Landlord and tenant update

There is a general election next year and politicians have suddenly woken up to
the fact that between 10 and 25 per cent
of households are now living in privately rented accommodation. These are all potential voters, and they are not happy:

• Very few landlords are willing to give longer fixed terms (i.e. over one year), which many tenants would like.
• Their security of tenure is never more than the length of their tenancy agreement fixed term and the time it takes to get a possession order through the courts.
• Rents in the private sector, particularly in London, are very high and often unaffordable by low-income families.
• Many properties are in poor condition but tenants are often scared to enforce their rights because of the threat of ‘retaliatory eviction’.
• Even if tenants want to enforce their rights, bringing a claim through the civil courts is expensive and complicated and local authorities (in most cases the regulator) are often unable to help because of lack of resources. Generally, local authority budgets have been cut savagely along with their staffing.

However, landlords have complaints too.

• If a tenant is not paying rent, it can take six months or more to get them out of the property so a paying tenant can be installed. That’s a lot of lost rent.
• They are often forced to bring eviction proceedings against tenants simply so they can be rehoused by the local authority (tenants in ‘priority need’ are normally advised to stay put or they will lose their right to be rehoused).
• They can be forced to pay thousands of pounds in penalty payments to tenants if they are just a few days late in protecting the tenant’s deposit – even if the reason is innocent (for example, if they were knocked down by a bus and were in hospital).
• More recently, further to the decision in Superstrike Ltd v Rodrigues [2013] EWCA, they can be liable to penalties and be unable to evict their tenant under section 21 even if they have acted perfectly properly and in accordance with government advice.
• There is little or no regulation of letting agents and many landlords have lost thousands of pounds when agents with no client money protection in place have gone out of business.

So, what is the government doing about all this?

Tenancy deposits

Landlords will be relieved to learn that tenancy deposit legislation is going to be amended for a second time via an alteration to the Deregulation Bill. This will resolve the issues arising from Superstrike, which implies that landlords should again serve the prescribed information when tenants stay on under a periodic tenancy after the end of their fixed term.

Landlords will no longer have to do this once the legislation comes into force – believed to be either October 2014 or April 2015. In the meantime, however, it is still a problem.

Agent regulation

From October 2014 (or possibly April 2015), all letting agents (and property managers) will be required to be a member of one of three government-authorised redress schemes: the Property Ombudsman, the Ombudsman Service (property) and the property redress scheme.

This will at least give disgruntled landlords and tenants somewhere to complain to, assuming their agent has actually signed up to one of
the schemes.

The experience of the tenancy deposit scheme, where many landlords are still non-compliant more than seven years after the law came into force, indicates universal compliance may take a while.

The achilles heel of the ‘mandatory redress scheme’ for agent legislation is enforcement. All the redress schemes can do, ultimately, if a member refuses to abide by a decision, is expel them from the scheme. This will not help the complainant, although the agent will be vulnerable to a fine of £5,000.

Ideally, persistently non-compliant firms should be closed down – though this would probably require the help of local authorities, who in most cases are unable to cope with their existing workload. Still, the new regulations are a start.

Longer fixed terms and quicker evictions

These go together. Landlords (and, perhaps more importantly, their mortgage companies) are not going to be willing to give long fixed terms while the current eviction process for rent arrears takes up to six months or more and is vulnerable to being derailed by ‘devious tenants’ making up fictitious defences.

>The most efficient eviction procedure is the so-called ‘accelerated procedure’ under section 21 of the Housing Act 1988, which can only be used after the fixed term has come to an end. This is a disincentive to landlords to give longer fixed terms.

The government has set up a working party to look into speeding up the eviction process but has yet to do a final report.

There is always the option of forcing landlords to give longer fixed terms anyway, but this is what happened under the Rent Act 1977, which had the effect of depressing the private rented sector until it was virtually non-existent. If we want to retain a vibrant private rented sector and the cooperation of landlords, this is not the answer.

Developments in Wales

Things are a bit different in Wales. The National Assembly is bringing in mandatory licensing and accreditation for landlords under the Housing (Wales) Bill, which is making its way through the system.

There are also plans to simplify the legal system under a Renting Homes Bill, which, if it happens, will bring in many of the reforms proposed by the Law Commission’s report in 2006. The Welsh reforms are mostly good and hopefully will find their way into the English system in due course.

Immigration status checks

This is in the Immigration Act 2014, although the sections regarding landlord checks have not yet come into force. When it does, it will require all landlords to check the immigration status of all prospective tenants, the objective being to make it hard for illegal immigrants to find accommodation. It is believed that the scheme will be trialled first in one part of the country before it goes nationwide. However, this is unpopular all round:

• Landlords are furious at the prospect of being used as an unpaid and untrained ‘border control’ with the risk of a £3,000 fine if they make a mistake, while the government’s own immigration service is notoriously inefficient and cracking at the seams.
• Ethnic minority tenants are worried that this new law will give xenophobic landlords an excuse to discriminate against them.

With the private renting sector set to get bigger, this is now an important area of policy. It would help considerably if we could have housing ministers who stay in post for more than a year and who have some understanding of the subject. Knee-jerk reactions from people who don’t understand the issues are not helpful.

It would also show some commitment on the behalf of the government if the position of housing minister could once again become a cabinet post.

There is a groundswell of feeling among the public and the press that something is very wrong with our housing law system and that something needs to be done about it.

The landlord’s lobby groups (the National Landlords Association and the Residential Landlords Association) have now been joined by a new tenants’ lobbying group, Generation Rent, who have recently published their own manifesto. They are not going to go away.

However, the real problem is not housing law or landlords’ and tenants’ respective rights; it is that we don’t have enough housing to go round.

If we had ample housing, tenants would not have to live in fear of being evicted if they complain about the poor condition of their home. They would have somewhere else to move to.

Rents would come down as tenants would have more choice. However, in some areas (particularly in London), tenants often feel lucky if they can find a broom cupboard or garden shed with a rental of 50 per cent or more of their take-home salary.

You can only fix so much by fixing the law. We need to fix the housing supply too. SJ

Tessa Shepperson is a solicitor (non-practising) and publishes the Landlord Law blog