Agri landlords urged to act now before new bill

Landowners who privately rent properties are being urged to act now before new legislation is introduced which will make it more difficult to evict tenants.

If passed, the Renters (Reform) Bill aims to radically shake up the rental sector to make it fairer for tenants. The bill is being debated in Parliament now and while current speculation is that it could be another year before the legislation hits the statute books, lawyers say landlords should be aware of the incoming changes so that they can get their house in order.

Victoria Howlett, a specialist in agricultural and property litigation and a senior associate at national law firm Clarke Willmott LLP, said: “Many of the clients I work with are farmers and landowners who also have several properties which are rented privately.

“With today’s declining mortgage rate affordability and high inflation, rental figures look set to continue increasing for the foreseeable future. Yet demand is outstripping a diminishing supply as landlords, facing declining profits, have no option but to serve notice on their tenants so that they can sell up and exit the sector.

“While the introduction of the Renters (Reform) Bill may seem a long time off, we are speaking to our clients now about their mid and long-term plans for their properties and whether they will need to serve notice on their tenants.

“The Bill will introduce some serious changes, the most noteworthy being the abolition of “no fault” evictions via the section 21 notice. Under the new regime, a landlord will only be able to terminate a tenancy via the revised section 8 route. Therefore, it’s really important for people to be aware of what is to come.”

Other significant changes currently proposed by the Bill include:

• The section 8 grounds for possession will be widened to include new and revised mandatory and discretionary Of note to our clients is the new mandatory ground available to landlords requiring possession to house an agricultural employee.
• To increase rent (once a year at most), a landlord will need to complete a prescribed form and serve it on their tenant with 2 months’ notice. The tenant can dispute the increase through the First-tier Tribunal.
• Animal lovers have welcomed the new right for tenants to request a pet and for the landlord not to unreasonably withhold consent. If a tenant believes the consent has been unreasonably withheld, they can take their complaint to the Ombudsman. Guidance as to what might constitute “unreasonable refusing” is expected to be issued in due course.
• Fixed term tenancies will be replaced by periodic tenancies. The net effect of this is that tenancies will last indefinitely until terminated by either party.
• Whilst the current version of the Bill is currently silent on this change, it is expected that the proposed change for all private landlords to join a government approved redress scheme/ Ombudsman will be introduced. Landlords who fail to join a scheme could face enforcement action by their local councils. The powers of the redress scheme will be to “put things right” for the tenant who can access it for free. These powers include compelling landlords to: issue apologies; provide information; take remedial action and pay compensation of up to £25,000. The scheme will have teeth in that if landlords fail to comply with a decision, then they may be liable for a banning order.

The changes will be introduced in two phases with all new tenancies agreed after the enactment of the new law being governed by the new system in the first instance. Then in phase two, to avoid a two-tier tenancy system, all existing tenancies will transition across to the new regime on a new date, which will be appointed by the Secretary of State.

Victoria continued: “Whilst there is still a lack of clarity as to the full raft of changes, landlords can take it as read that the current “no fault” regime is coming to an end and the upshot of this is that getting vacant possession of a property will be more involved both in time and expense.

“Landlords are starting to instruct us to serve section 21 notices on properties that are either occupied by problematic tenants or that they wish to take back to sell.”