In May 2006 the Law Commission published its final report outlining its proposals to simplify the tenancy scheme for rented housing.
The proposed scheme re-categorises tenancies as “occupation contracts” by which the key elements of the contracts are prescribed by statute.
Any tenancy or licence agreement related to property occupied as a home will become an “occupation contract” and the tenant will be referred to as the “contract-holder”. The new regime will relate to all types of tenancy (secure, assured, assured shorthold and common law) and licences. One important exception is that Rent Act 1977 tenancies and agricultural tenancies will be excluded.
The proposal is that there will be two types of occupation contracts. The first is the secure contract, which will be based on the local authority secure tenancy scheme currently in place – it will be open to local authorities and RSLs to grant this type of contract unless a specific exception could be relied upon and allow them to grant standard contracts. The second type of agreement will be the standard contract – this will be similar to the current assured shorthold regime for general use by private landlords. The main difference from the current scheme is that there would be no rule preventing a possession order being obtained before the end of the first six months.
The landlord would be required to provide the contract holder with a statement of the contract terms, and there are proposals for different categories of terms (such as key terms, fundamental terms, documentary terms and additional terms). The contract will contain an updated version of Section 11 of the Landlord and Tenant Act 1985 relating to repairs, and possibly also requirements for properties to be free from “category 1 hazards” under the Housing Act 2004. In addition, as with the current scheme, anti-social behaviour will form a ground of possession, and demotion to standard contract status will be available for local authorities and RSLs.
Grounds for possession will be re-grouped in two classes – breach of the terms of the occupation contract and estate management grounds. There will also be a mandatory no fault ground (requiring two month’s notice) and a mandatory serious arrears ground. This is similar to the Section 21 and ground 8 procedures that currently apply to most tenancies.
The possession procedure will largely be retained with one significant modification: a notice of seeking possession will become ineffective if it were not acted upon within a prescribed period (currently being considered as 6 months unless a mandatory ground is being relied upon, in which case it is likely that the period will be 4 months). Although judicial discretion in the possession proceedings may be widened, there will be statutory guidance and Judges will have to answer a check list of questions guiding the exercise at their discretions.
There is no suggestion for the procedure for tenant’s termination to be changed, and it is likely that the 4 week tenant’s notice will be retained.
Also of comfort to landlords is that there will be a swift and easier procedure for recovery of possession for property that has been abandoned similar to the scheme that operates in Scotland.
There will also be new provisions for succession and death of a contract holder, involving rationalisation into “priority” and “reserve” successors.
Further, unless the landlords of various tenancies (such as long term tenancies, emergency accommodation, holiday lets, care institutions, etc) give notice that the arrangement will be an occupation contract, such tenancies will be outside the regime.
Although the implications for social landlords are fairly limited, the use of model contracts could reduce the risk of challenges based on potentially unfair contract terms, and will provide more clarification for housing managers.
The proposals are currently in the early formative stages, and there is no timetable of introduction of the legislation as yet. The final report “renting homes” can be found on the Law Commission Website.