Renters' Rights Bill

Written evidence submitted by Training for Professionals (RRB15)

Submission on the Renters’ Rights Bill

Written evidence submitted by Training for Professionals, an organisation providing training and support service to the private rented sector. This submission was drafted by David d’Orton-Gibson, with over 36 years’ experience of the PRS.

Executive summary

There are several areas of the bill that need consideration or correction. They are summarized below.

1). Section 12 lists a list of grounds but seems to miss the new ground 4A.

2). The transitional provisions for section 21 notices do not seem to reflect the legal position for longer notices.

3). Two amendments to the Deregulations Act 2015 clash with each other.

4). We see a problem with the new rules where the Home Office have served an Immigration Act notice.

5). We can foresee an issue where an intermediate tenancy collapses.

6). Section 109(8) seems to be missing an "s" on the word "provision".

7). Clarity around advance rent payments should be considered. This also links to the issue of guarantors.

8). Tenants want fixed terms.

9). Commencement.

10). Rent increases

11). Students

Details

1). Section 12 contains a list of grounds that is says can be included in the tenancy statement, where prior notice of the ground is needed. Ground 4A is not in that list, implying that it cannot be included in that tenancy statement. There does not seem any logical reason for not including this ground with the others.

2) Schedule 6 deals with transitional provisions and para 3 deals with the situation where a section 21 notice is served before the new law commences. It works in most situations but we do not believe it works where the rent payment on a periodic AST is longer, say paying every 6 months. In this case, as the section 21 must not expire before a Notice to Quit served the same day, the section 21 would have to be at least 6 months long, and expiring at the end of a period of the tenancy, so possibly up to nearly 12 months long. In sub para (2) the new 4DA says you can only commence proceedings within 6 months of the notice being given, yet as explained, the notice may not have expired at this point. The sub para (b), only makes this worse. The current rule is within six months of service, unless the notice has to be longer than two months, in which case it is within 4 months of expiry of the notice. This works though one might wish to drop the four months to three to match other provisions.

3).Schedule 2 para 48 says the Deregulation Act 2015 section 33(13) omitted. Schedule 4 para 41 says it is amended. These seem to logically conflict.

4). There are a variety of restrictions on serving notice. For example, if you have not complied with deposit protection, if you have not entered details on the property database and other that can be created by regulations (section 29). Generally these restrictions are not applicable for grounds 7A and 14, the antisocial behaviour grounds. No other grounds are exempt these provisions.

4.1). The first issue is that there is a ground 7B where the Home Office serve notice on the landlord about illegal immigrants being in the property. If the notice covers all immigrants it counts as a High Court order and can be enforced as such. If it only covers some occupiers then the landlord can serve section 8 using ground 7B and the court will either award possession or award the tenancy is transferred into the names of the legitimate occupiers. We feel 7B should be added to all instances excluding 7A and 14 as it seems mad that the Home Office are requiring action but there will be nothing the landlord can do.

4.2). Under the current legislation there are a number of situations where a landlord cannot serve section 21. However, these do not apply to section 8 notices. These include no gas safety check on move in, no deposit protection, no How to Rent guide etc. It is important that the right to serve notice is retained if, for example, the rent is not paid as otherwise the landlord could be left with a tenant for the rest of their life who is paying no rent. It is fine to not allow the landlord the "choice" grounds, like moving in or selling, but it should not prevent enforcement of contractual obligations. We would also suggest that the principal behind the Trecarrell House Ltd v Rouncefield judgement (if there is no gas safety at move in you can never serve notice (limited to section 21 in that judgement)) should be avoided and once a property has a compliant gas safety check (or even the last two checks) the landlord should again be able to serve notice as the tenant is not at any risk. Otherwise you create a "forever" penalty that would not even be covered by rehabilitation of offenders type legislation.

