The end assured shorthold tenancies and fixed-term assured tenancies – landlords beware!

This ebriefing is the first in a series covering all aspects of the Bill and focuses on the proposed changes to tenancies and new implied terms.

Changes to tenancies

The Bill will introduce the following amendments to the Housing Act 1988 (the ‘1988 Act’) to provide that:

• Assured tenancies can only be periodic with rental periods capped to a maximum of one month (i.e. fixed term assured tenancies will be prohibited).
• Assured shorthold tenancies will be abolished.
• The ability to demote an assured tenancy to an assured shorthold tenancy because of anti-social behaviour will be abolished (although this is a tool we rarely see used).
• Private sector landlords and registered provider landlords of accommodation that is not social housing (i.e. market rent lettings) must give tenants a written statement:
  • of tenancy terms that are to be specified in regulations to be made under the 1988 Act
  • that the landlord proposes to have the ability to recover possession on certain grounds for possession set out in schedule two to the Housing Act 1988 (which are to be significantly amended and will be covered in a later instalment of this series)
  • of other information about the tenancy, the property, the parties and the rights of the parties that is to be specified in future regulations to be made under the 1988 Act.  

In addition, the Bill will amend the 1988 Act to make it clear that fixed-term tenancies of seven years or more (i.e. long leases) cannot be assured tenancies. This will change the position for how existing shared ownership leases can be brought to an end (more on this to follow in a later instalment of this series), although there is some transitional protection where possession proceedings have already commenced based on a notice of seeking possession.

New implied terms in tenancies relating to pets

The Bill will also make it an implied term if every assured tenancy except where the landlord is a registered provider of social housing and the accommodation is social housing, that:

• the tenant may keep a pet at the property if the tenant seeks written permission to do so and the landlord consents in writing. Landlords will not be permitted to refuse consent unreasonably and must in general terms give or refuse consent in writing within 42 days of the date that the request is made (subject to additional provisions relating to the landlord seeking additional information from the tenant, situations where the landlord needs to obtain consent from its superior landlord and delays agreed between the parties).   
• The Bill provides some guidance as to when it would be ‘reasonable’ for the landlord to refuse consent to the pet, including where:
  • keeping the pet at the property would cause the landlord to be in breach of its agreement with any superior landlord
  • the landlord has attempted to seek permission for the tenant to keep the pet from any superior landlord, but the superior landlord has not given consent.
• if the landlord gives consent to the tenant keeping a pet in writing, as a condition of that consent the tenant must:
  • at all times have insurance that covers the risk of pet damage to the property (and any communal areas outside the property that the tenant has a right to use with the property); or
  • pay the landlord its reasonable costs of maintaining insurance that covers the risk of pet damage to the property (and any communal areas outside the property that the tenant has a right to use with the property). (Note that the Bill proposes to amend the Tenant Fees Act 2019 to make such payments to the landlord ‘permitted’ under the Tenant Fees Act 2019).

The Bill defines a ‘Pet’ as an animal kept by a person mainly for:

• personal interest;
• companionship; and/or
• ornamental purposes.

So as things stand, this will be open to interpretation (although it is likely that guidance would be published to make the position clearer).

Implementation

The Bill (if passed as drafted) will apply to all new tenancies entered into after the relevant sections of the Bill come into force.

There are also provisions that will result in all existing tenancies transitioning to the new regime at a later date (with transitional provisions about existing court proceedings for assured shorthold tenancies).

Likely commencement

The Bill is, of course, subject to change having only just been given its first reading in the House of Commons. The Bill will next be debated and scrutinised during various further Parliamentary stages but is expected to be finalised prior to the end of this Parliamentary session in early summer.

Clearly, there is some way to go before the Bill comes into force. We will though provide further updates as the Bill passes through the Parliamentary stages if significant changes are made.

Comment

There have been mixed reviews for the Bill so far across the rented sector, but it has been described by the Government as a ‘once in a generation overhaul of housing laws that will benefit 11 million tenants across England’.

The impact of the Bill is clearly significant and we have considerable change ahead. As the Bill passes through the various stages of Parliament, careful and early planning is essential to ensure that landlords are ready for the new regime when it does come into force in the medium term.  

In particular, landlords will need to prepare for the introduction of a single system of periodic assured tenancies, which will involve an overhaul of existing tenure (removing assured shorthold tenancies, starter tenancies and fixed-term tenancies, that were introduced more widely by some registered provider landlords just over a decade ago) and associated policies and procedures, as well as new forms of assured tenancy to ensure that they are able to quickly adapt to the new legislative framework.

There are obvious concerns about how the private landlord sector will react, with some landlords having exited pursuant to tax changes over recent years. With the Bill now published, will there be a flurry of section 21 no-fault notices served by those landlords seeking to regain possession to allow them to sell? One of the proposed new possession grounds is designed to address this issue as we’ll set out in a later briefing, but will this be sufficient?

It will also be interesting to see how far the regulations to be made will go as to the prescribed information to be included within the tenancy agreement. There are model occupation contracts within the new tenure regime now operating in Wales, but there have been no indications to date that the government will be as prescriptive in England. Landlords should also consider any amendments that would be needed to their policies and procedures on pets if the Bill comes into force. Registered providers will no doubt appreciate the exception made here for social housing properties, the proposals in this regard having previously raised concerns.

You may also be interested in

Renters Reform Bill webinar – Part one

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Renters Reform Bill webinar – Part two

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For more information, please contact Penny Bournes, an associate in our housing management team.

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