Renters' Rights Bill

Written evidence submitted by Matthew White, Regional Lettings Director, Hose Rhodes Dickson (RRB35)

I suspect that you may have and will receive a raft of emails and letters from Island landlord’s and maybe letting agents, expressing concerns and disappointment over the introduction of Labour’s Renters Rights Bill and how, potentially, they believe that the abolition of section 21 of the Housing Act 1988 could lead to a mass exodus of landlords from the Island’s PRS. That is not why I am reaching out to you despite being a landlord, providing homes to Island families and pensioners, and the director in charge of residential and holiday lettings for Hose Rhodes Dickson.

For good, reputable landlords who maintain their properties and provide safe, compliant, and comfortable homes to their tenants and whose tenants care for the property they rent and pay the rent on time and in full, month on month, the abolition of section 21 of the Housing Act 1988, in my professional opinion, should not be a concern. My question to the landlords who may have reacted out to you without first considering their position, is; ‘why would you want to evict a good tenant, who cares for the property and pays the rent on time and in full?’ Section 8 of the Housing Act 1988 is being enhanced with provisions for landlords to recover possession of their property should they wish to sell or move back in; it also provides for instances where a tenant is guilty of anti-social behaviour and the provision to recovery of possession due to rent arrears remains.

My reason for reaching out to you is to bring to your attention, should you not already be aware, the impact that the repeal of Ground 3 of Section 8 of the Housing Act 1988 will have on both the Island’s tourism sector, specifically self-catering, as well as the availability of rented housing stock usually let with long-term intentions.

Please may I be clear that I am not supporting the financially secure, second homeowner who only visits the Island at school holidays, leaving their properties vacant the remainder of the time. I am supportive of those that have either constructed, converted, or purchased property on the Island to provide Island visitors with quality, safe and complaint self-catering holiday accommodation. With occupancy of furnished holiday lets being very low in the winter months on the Island, say November to March, many furnished holiday let business owners, make ends meet financially with short-term letting in the winter months to those that seek such short-term housing for a specific need, which in many cases, this need is neither their preference or wish.

These properties are often let to those between selling their home and purchasing another, having to vacate their home whilst remedial works are completed following flood or fire damage, working on the Island for Island businesses or public services providers as sub-contractors or on secondments for say 2 to 5 months. These people are neither seeking accommodation on night rate basis or long-term rented accommodation and therefore, the provision of short-term furnished housing for say 2 to 5 months meets this need and prevents impact on the availability of rented accommodation for those seeking a long-term rented home.

Ground 3 of Section 8 of the Housing Act 1988 affords those with property that is principally let as holiday accommodation a secure means to let to a niche marketplace under the Housing Act 1988. This legally correct and appropriate means of delivering short-term housing, mitigates the risk of impact on the primary aspect of their property business, furnished holiday letting and provides confidence to let to this niche market during the winter months.

With reference to the explanatory notes that relate to the Renters (Rights) Bill prepared by the Ministry of Housing, Communities and Local Government, the notes set out the background, purpose and use of the Ground 3 provision, however the notes do not explain the rationale behind why landlords will now be, "prevented from evicting tenants in order to let properties out for short periods of high tourist demand", and it is the rationale behind the repeal of Ground 3 that I seek clarity on from you.

Given that the lawful use of the Ground 3 provision requires very specific criteria to be met;  the property must have been let as a holiday let in the 12 months prior to the tenancy being granted and that the tenancy is for a term no longer than 8 months, I can not reach any determination on how a landlord letting their property long term to tenants under an assured shorthold tenancy created by the Housing Act 1988 could in anyway lawfully use Ground 3 of Section 8 of the Housing Act 1988 to evict long-term tenants in order to take advantage of "high tourist demand" and let their property as short-term accommodation under a license to occupy. If a landlord tried to use a Section 8 notice citing Ground 3 where they were unable to meet the qualifying criteria, the notice would not be valid, and the landlord would not be successful in evicting the tenants. I trust you will agree that with this very specific criteria having to be met and with the burden of proof being the landlord’s, it is not possible for a landlord letting their property on a long-term basis under an assured shorthold tenancy created by the Housing Act 1988 or indeed as an assured period tenancy, which will be case following implementation of the Renters (Rights) Bill, to use Ground 3 lawfully.

Please find below an extract from the explanatory notes on the Renters (Right) Bill, prepared by the Ministry of Housing, Communities and Local Government referencing the repeal of Ground 3;

Repeal of Ground 3: holiday accommodation

Effect

874 Paragraph 8 removes ground 3 from Schedule 2 of the Housing Act 1988.

Background

875 Ground 3 of Schedule 2 of the Housing Act 1988 requires the court to award possession if, at some time in the 12 months prior to the tenancy starting, the dwelling-house was used as a holiday let. In practice, this ground facilitated seasonal holiday lets – properties would be let out as a holiday let over summer, and to a private tenant for the rest of the year.

