancies terminated to make way for defaulting tenants may result in some legal, not to mention moral, difficulties.