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Tessa Shepperson

Specialist Landlord and Tenant Lawyer, Landlord Law

The private rented sector post-Brexit: Carrying on as usual

The private rented sector post-Brexit: Carrying on as usual


Tessa Shepperson discusses how the referendum result will affect landlords and tenants, particularly in terms of changes or delays to new legislation

Tessa Shepperson discusses how the referendum result will affect landlords and tenants, particularly in terms of changes or delays to new legislation

We live in interesting times. We woke
up on 24 June to a changed world:
our relationship with our European neighbours forever changed, the possible breakup of the union, and, after a couple of weeks, a completely new government. How
will this all affect housing and the private
rented sector?

In the immediate future

Initially, there will be no change - to the law at least. All existing laws will remain as they are.

In terms of the economy, there are concerns about a drop in property prices but I suspect
that prices are unlikely to drop too far. We have
a housing shortage and people need homes to live in. Market forces will presumably prevail.

There is then the question of what happens about legislation already in the pipeline. So far
as this article is concerned, there are two main recent Acts:

  • The Housing and Planning Act 2016; and

  • The Immigration Act 2016.

Both of these require delegated legislation before they come into force. It is unclear whether this
will be delayed due to the extra burden placed
on parliament by Brexit. We shall have to see.

There is also a question of whether all of the legislation should stand as it is, bearing in mind our changed circumstances. Immigration Act 2016

There will almost certainly be changes coming
for immigration law. A large percentage of those who voted for Brexit did so in the belief that this would lead to reduced immigration, and the government has indicated that this wish should be respected, always assuming that it is possible. This may well impact the new Immigration Act.

For landlords, the relevant part of the act is part 2, which sets out the details of offences relating to renting to persons without a right to rent, and the new powers of eviction which landlords will have
to enable them to remove the offending tenants.

It is arguable that even if there is a major overhaul of the immigration legislation, these rules, or some very like them, will still be required. However, it may be that until we know what these new rules are, the government will decide to delay the implementation of the rules presently
in the statute. Or it may not. Some delegated legislation will be required, though, as the statute refers to official guidance being available.

There is also the point that the statute, as currently drafted, does not appear to give tenants any right to appeal against a notice from the secretary of state served under section 40, particularly where the landlord is entitled to enforce this (after service of
a 28-day notice on the tenant) as if it were an order of the High Court. There may well be human rights appeals, particularly if notices are issued on incorrect grounds.

Housing and Planning Act 2016

This is a big Act which will require a lot of delegated legislation before it can come into force. So far as the private rented sector is concerned, the Act is fairly uncontroversial
and the only problem is finding time to deal
with the prescribed forms and regulations.

However, there is some controversy regarding the rest of the Act, with its emphasis on promoting starter homes for first-time buyers and the extension of the right to buy in the social housing sector.

There is a considerable body of opinion saying that this is the wrong approach and that if we
are to solve the housing crisis, which most people now admit is serious, it is going to be necessary to encourage social landlords to build more houses.

For example, the recent 'Building more
homes' report from the House of Lords Select Committee on Economic Affairs makes the following points:

  • The government's assessment of the number of new homes needed is too low. We need
    to build in the region of 300,000 per year;

  • The private sector is not able to meet this
    need, nor is it in its financial interest to build the type of housing which is urgently needed, i.e. low-cost family homes;

  • The only way that the need can be met is
    by encouraging the social sector (local authorities and housing associations) to
    build more properties; and

  • For this to happen there needs to be a substantial change in policy, as the Cameron government's policy was to support owner occupation at the expense of the private
    and social rented sectors.

Theresa May's speech on the steps of No 10 at
the time of taking office promised to look after
the interests of ordinary families. As a shortage of affordable housing is one of the biggest problems facing many of those families, it is to be hoped
that May's government will take on board and action the recommendations of the select committee's report.

Other proposed legislation

Legislation currently going through parliament
or still on the drawing board is probably going to be considerably delayed or killed off by Brexit. For example, Caroline Lucas' Housing (Tenants' Rights) Bill and Baroness Grender's Renters' Rights Bill, both private members' Bills, are unlikely to make
it onto the statute book.

There were also government initiatives to
revisit and simplify the tenancy deposit legislation (now unnecessarily complex after two sets of amendments), and also to revise the houses in multiple occupation (HMO) licensing rules to extend the remit of mandatory licensing beyond the current limits. It is uncertain whether these
will now go ahead.

EU legislation

Finally, there is quite a lot of EU legislation that impacts the private rented sector. This legislation
is still in force at the moment, but as and when
we exit the EU, it will need to either be repealed
or replaced with British versions. The regulations include:

  • The Heat Network (Metering and Billing) Regulations, which in particular affect HMOs;

  • The Consumer Protection from Unfair Trading Regulations, which deal with property misdescriptions and other trading issues;

  • The Energy Performance of Buildings Regulations, which require tenants and property buyers to be provided with an ~energy performance certificate; and

  • Various regulations regarding the provision
    of services by agents to consumers, which
    are all derived from EU legislation.

The easiest way for parliament to deal with
these would be to pass an Act providing for all regulations made in support of EU directives to continue in force as before, and then to look at
the individual regulations separately and amend
or repeal them at a later date.

Brexit will impact in various ways on all our lives, but it seems that, apart from price fluctuations, there is unlikely to be any immediate change in
the rented sector. The main result is likely to be big delays in new legislation, although it is to be hoped that the May government will look kindly on the recent select committee report.

So far as your advice to landlords is concerned, the best thing you can do is to recommend that they keep themselves informed but, in the meantime, carry on as usual.

Tessa Shepperson is a lawyer and blogger on landlord and tenant law @TessaShepperson