Tenancy reform

For more information, please contact:

Samantha Grix Partner 020 7880 4307 Email Samantha

Abolition of assured shorthold tenancies

Section 2 of the Bill will repeal Chapter 2 of Part 1 of the Housing Act 1988 which provides for assured shorthold tenancies, as well as section 6A of the Housing Act 1988 which provides for demoted tenancies. These tenancy reforms are intended to apply to the social housing and private rented sectors.

There is no exemption for starter tenancies, which are routinely granted by registered providers and we do not expect this to change. The Government has advised that they want all tenants to be on an equal footing and do not see why social housing tenants should be at any disadvantage.

Further, and given that section 21 Notices are also to be abolished, there would be no benefit to having a starter tenancy in any event. In order to offset the abolition of section 21 notices, enhanced grounds for possession are provided in the Bill and these are detailed below.

Abolition of fixed term tenancies

A new section 4A will be inserted into the Housing Act 1988 to end a landlord’s ability to grant fixed term tenancies.

Section 4A(1) states as follows:

4A Assured tenancies to be periodic with rent period not exceeding a month (1) Terms of an assured tenancy are of no effect so far as they provide for the tenancy to be a fixed term tenancy.

The effect of this is that upon the legislation coming into force, any fixed term tenancy (whether granted pre or post implementation) will be of no effect insofar it is for a fixed period of over one month (section 4A(2)). The tenancy will automatically and immediately convert to a periodic assured tenancy i.e., a lifetime tenancy.

The period of the tenancy will mirror the rental periods where the rent is paid weekly or monthly (section 4A(2)). Any rental period that exceeds monthly, will thereafter be treated as being monthly beginning on the first day of the tenancy (section 4A(4). The rent for these new monthly periods will be calculated in accordance with the formula detailed at section 4A(5).

Helpfully, section 4A(7) addresses first rental periods which are adjusted to reflect tenancies commencing part way through a week or month. The rental period will be taken as monthly if the rent is payable as such thereafter.

Clause 18 – Homelessness – duties of local authorities

There are various proposed amendments to the Housing Act 1996 in relation to duties of local authorities to persons who are found to be homeless or threatened with homelessness.

Key points

Section 193(1A)(b) will be omitted so that the main housing duty will continue even though the relief duty has been terminated, where the local housing authority consider that the applicant has unreasonably refused to co-operate.
Section 193(6)(cc) will be omitted so that the main housing duty will not end if the applicant accepts an assured tenancy from a private landlord.

Section 195A is subsequently omitted in respect of the duty on the local authority to offer accommodation following re-application within two years after a private sector offer, as the main housing duty will continue in these cases and will no longer be time limited.
Section 193C is amended so that the main housing duty will not end where the local authority considers the applicant to have behaved unreasonably.

Clause 19 – Tenancy deposits

Consequential amendments are made to Chapter 4 of Part 6 of the Housing Act 2004 to remove references to assured shorthold tenancies in relation to tenancy deposits.

There is also a proposed new section 215 of the 2004 Act setting out sanctions for non-compliance with tenancy deposit requirements. This current version states that a landlord cannot serve a section 21 Notice where the prescribed requirements have not been complied with, unless the deposit has been returned to the tenant or proceedings under section 214 dealt with by the court, withdrawn or settled by the parties.

The proposed new section 215 requires the landlord to have complied with the relevant requirements before the court will award possession, and this applies to all grounds for possession apart from grounds 7A and 14 (which are the anti-social behaviour/nuisance grounds). This does not apply where the deposit has been returned to the tenant or proceedings under section 214 have been dealt with by the court, withdrawn or settled by the parties.

These amendments are of wider application to the private rented sector where deposits are more commonplace. Registered providers of social housing may have some tenancies with deposits, but these are likely be limited to intermediate tenancy products or market rent arms.

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