The Government has decided under a potential new law to completely change the way that lettings will be dealt with.
Under the new system all private tenancies will be periodic in their style.
In real terms it will protect tenants more than it will landlords.
The changes will be implemented, which we will outline later, in two stages allowing for landlords, tenants and ourselves to prepare for the changes. Offering increased security.
Being the first implementation date will be any new tenancies which had previously been assured tenancies or assured shorthold will be governed by the new system. The sector will be given a minimum of 6 months advance notice for the first implementation.
The second-tier system being reforms for all the existing tenancies will mean that they will move to a new system after the second implementation date. This will take place 12 months after the first implementation date. After this point any previous agreed fixed terms will not apply.
Abolishing the section 21 eviction notice.
The use of Section 21 (end of tenancy) will be outlawed under the reform. This means that the tenancy will only end if the tenant ends it or if the landlord had a valid reason for possession. At the same time the grounds for current possession under the Section 8 being (when the tenant falls more than 8 weeks in arrears) will be strengthened so that landlords are confident when they need to manage their assets tenants will meet their obligations. Then they can access their property.
The Government will outline within the white paper the grounds in which landlords can claim their property back.
The changes will be that all tenancies will be on a periodic system. Tenants will be required to give a minimum of two months’ notice. Landlords and tenants will not be able to agree notice periods longer than two months. If the landlords wish to have their property back under the new rules they must give the tenants two months’ notice in cases where evictions occur for reasons outside the tenants control. For example, if the landlord wishes to sell or where a property has been repossessed by a lender. Notice period will differ for other grounds such as rent arrears and anti-social behaviour.
There will still be legal documentation to serve on the tenants such an energy performance certificate, how to rent guides, gas safeties etc. Under new rules only deposit protection will have to be demonstrated where making a claim for a section 8.
In real terms a tenant will be able to give notice at any time during the tenancy of two months’ notice. Whether this is two days into the tenancy or 20 years. The landlord can only get their property back if they sell. This will be implemented in two stages.
The use of Section 21 will end the tenancy will be outlawed in two stages alongside of the introduction of periodic tenancies. From the first implantation date all new tenancies will change to periodic. Tenants will need to provide two months’ notice when leaving a tenancy and the landlord will only be able to evict in certain circumstances.
After the implementation above on new tenancies it will then relate to all existing tenancies.
Strengthening of the section 8 grounds.
A section 8 is a notice whereby the landlord can obtain their property back. The Government feel that there needs to be grounds in which a landlord can obtain their property back. The grounds will be as follows;
Moving into the property.
A section 8 will be served by the landlord if they wish to move back into the property and live at the property not only for them but also for their children or any other family members. The Government will introduce a new ground that allows landlords and their close family members to move into the rental property.
Selling the property.
If the landlord wishes to sell their property, they could have previously relied on the section 21 and ask the tenants to leave. Landlords will be able to make the decision about their investments and the Government states that they should be able to sell their property. They will be encouraged to try and sell it with the tenant first.
Repeated serious arrears.
A landlord can regain control of their property if the tenant has consistently long rental payments.
Landlords have found this difficult in the past to try and evict on this basis, but the Government will strengthen it.
Notice periods and existing rent arrears eviction grounds to increase.
The notice period for existing rent arrears eviction will increase to 4 weeks and the current mandatory threshold of two months arrears of serving a notice and hearing will not change. Therefore, this will not be affected.
Changes to evictions for anti-social behaviour.
For criminal or serious anti-social behaviour notice periods will be lowered to two weeks in most cases.
The Government have also laid out area which we will not include at this moment in time. But at a later date for improving court proceedings for possessions, applying the decent homes standards for private rented sector. Which will also be included and creating a new private renters ombudsman.
There will also be a introductory property portal to enforce enhancement and improving tenants rights. We will outline all of these at a later date.
The new system is not going to suit every landlord, but it might suit others. It might be difficult for landlords especially where tenants give notice in the months that people don’t wish to take property. Such as just before Christmas etc. There is no plan at this moment in time for landlords to be able to increase rents. This is obviously going to be an issue. It may be that we revert to the very old system of the 1970’s where landlords create leases rather than tenancy agreements. Where they advertise the rent of a £1 but the premium is paid ie the full rent upfront of the date the tenants move in. This then allows for it to be a fixed term rather than fluid. The bills are very heavily based on behalf of the tenants. This will be particularly difficult for landlords who have student properties.
As an example:
A student could move in September give notice 3 weeks later to leave and serve the landlord with two months’ notice to this effect. The property would then have to try and be relet in a period when students are not looking.
Our advice now is to seriously consider whether you wish to continue in the student market. Or if you wish to sell. We are opening a sales department and will be contacting you in this regard. If you do want a free valuation, please do not hesitate to let us know.
Obviously, the white paper released by Government is not law and will take some considerable time to go through. Potentially the end of 2023 and beginning of the 2024. It may even be watered down further. However, both the conservative and the labour party are very of a mind that this is the right way to go. We therefore believe the periodic tenancies are likely to change long term.