876 The removal of ground 3 means that the court will no longer be required to award possession on the basis that the property was previously used as holiday let in the 12 months before the start of the tenancy. This will prevent landlords evicting tenants in order to let properties out for short periods of high tourist demand.

877 Under Schedule 1 of the Housing Act 1988, a holiday letting is excluded from being assured tenancies and will remain excluded from being periodic tenancies. A holiday letting is a tenancy the purpose of which is to confer on the tenant the right to occupy the dwelling-house for a holiday.

The impact on Isle of Wight tourism with many self-catering holiday accommodation businesses being rendered not financially viable with the repeal of Ground 3, will see many jobs and businesses that support the self-catering holiday accommodation business owners with housekeeping, linen hire, maintenance works, and booking and managing agencies, all put at risk.

It is my view that those that drafted both the Renters (Reform) Bill and the Renters (Rights) Bill have not considered that Ground 3 is used for the legitimate purpose of bringing to an end assured shorthold tenancies and going forward assured periodic tenancies, that meet very specific qualifying criteria and that provide short-term housing for those tenants / renters that have sought out housing to meet their specific need. For example, those whose homes have been damaged by flood or fire, are between selling one home and buying another or those seconded to or contracted under short-term job relocations, all seek furnished, short-term housing. These types do not need nor do they seek long-term rented housing and therefore, this demographic of renters at present are not reducing or impacting the availability of long-term, unfurnished residential rented homes for families, pensioners and individuals looking to secure long-term homes to rent.

With Ground 3 being repealed and presenting a clear risk to the availability of furnished, short-term housing, those that seek this type of housing will in the future have little option than to secure housing from the available mainstream rented housing stock and with the heightened financial security that those seeking short-term housing present to landlords, we will see a reduction in the availability of rented homes that would and is at this time secured by families, pensioners and individuals looking for long-term rented homes.

One may suggest that those that seek furnished, short-term housing should secure a furnished holiday let or serviced accommodation under a license to occupy and not a tenancy, which I agree they could. However, the periods of occupancy required to meet the needs of this demographic are greater than the maximum 30-day period allowed to maintain the status of a license to occupy as a furnished holiday let / serviced accommodation.

A real time example of the need on the Isle of Wight, and indeed in other parts of England, for furnished, short-term housing can be referenced by the devastating losses many residents sustained and experience during the winter of 2023 when many homes were flooded and were rendered unhabitable. Many of these homeowners secured furnished, short-term housing from the stock of properties that are principally let as furnished holiday lets throughout the Spring, Summer, and Autumn months and available short-term through winter months. Invariably the insurers for the homeowners who homes were flooded met the cost of the short-term rented housing, which given the extensive damage sustained to these homes, required the alternative accommodation to be for a term longer than 30 days. I am certain that those whose homes sustained superficial damage and only required alternative accommodation for terms less than 30 days, secured accommodation on a night rate basis in hotels or furnished holiday lets. Neither of these two requirements for alternative accommodation have to date impacted on the long-term rented housing stock available in the PRS. Going forward with the repeal of Ground 3, I am certain it will.

For a landlord who is presented with the opportunity of securing a tenant whose insurer is paying the rent, this guaranteed payment of rent is very attractive and in my professional experience as both a landlord and a letting agent with over 30 years in the sector, a landlord is likely to select a tenant whose rent is guaranteed by an insurer over a family, pensioner or an individual reliant on their household income to pay the rent. One might be of the view that the family, the pensioners and the individuals present the landlord with a long-term tenant, and currently that is the case. However, under the Renters (Rights) Bill, a tenant will enjoy the provision to give the landlord 2 months’ notice to quit the tenancy at any time and therefore, under the Renters (Rights) Bill, a family, pensioner nor an individual presents no greater length of tenancy than those seeking a short-term tenancy, when the rent is guaranteed. With the impact on the availability of short-term housing for those specifically seeking it, it is my professional view that the repeal of Ground 3 will impact the availability of rented homes being sought by families, pensioners and individuals.

May I thank you in anticipation of your kind consideration of my concerns over the impact of the repeal of Gound 3 of Section 8 of the Housing Act 1988 and I would be obliged if you would bring this matter and my concerns to the attention of your colleagues in the Ministry of Housing, Communities and Local Government, together with your fellow MPs with the view that a review on the repeal of Ground 3 of Section 8 of the Housing Act 1988 maybe considered. If not, I would really like to understand from those that considered and decided on the repeal of Ground 3 their rationale for its repeal other than the narrative of the explanatory notes that states what the repeal of Ground 3 will do;  "prevent landlords evicting tenants in order to let properties out for short periods of high tourist demand".

October 2024