The Renters’ Rights Bill: considerations for faith organisation landlords
This article will consider the Renters’ Rights Bill insofar as it will affect Church bodies, and outline some of the implications of the Bill for faith organisation landlords, as well as some practical considerations.
The Renters’ Rights Bill reflects many themes that faith organisations have advocated for many years, and which are consistent with their values and teaching:
greater security and stability for tenants;
fostering family life and family homes;
creating an environment where there is greater fairness and access to the rental market;
provisions to tackle discrimination;
a decent standard of accommodation;
transparency; and
greater regulation of the private sector rental market and provision to outlaw unscrupulous and, in some cases, immoral practices.
It is likely that Church bodies handling their own lettings have their own registration with one of the approved schemes, or that letting agents protect deposits on the landlord’s behalf. Requirements to comply with the deposit protection will continue, and protection of the deposit is a condition precedent to the court awarding possession in the majority of cases. Whoever is coordinating the letting on behalf of the Church body should continue to ensure that the deposit received is protected.
How the PRSD may work in practice remains to be seen, as the detailed provisions will be contained in regulations. An understanding of the distinct ownership structures of properties held by or on behalf of Church bodies will be needed. For example, properties may be held:
by a custodian trustee or trust corporation on behalf of managing trustees;
in the name of an ecclesiastical corporation such as the incumbent of a benefice;
in the name of the Church organisation, either as part of its corporate property or subject to trusts.
In practice, the day-to-day management of the property may be handled by others. For example, managing trustees who are the local people on the ground arranging and managing the letting of property. In relation to Parsonage property in the Church of England, the sequestrators of the benefice (the churchwardens and Area or Rural Dean) may let the Parsonage property when there is no vicar in post.
There will be a need to ensure precision in complying with the PRSD requirements to ensure that both property and landlord details – and, in practice, the Managing Trustees’ details – are correctly recorded as regulations may provide. Landlords and their properties must be registered on the database before the property is marketed. Advertisements for a property must include the unique identifiers which will be allocated to the landlord and property when the database entries are created. The fees for including the landlord and property on the database will be borne by the landlord.
Church bodies should ensure the correct nomenclature and details of the landlord and managing trustees, as per the database entries, are included in the written statement of terms and conditions provided to the tenant before the tenancy begins. Church bodies may wish to make a policy decision as to how they will be termed, in the interests of consistency.
Please be aware that, once the Renters’ Rights Bill becomes law, rent review provisions within existing agreements will no longer be effective. The only way to increase the rent will be to issue a notice under section 13 of the Housing Act 1988. Tenants will be entitled to two-months’ notice and can only be served with a notice once per year.
The position is different in relation to the private registered providers of social housing. They will still be able to increase rents on relevant low-cost tenancies via a provision in the tenancy agreement. The rent can be increased at any point in the first year of a tenancy, and then once every year thereafter with one month's notice.
Church bodies may incur additional administrative costs in navigating the rent review process, particularly if agreement is not reached between the parties, and the tenant makes an application to the First Tier Tribunal (Property Chamber) to challenge the validity of the Notice. For example, if there has been a procedural irregularity, or because the tenant considers the proposed rent to be excessive.
Diarising key dates will be imperative: the key dates of the tenancy agreement; protection of the deposit; database registrations; requests to keep a pet; the service of notices; and in relation to rent reviews. Church bodies would be wise to keep track of key dates themselves, even where a letting agent is engaged, particularly where there are multiple lettings.
The Decent Homes Standard, and the extension of Awaab’s Law to private landlords, which may require landlords to address hazards in a property within a specified timeframe, will apply equally to Church bodies and charities as to secular landlords. Many Church bodies will already undertake periodic inspections of properties and seek to preserve the capital value of their assets given the fiduciary capacity in which they act. Periodic inspection remains advisable.
Church or charity landlords may incur additional costs given the requirement to join a redress scheme. For example, in the Church of England, a Diocesan Board of Finance may let property held in its name – corporate or glebe property – but parsonage properties are vested in the name of an incumbent as an ecclesiastical corporation sole. Each entity would require its own registration, even where a short-term let is involved, and the related costs of this and maintaining database entries should be budgeted for.
Finally, the Bill’s provisions on keeping a pet. As a condition of giving consent, a landlord may require that the tenant must either have insurance covering the risk of pet damage or pay the landlord’s reasonable costs of having pet insurance. Church bodies may hold a property as part of a larger property portfolio for which block buildings insurance has been put in place.
In the interests of consistency and estate management, Church bodies may prefer to put pet damage insurance in place themselves with their own insurer. This may be an area where insurers who offer block buildings insurance to Church bodies and charities already offer cover or, in time, provide a product or bolt-on cover that will dovetail with existing insurance arrangements.
Conclusion
In summary, while the Renters’ Rights Bill will make fundamental changes to residential tenancies, involving navigating new and additional processes and the related costs involved, it will establish a new benchmark in many respects that will likely affirm the approach that responsible landlords – including Church bodies and charities – may already be taking.
Forward planning, good record keeping, good communication, and a considered approach to lettings is advisable. So, too, is taking into account the additional costs and resources that might be involved in complying with the new law.