Where does the balance of power in the residential sector lie between landlords and tenants?

Recent reforms suggest that the pace of regulation and protection of tenants is increasing.

  • The Homes (Fitness for Human Habitation) Act 2018 came into force on 20 March 2019. It is designed to ensure that all rented accommodation is fit for human habitation and to strengthen tenants' means of redress against landlords who do not fulfil their legal obligations to keep their properties safe.
  • The Tenant Fees Act 2019 came into force on 1 June 2019. The Act prohibits landlords from charging certain fees or requiring certain payments that are not specifically permitted by the Act, and applies in relation to any tenancy agreement, student let or licence to occupy housing in the private rented sector. The Act bans most letting fees and caps tenancy deposits paid by tenants in the private rented sector in England.
  • DCLG’s How to Rent guide has also been updated and landlords will need to ensure that the updated guide is sent out to their tenants. This highlights the procedural and administrative processes landlords are required to go through and clearly points out tenants’ rights and means of redress.

Current consultations confirm that the government is considering further changes, specifically:

  • The Ministry of Housing, Communities and Local Government is reviewing unfair practices in the leasehold market. Recent announcements have included the Housing, Communities and Local Government Select Committee report to the government (20 March 2019), the leaseholder pledge (28 March 2019), and the consultation on the abolition of section 21 notices (15 April 2019). MHCLG has just published its proposed reforms to the residential leasehold market including the prohibition of leasehold houses and ground rents and launched a consultation on residential deposit reform (27 June 2019).
  • The Law Commission Residential Leasehold and Commonhold Project is addressing leasehold enfranchisement, the right to manage, and commonhold.

The combined effect of measures enacted must be positive in terms of protecting tenants from the worst excesses of the residential sector. They do place an additional burden on landlords but not one that is significant. 

However, the problems of chronic insecurity for tenants remain while a tenancy can be terminated on two months’ notice. Those problems are made worse by a shortage of good housing stock and a strong residential market. The balance is too far in favour of landlords if a family can be evicted from a home with children at local schools on such short notice or if a group of sharers can be hijacked to pay a higher rent by landlords terminating.

Of all the above measures, the potential abolition of the s21 notice procedure has the most potentially transformative impact for housing. The consultation may pave the way for residential tenancies that a landlord cannot seek to terminate simply on two months’ notice. There are complications afoot with how to terminate when the tenant is in default and whether landlords can regain possession prior to sale or development. Longer tenancies will also have landlords concerned to index or review rents.

Expect compromise but let’s hope for security as well as better conditions for tenants at no real expense to decent landlords and agents.

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