What impact could the possible Conservative changes regarding Housing have to Landlords?

7th April 2020

Housing was at the forefront of debate during the election, and whilst the Conservatives focus is on getting Brexit done, there are likely to be some significant changes to housing policies during their government.  Whilst we won’t see rental controls in the same way we would under a Labour leadership, the Conservatives are pledging to introduce a cap on rent rises in line with inflation, whilst allowing some cities to cap them to a greater degree.

There are two main changes proposed, one which is introducing life time deposits and the other which would see changes to evictions and removing the ability to serve a Section 21 notice.

Life Time Deposits

Contract signing on purchase of a house

This is the current and more traditional deposit system.  From 1 June 2019 landlords were limited to 5 weeks deposit for new and renewed tenancies (or 6 weeks if the annual rent is £50,000 or more). Tenants who are looking to move, either into a new rental or looking to buy need to wait for the current landlord to release the deposit once they have vacated the property.  If there are no disputes this should happen within 10 working days.  If there is a dispute it may take longer.  In the meantime they will have to have found another 5 weeks’ worth of rent for their new property as well as month in advance.

The conservative proposal is that a lifetime deposit transfers with the tenants as they move and they no longer need to wait for the current one to be released. Quite how this will work in practice has not been detailed. There are clearly question marks around what will happen in the event of a dispute. The traditional deposit is also no longer the only option available to tenants or landlords. Many BTR schemes are no longer charging deposits or offering alternatives such as insurance back schemes where one weeks rent is paid and this is in lieu of a deposit, however in this scenario the money is not repaid to a tenant at the end of the tenancy as it is similar to a car insurance policy where the money is not returned.

Eviction Process

The changes to the eviction process and the proposed abolishment of Section 21 is to try and cease ‘no fault’ evictions.  At this time a landlord can serve a Section 21 on a tenant giving no reason and simply giving two months’ notice for the tenant to vacate the property.  Unscrupulous landlords can use this to evict tenants who they perceive as trouble makers and simply want to replace them as a tenant.  In some cases landlords have done this when tenants have requested works which the landlord does not want to complete.

Under the changes Landlords would only be able to serve a Section 8 notice. This differs to a Section 21 as a Section 8 notice requires the landlord to give a reason for the eviction and can only be served under specific grounds if the tenant has breached their tenancy. For example it can be used if a tenant is in rent arrears, is a repeat offender of noise disturbance, conviction of a serious offence, if the landlord wants to take the property as their own home. The Conservative proposal is that the Section 8 notice is more robust and adding extra conditions where they can be used which will still allow the landlord to evict a tenant. Further details around this proposal are yet to be provided.

EPCs & Minimal Rental Standards

Construction site

The Conservatives are also extending the energy efficiency rules relating to EPC’s which will mean that any existing tenancies (rather than just new ones) will not be able to be rented out from April 2020.  In addition to this the government are also looking to introduce minimal rental standards via a national data base.  There is speculation about how this will be enforced, via trading standards perhaps or by local councils.

There is no question that legislation and polices are moving more and more in favour of the tenant and BTR landlords have supported this for some time.  They would however agree that some systems should be overhauled; this needs to be done by consultation with leaders in the industry such as ARLA, the RLA, and BTR bodies such as the UKAA, and both independent landlords and institutional landlords’ needs must be considered, as well as those of the tenant.

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