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The SWLA Office have been busy with meetings this month. We met with Rebecca Smith (Conservative MP for South West Devon), Fred Thomas (Labour MP for Plymouth Moor View) and Luke Pollard (Labour MP for Plymouth Sutton and Devonport) to discuss the Private Rented Sector (PRS) and the major changes that are imminent in the form of the Renters’ Rights Bill(RRB).
Where most of the Renters’ Rights Bill measures are welcomed by SWLA – there are a few measures which will cause problems for both tenants and landlords. We discussed the unintended consequences of the problematic measures and gave suggestions to make these measures work better.
Here is a summary;
Section 8, Rent Arrears
Currently, if a tenant has arrears of more than 2 months, a landlord can issue a Section 8 giving 2 weeks notice. The RRB plans to change this to a tenant having to have arrears of over 3 months, with the landlord having to give 4 weeks notice.
Unintended consequence: Landlords will not be able to shoulder the excessive rent arrears, PRS properties will be sold or repossessed, shrinking the PRS. Tenants will end up with excessive rent arrears debt which will be even more difficult to pay off, and will remain on the tenant’s County Court Judgement record, making it difficult for tenants to secure another rental property.
SWLA recommend keeping the timeframes to what they are currently – 2 months arrears with 2 weeks notice.
A New Student Possession Ground
Currently, fixed term tenancies are the norm. This works well for student properties as expectations are set, and the fixed term coincides with the academic year, leaving plenty of time for student tenants to move out and new students to move in, making a harmonious and predictable tenancy for tenants and landlords. The RRB plans to abolish fixed term tenancies, all tenancies will begin and remain ‘periodic’ – with no set end date. Therefore student tenants who decide to stay longer than the academic year, would require a landlord to serve notice under the new ‘Student Section 8 Possession Ground’ (this includes pre advice of the notice at the start of the tenancy, and 4 months notice before the end of the academic year), in order to ensure that the landlord is able to apply to court if the student tenant stays beyond the mutually expected time frame for the tenancy.
Also, currently, student tenants cannot leave the fixed term without the landlords’ agreement – again setting expectations and giving security to both tenants and landlords. The RRB plans to allow all tenants to be able to give 2 months notice to landlords at any time in their tenancy.
Unintended consequences: This ‘Student Possession Ground’ is for Student HMO tenancies only – leaving one and two bedroom student properties without this ground for use. The administration for the notice is excessive, leaving landlords with further costs – which may push student rents up. Student landlords are not feeling confident that their student lets will run smoothly after the RRB introduction, many landlords are already planning a change of use – for example letting to non students. Many properties will be lost from the student market, leaving less choice for students – with students possibly having to rent ‘non student’ properties from the general PRS. With regards to the lack of fixed term, students will be able to leave their tenancy giving 2 months notice, they can do this at anytime from the commencement of the tenancy. This could leave landlords with no tenants part way through the academic year – the property would be difficult to re-let to new students who would likely already be settled into accommodation for the academic year.
SWLA recommend that a landlord renting a property wholly to students, is allowed to use a fixed term for the purpose of coinciding with the academic year. Giving security to all parties.
Anti-Social Behaviour Ground
Currently, this ground is already in place, it’s not a ‘mandatory ground’ for eviction, and it needs very robust evidence, and EXTREME anti-social behaviour for it to be effective. Many landlords currently use the Section 21 process to evict anti-social tenants, as the Section 21 is more effective than relying on a ‘non mandatory ground’. Section 21 is being abolished, so the Section 8 process and Grounds need to be effective, reliable and timely.
Unintended Consequences: Landlords will be reluctant to let to tenants who do not pass rigorous background checks. It will not be worth landlords’ risk to give tenants a chance who may not have a ‘perfect’ rental history. This will undoubtedly lead to more tenants having less access to properties in the PRS, and will contribute to the numbers facing homelessness.
SWLA recommend investment to the courts purely for Section 8 cases, to ensure that the courts are prepared for all possession cases to be heard in the court. The process also needs to be simplified and possibly digitised for ease of use.
Rent Rise Changes
Currently, out of the fixed term of a tenancy, landlords can increase the rent once per year (giving 1 months notice) using the Section 13 rent increase procedure. Tenants can easily appeal these rent increases at tribunal. The tribunal decision can take around 6 months, the rent increase decision can be more than what the landlord proposed, and the rent increase is usually backdated to the date that the landlord proposed the rent increase. Therefore, reasonable rent increases, that are in line with local rents, are rarely appealed by tenants. The RRB intents to limit the rent increases to once per year (no change there) with landlords having to give 2 months notice, but the appeal/tribunal process will change. The rent increase decided by the tribunal cannot be higher than what the landlord proposed. And the rent increase will not be backdated to the date that the landlord proposed the rent increase, it will be increased when the tribunal makes its decision.
Unintended Consequences: Without reform of the tribunal system, the delays in rent increases and the demand on the tribunal service will be huge. Tenants may appeal, even if the rent is fair, as this will delay the rent increase for them – who wouldn’t?! Landlords business plans will need to factor this in, perhaps landlords will need to start off with a higher than usual (but still in line with local rents) rent to allow for these appeals. Tenants will be footing the bill by paying higher rents where the rent would have been lower if the Tribunal system remains reasonable – as it is pre RRB.
SWLA suggest that if an appeal does take place, and the rent is found to be fair, the rent increase should be backdated to the the date that the landlord proposed the rent increase.
A New Ombudsman Service
Currently, there is no PRS Ombudsman. Therefore tenant/landlord disputes usually end up in court. The RRB is introducing a new Ombudsman service that will provide fair, impartial and binding resolutions to tenants and landlords, with the intention of reducing the need to go to court. Only tenants will be able to initiate disputes.
Unintended Consequences: Will the Ombudsman be set up, and ready for the implementation of the RRB? Landlords will have to join the Ombudsman by law. How will landlords be able to raise disputes? Payment for the Ombudsman – it will be another fee that landlords will have to pay – per property. Tenants can raise disputes for free. Here is the wording from gov.uk regarding the new Ombudsman;
‘Tenants will be able to use the service for free to complain about a landlords’ actions or behaviours. The service will offer fair, impartial and binding resolution for tenants, and will have powers to compel landlords to issue an apology, provide information, take remedial action, and/or pay compensation. The service will also benefit landlords by resolving tenant-initiated complaints in the quickest and most cost-effective way possible. Landlords will also have access to guidance and support from the ombudsman service to help them improve their complaint handling practices.’
Very concerning. Whilst we support a fair resolution for tenants who have bad landlords, what about the good landlords who are doing their best to provide good and safe accommodation? Confidence is down, which is leading to many landlords selling up and leaving the PRS. Unfortunately increasing the numbers of those who face homelessness.
SWLA suggest that with the introduction of an Ombudsman for landlords, there should be the same service for landlords to raise issues regarding tenants who breach their fair tenancy agreement terms.
SWLA welcome all MPs to get in touch with us – we can help everyone best understand the PRS so that we can all help to create a better and more fair PRS.
SWLA members are encourage to send this article to their local MP so that little changes can be made to the measures of the Renters Rights Bill – whilst discussions are taking place in Parliament.
You can follow the Bill’s progress here; https://bills.parliament.uk/bills/3764
