If you are an existing private landlord, or considering entering the buy-to-let market, the new Bill running through Parliament may give you cause for thought. Certainly you may wish to consider a fresh approach to letting in order to minimise problems in the future.
Significant changes are afoot which will have serious implications for landlords seeking to gain possession of their property. The length of time taken to recover possession and associated costs of the exercise may increase if the Bill passes in its current form.
It will be increasingly important to ensure you have taken mitigating steps at the outset to avoid any issues arising further down the line.
If you are thinking about purchasing or selling a buy to let investment, our residential property team are available to support you through the entire process.
Alternatively if you are a Landlord and wish to discuss any of the issues subsequently raised our Litigation and Disputes Lawyers can help . Please contact your local Kingsfords office in Ashford, Cranbrook or Hythe. Alternatively, you can send an enquiry and a member of our team will get back to you promptly.
Renters Rights Bill – Some of the Key points.
- “No Fault” evictions under the Section 21 procedure will no longer be possible.
- Tenancies will become “Periodic”, running from no more than month to month, rather than for a fixed term.
- Whilst tenants can serve a 2 month notice to end the tenancy at any time, Landlords’ notices will have to be for a minimum of 4 months and only after an initial 12 month tenancy period has elapsed.
- New grounds enabling Landlords to sell, or move into the premises will apply, but again only after an initial 12 month period and upon giving 4 months’ written notice.
- Rent reviews/increases will be limited to one per 12-month period.
- Tenants will be entitled to keep pets.
- Any discrimination against tenants on the basis they have children and/or are on benefits will be banned.
- A ‘Decent Homes Standard’ will apply to tackle less scrupulous landlords.
What if I need to secure Possession now?
Whilst the Section 21 “no fault” possessions route still exists, you may wish to consider that option before the anticipated law, (with its complications), comes into effect at some point in 2025.
If the premises are not delivered up under the S21 notice you may want to initiate a court claim now. In those circumstances it may become increasingly advantageous to ask for the Court’s permission to “transfer up” the Possession Order to the High Court for enforcement. Although that step will incur initial higher fees through the use of a High Court Enforcement Officer, it should represent a significant saving in time. That shorter time saved may also represent savings of many thousands of pounds as subsequently detailed.
Gaining possession under the new regime
The adage “Prevention is better than a cure” will increasingly be at the forefront of Landlord’s minds. Notwithstanding the anti-discrimination aspects of the intended law, we think Landlords will adopt far more stringent vetting processes when considering tenants.
Once law, possessions will be via the “Section 8” process, under which robust grounds for granting possession must be evident. Simply there be outstanding arrears of rent for example may not necessarily be sufficient grounds alone to proceed.
In rent arrear claims, the rent must have been in arrears for a minimum of 13 weeks before they can serve a 4 months notice to repossess. Taking into account the additional length of time the court action and eviction process itself will take, outstanding arrears of rent in excess of a year plus are likely to become the norm.
Another fear – unless checked by Parliament in the debating phase, is the inference that should any of the arrears be discharged before the issue of the claim, then the enforcement clock has to be reset. A “canny” tenant seeking to exploit the law, could pay a small part of the 13 week arrears just before that period expires, thus preventing the 4-months notice from being served.
Regrettably the existing court system and its limited number of bailiffs are struggling to cope with post-pandemic demand and that situation is only going to get worse in our view.
For the quarter April to June 2023 landlord possession claims increased in the same quarter of 2024 from 22,526 to 24,495 (up 9%), possession orders from 16,029 to 18,436 (up 15%), warrants from 9,957 to 11,172 (up 12%) and repossessions from 5,950 to 6,927 (up 16%).
There are only approximately 170 County Courts in England and Wales comprising around 400 or so District Judges with approximately 320 bailiffs to deal with all manner of enforcement orders. Unless there are adequate reforms to increase judicial numbers and equally their Bailiff counterparts, the whole court system will come under severe strain.
In turn the court system needs an overhaul to increase its capacity and cope with the anticipated increase in Possession claims passing through it. Currently the process can take a minimum of 6 months, during which time any rent arrears could grow significantly. This period will increase as it takes a further four to six weeks for a County Court bailiffs Warrant of Possession to be approved, as compared with around just 7 days for a High Court Enforcement Officer. (This may add to the attractiveness of adopting the HCEO route).
Conclusions.
The Act may have the unintended consequence of private landlords withdrawing their properties from the rental market. By reducing the supply of rental housing available, coupled with an ever increasing demand from those unable to join the property ladder itself, rental prices may increase dramatically. This is already the case in various hotspots in the UK.
On the flip side if rental supply shrinks, it may mean that first time buyers benefit should private landlords withdraw their properties and look to cash in their asset.
The remaining private Landlords will in all probability feel they have to commence court action sooner rather than negotiate with tenants, in an attempt to keep some level of control and minimise their financial exposure. Landlords are likely to need greater legal advice and assistance in the next few years when the Bill becomes law and these choppy waters are navigated.
If you are a Landlord and wish to discuss any of the issues raised in this article our Litigation and Disputes Lawyers can help . Please contact your local Kingsfords office in Ashford, Cranbrook or Hythe. Alternatively, you can send an enquiry and a member of our team will get back to you promptly.
If instead you are thinking about purchasing or selling a buy to let investment, our residential property team are available to support you through the entire process.