5). We can see issues around intermediate tenancies. If the property is let to a company for staff, then on expiry of their fixed term the contract ends by the effluxion of time. Also they may have let staff live in the property. They will not be able to evict those staff to hand the property back to their landlord as they are not looking to use the accommodation to house other staff. On expiry of the head lease the head landlord will become the direct landlord of the tenant occupiers. This will be on the terms of the sub lease, which may be at a heavily discounted rent for the staff. The landlord might have to wait up to a year to change that. In fact if the company had let the property room by room the head landlord might only inherit one occupier paying for just one room, and yet they will have no way of changing that even if the individual is over accommodated.

6). Section 109(8) seems to be missing an "s" on the word "provision".

7). Rent periods and payments

7.1). Section 1(1) of the bill says:

1. Terms of an assured tenancy are of no effect so far as they provide-

a. for a tenancy to be a fixed term tenancy, or

b. for periods of the tenancy to be different from the periods for which rent is payable ("rent periods").

It is not uncommon for a tenant who cannot pass referencing to be asked to pay six months rent upfront. This might be because they have just moved into the country so have no credit history. Clearly from the above the rent periods have to be monthly, but it is not clear if one can have a schedule of when rent is due and collect the rent for the first six periods upfront. Polly Neate and Shelter obviously seem to think this is possible. Without this those on lower incomes may struggle more to be accepted. The sad point is that such a problem will adversely affect those on lowest incomes the most.

7.2). A similar situation occurs in student letting where it is not uncommon to charge the rent "termly". This secure their accommodation for people who are generally leaving home and have little budgeting experience.

7.3). The whole problem is made worse by the Wingfield v De St Croix court case from 1919 where the court decided a guarantor on a periodic contract had the right to give reasonable notice. Landlords could sign up a tenant with a guarantor and then have the guarantor immediately serve notice.

8). Just this week Acorn (the tenants’ union) have celebrated TSB agreeing to change their mortgage condition to allow landlords to issue three year fixed terms rather than the one year that was previously allowed. Shelter have long complained that "any day" the tenant can get section 21 evicting them, actually it is a two month warning and typically several months for the court beyond that, but it can arrive any day after the last two months of the fixed term. Getting rid of the fixed term will just mean that "any day" from 10 months they may get a section 8 notice evicting them. Tenants and landlords want fixed terms. We believe the loss of the fixed term was to allow tenants to serve their two months’ notice and leave if the landlord does not look after the property. However, giving them this freedom in by only having periodic tenancies opens the door for the landlord to serve notice as well.

8.1). Why not allow fixed terms but introduce a system for the tenant to be able to serve a disrepair notice (which could be for a specified period) and if the landlord does not respond appropriately, the tenant would be able to give a ‘vacation for disrepair’ notice. This latter one could be much shorter, say 1 or 2 weeks, whereas the current rules will require the tenant to give at least two months’ notice, but expiring at the end of a rental period. The average would be circa 10 to 11 weeks. This long notice is a problem as any property currently on the market will be let long before 10 weeks. Therefore, under the current system proposed, the tenant would have to serve notice without securing a property. In the suggested system, with a much shorter notice, if the landlord does not repair they can take their time finding a suitable property and give a short notice to leave once one is found. This would make the system far more tenant friendly. This suggestion would address Matthew Pennycook’s concerns about substandard properties but provide the market with the stability and certainty of fixed terms and would actually help tenants to move.

9). The current plan involves a "big bang" commencement for new and existing tenancies. Many landlords are concerned bout the new legislation and we would expect a number to be wating to serve notice till they here the law is being commenced. If there is a single commencement dates for all we believe this will have two negative impacts.

9.1). Firstly, by having a bigger focus on a particular date it will encourage more landlord to chose to serve notice before that date. If the commencement dates was for new tenancies and for existing tenancies there was a one year transitional period there would be less focus on a single date and so less pressure for all to serve notice by that date.

9.2). If there is focus on a single date many tenants, who might have left of their own choice in the next 12 months would be evicted prematurely. By having a 12 month transition more tenants would choose to leave on their own terms and it would not negatively affect the number of section 21 notices served, on the contrary, there would be fewer served.

