A private rental sector legislative update

 It’s that time again, a quick summary of the latest political movements and legislative updates that will impact on the private rented sector (PRS) as we move into 2019.

 

Since my last update the issues around Brexit have preoccupied our MPs, and therefore much anticipated legislation is yet to be implemented. That being said there is still plenty happening for you to be aware of so please do read on!

 

Firstly, we now have a new housing minister for the 8th time in 8 years, Kit Malthouse MP. At this time, we don’t have any indication as to the direction he intends to take the UK housing market, but what we do know is that he appears to be a strong advocate of the universal credit system and new home building, and therefore I’m certain both will remain prominent during his tenure.

 

In terms of new consultations for you to be aware of, the proposed mandatory three-year tenancy is key. The proposal as it stands is to introduce a mandatory three-year tenancy agreement that will replace the Assured Shorthold Tenancy (AST) as we know it. Currently the proposal is being shaped as follows:

  • Three year fixed term

  • A six-month break clause to be included which will allow the Landlord or Tenant to break the agreement

  • Landlords can serve notice to terminate during the three-year fixed term if they are selling the property or moving into it themselves

  • Landlords can still recover their property using the section 8 notice for non-payment of rent and other qualifying scenarios

  • Student property and short term lets will be exempt

  • No rent caps

  • Annual rent increases are to be built into the agreement and index linked or capped.

The idea behind the proposal is to ensure security of tenure for those that need it the most, but it is being met with mixed feelings within the landlord community...

 

My view is that like most of the legislation implemented in the PRS it is designed around the needs of the bottom 30% and/or the London market. The problem with that is this means that often the legislation does NOT meet the needs of the wider market.

 

In this case I actually think this is a very interesting proposal. I suspect that professional, long-term landlords will like the sound of this as it gives them security of let and provisions are still in there to repossess the property - but more interestingly there is a proposed annual rent increase clause.

 

This particular clause has most certainly been included to manage the rapidly increasing rents in London as the proposal is set to link it to some form of index. However, outside of London and especially in the North, most Landlords are unable to increase rents as the market won’t allow it, which makes this very interesting indeed!

 

Other notable updates:

  • Amendment to Energy Performance Certificate (EPC) regulations which will see the removal of the ‘no upfront cost’ exemption, meaning that as of April 2019 landlords will be forced to implement energy efficiency measures requested by their tenants in their properties up to the value of £2,500

  • The Tenant Fee bill is likely to be introduced in October 2019

  • The Fitness for Human Habitation bill is currently working its way through the system and will see tenants given the ability to take action against a landlord in court for properties deemed as unfit for habitation

  • New MOT style approach has been introduced for landlord gas safety certificates – allowing landlords to carry out their safety checks up to two months before the expiry date, without losing the anniversary date

  • Landlords must now use the new style section 21 notice form known as ‘form 6a’ in order for their notice to be valid.

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