Managing Tenancies

Summary

Landlords' responsibilities in tenancy management have changed significantly over the past two decades. As the demographics in the private rented sector shift and with 20 percent of households now privately renting, the Government is looking to regulate landlord-tenant relationships further.

Our policy work in this area includes:

• tenancy reform and possession
• deposits.

Our policy

We recognise the importance of the landlord-tenant relationship as the centre of a successful tenancy.

This means that both landlords and tenants know and understand their rights and responsibilities.

Regulation of this relationship should ensure that criminal landlords are not able to take advantage of vulnerable tenants but should also be balanced to ensure that responsible landlords are able to run their businesses effectively.

Tenancy reform and possession

Landlords can seek possession through two processes under the Housing Act 1988: Section 8, which requires the landlord to provide a reason - or ground and Section 21, which can only be used outside of a fixed term but which doesn't require the landlord to specify a ground. If the criteria for a Section 21 claim are met the court must grant possession, whereas under Section 8 some grounds are mandatory, whereas others - such as anti-social behaviour - are discretionary.

In the biggest change in the sector for 30 years, the UK Government has announced that it will be abolishing Section 21 and landlords will need to use the Section 8 process to regain possession. This will apply in England only.

The Welsh Government has recently passed the Renting Homes (Amendment) Bill that encourages landlords to use Section 8 rather than Section 21 for grounds-based possession claims. This has been done through increasing “no-fault” notices to six months and preventing the service of such a notice in the first six months, creating one year’s security of tenure. The changes will come into effect with the implementation of the Renting Homes Act, scheduled for Spring 2022.

Many landlords currently use Section 21 even though they have grounds under Section 8 due to the longer process, higher cost and lack of certainty associated with Section 8.

Our policy

Alongside reforms to the courts, we are calling for the Section 8 grounds to be updated so that they reflect the current rental market and enable landlords to be confident that they will be able to regain possession where they have legitimate reasons to do so.

We are calling for:

• the introduction of grounds where landlords need to sell, or they or their family need to move into the property
• changes to ensure that landlords have a reasonable expectation of regaining possession where there is antisocial behaviour
• improvements to the rent arrears grounds so that tenants cannot continually build up and pay down just prior to possession hearings, unreasonable arrears, in order to avoid mandatory grounds
• better protections for landlords where tenants are illegally subletting properties.

Deposits

Many landlords take security deposits at the beginning of a tenancy. In England, the Tenant Fees Act limits the maximum amount which can be taken as a deposit to five weeks' rent in most cases. This does not apply in Wales, which has its own tenant fees ban. There still remain concerns around the affordability of deposits and that some tenants struggle to access housing because of this.

This has led to a number of tenancy deposit alternative products entering the market. These are unregulated products with varying amounts of cover for landlords and tenants.

The UK Government has announced that they will be introducing 'lifetime deposits' in England to help tenants move around the private rented sector. We are participating in the working group exploring how this scheme will work. The NRLA is campaigning for a similar scheme in Wales in the form of a tenant passport.

Our policy

• Deposit schemes need to work for both landlords and tenants - it's vital that landlords are confident that they will be able to reclaim any damages at the end of the tenancy.
• It's important that landlords have the full protection of the deposit throughout the duration of the tenancy - any schemes to effect 'deposit passporting' between tenancies should not disadvantage the landlord from making legitimate claims on the deposit.
• Equally, any such schemes should be designed so that tenants are not disadvantaged in applying for tenancies due to a perceived higher risk.

Amount of regulation

The last decade has seen a significant increase in the legal obligations placed on landlords. Since the start of the coalition Government, there have been 47 new statutory provisions that landlords need to follow to manage their properties.

This will continue to increase. By the time the Building Safety Bill is given royal assent, the number of statutory provisions on private landlords will have risen by 40% in the last decade to 168 pieces of legislation.

Given all of this it is not surprising that many landlords feel that the increasing legislative load makes it difficult to manage tenancies effectively, particularly where multiple pieces of legislation overlap.

Not under-regulated but under-enforced: the legislation affecting private landlords

Our policy

Rather than adding new legal obligations, the NRLA believes that future developments in PRS legislation should focus on two areas –

• Improving local authority enforcement levels rather than the scope of enforcement. Local authorities already have extensive powers to improve property conditions, but they are not using them.
• Updating older legislation for the modern world. Much of the legislation that underpins landlord and tenant law was written before email and could be updated to allow for easier use of electronic communication. It could also be adapted to reflect how tenants choose to live with friends rather than family for longer by making it easier to replace a joint tenant. The Renting Homes (Wales) Act is already doing this and thought should be given to a similar approach in England.