Changes to the Obligations on Landlords

Since my last blog, further amendments to the Renters Rights Bill (‘the Bill’) have been made, whilst other proposals remain under review by the House of Lords. It remains, however, that landlords must follow strict conditions imposed by Section 8 to recover possession of their property. Also prohibitions against both discrimination of applicants and rental bidding will apply

Advertised rent and rental increases

Rental bidding (the act of encouraging or accepting rental bids higher than the advertised rent), is prohibited under the Bill.   It is suggested The Living Rent Body will govern how a landlord calculates the advertised rent for their property, albeit tenants could still challenge the rent via the First-Tier Tribunal (Property Chamber) (‘the FTT’) after securing the tenancy.

Advanced rent payments will be capped at one months’ rent, with any higher amounts being regarded a ‘prohibited payment’.  Landlords will be obliged to return any ’excess’ to their tenant and may be prevented from serving a notice to end the tenancy until such time as that is done.

As tenancies will automatically convert to assured periodic tenancies, landlords will be required to serve a Section 13 Notice to increase the rent and can only do so once in any 12-month period.  Furthermore, landlords will need to give tenants two months’ notice before the proposed rent increase takes effect. There have been discussions about limiting rental increases to the Bank of England Base Rate, but alternative mechanisms are also being considered.  Rental increases can be challenged by tenants through the FTT, who will either uphold the proposed increase or set another rent, which will take effect from the FTT’s decision date (and will not be backdated to the expiry of the Section 13 Notice).

Discrimination

Landlords must not discriminate against applicants with children or those receiving welfare benefits and, more recently proposed, those with disabilities that may require home adaptations.

Guarantors

A landlord’s ability to insist on a guarantor is likely to be limited, particularly where a tenant pays a deposit, Universal Credit is paid directly to the landlord and/or the landlord has insurance for non-payment of rent.  Additionally, it is proposed to prohibit guarantors from being liable for rent following the death of a tenant (albeit the landlord could still recover arrears up to the date of death).  It is proposed a guarantor’s liability will be capped to a maximum of 6 months’ rent.

Section 8 Grounds

The Bill expands mandatory ground 1 to allow landlords, and now their immediate family, to recover possession for occupation as their main dwelling, while Ground 1A (new), will allow a landlord to recover possession to sell their property.  These grounds require landlords to give a mandatory four months’ notice to their tenant, so they can source alternative accommodation. To discourage misuse of these grounds, there will be a restriction preventing landlords from re-letting a property within 12-months of the section 8 Notice being served on either of these grounds.

The Bill introduces Ground 6A, and 6ZA, enabling possession to be recovered by superior landlords and intermediate landlords where they must undertake repair works or address licensing issues, which cannot be achieved while their tenant is in occupation. These grounds aim to ensure properties comply with the Decent Homes Standard (which will follow separately under new legislation) and are safe for human habitation. It remains under discussion whether landlords relying on ground 6A, will be required to compensate their tenant.

Mandatory ground 8, which many landlords are already familiar with, will require the tenant to have 3 months’ rent arrears (as opposed to 2 months currently) before a Section 8 Notice can be served.  All rent arrears grounds (8, 10 and 11) will also require the tenant to be given 4 weeks’ notice (instead of 2 weeks currently) before proceedings can be issued. Landlords should consider addressing rent arrears at an early stage and, if possible, seek to agree a repayment plan with the tenant. Where a tenant does not engage with their landlord, or make additional repayments, the landlord could apply to court to recover possession. Landlords wanting to use this ground for possession may prefer to serve their Section 8 Notice before rather than after the new legislation comes into force.

If you require advice about recovering possession of your property, then please contact our expert Tracey Smith.

John Lloyd | Trainee Solicitor