9.3). The big bang introduction is likely to cause more tenants to turn up homeless with the local authority. Again, if tenants left during the following year they would be more likely to have sorted out their own new accommodation and it would reduce what could be an unsustainable level of work for the local authority. When tenants go to the local authority it is rare that they will get offered a council house. Most likely they will be helped into the private rented sector, but the landlords could be leaving that and for reasons explained above, would be more nervous of those on lower incomes (which are those most likely to need the assistance of the local authority to secure housing). Local authorities generally already have families in bed and breakfast type temporary accommodation. Having a sudden upsurge in those made homeless will simply result in more people in temporary accommodation (why not leave them living in a perfectly good home for longer). The local authority will have enough staff for the normal level of homelessness applications and if they get a sudden upswing it will take them longer to process them, requiring staff to be pulled from other tasks like finding move on accommodation, and it will all result in people being in temporary accommodation for longer. There are also budgetary considerations for local authorities already short of funds.

9.4). If landlords were nervous of the new legislation and had a year to see it in action, they would have an opportunity to see that it was not a disaster and most things continued to work fine. This might encourage a percentage to remain in the market, keeping another home available for tenants and keep tenants out of temporary accommodation. In the second reading it was raised that landlord would sell, to which the reply was that "where do you think the properties go". Clearly they do not disappear. The point to note is that the vast majority of tenants cannot purchase the property. Therefore whilst it may be sold it is still more than like to see a tenant evicted without a home to go to. Making it easier for someone to move out of home and buy the ex-rented property does not help the tenant. The real solution to pretty much all the problems in the PRS would be to have a lot more rented properties (these could be social or private). If you created oversupply rent would not be so high. Landlords would not serve even a section 21 without very good reason as the property might be empty for some time before re-let (a bit like can happen in the commercial market now). Landlords would have to look after the properties and tenants in order to keep them as they would not want the void risk. Sadly, driving landlords out of the market is working completely in the wrong direction.

10). Rent increases.

10.1). The proposal is that all rent increases are by section 13 notices. Interestingly in recent year CPI linked rent increases have protected tenants from larger rent increases, something that will be lost. However, section 13 increase come with the right to an appeal under section 14. The current rules allow for the rent to be set at market level and from the date in the notice. This means that the tenant risks a higher rent increase if the tribunal feels the market rent is higher than being asked. The proposal is that the set level would be the lower of what was being asked or the market rate, meaning there would be no risk to tenants in appealing, they get nothing or they get a reduction. This could cause an significant increase in appeals with little purpose if the rent was already set to market rent.

10.2). The proposal for the increase to take place from the date of tribunal will mean, linked to the above, that it would be totally logical for every tenant to appeal every increase, even if they don’t expect to get and reduction in rent level, simply because they will not have to pay the increase to many months. Section 14 appeals are currently take 4-6 months and without the Government putting significant extra resources into the service, it is likely to get longer, and the longer the better for delaying the rent increase. This look like a system that has not been through enough.

11).Student lets

11.1). It seems strange to only include HMOs in ground 4A. If landlords are to arrange accommodation for students they need certainty it will be available, whether it is a two bed flat or a four bed house.

11.2). Scotland introduced similar rules some year ago. Student letting seems to have changed and, without the fixed term, the letting of student houses is now done (at least in the markets I have heard about) over the summer holidays. This is mad as the students are generally not at university during that time. Talking to one young lady (trying to arrange a letting from her home in Norway on nothing more than a video tour), she was relaxed as she could always give notice and move. Factually this may be true but practically it is a lot of cost and hassle for students which would easily be avoided by providing the certainty of the fixed term and therefore keeping viewings during the term time. Also logic says that the only properties that are likely to be available are those in poorer condition and a current tenant is also looking to move. Many students also move their belongings to their new property at the end of the summer term, meaning they don’t have to take it all home. If they have not yet secured a property there will be more parents driving to Uni to collect offspring only to take everything back in the autumn.

October 2024