The Renters’ Rights Bill: assured shorthold tenancies for faith organisation landlords
The incoming Renters’ Rights Bill raises considerations that are common to all Church bodies, as well as organisations in the wider charity sector, that let residential property.
The provisions that have received the most media coverage to date have been the planned abolition of assured shorthold tenancies (AST) and no-fault evictions. Section 21 of the Housing Act 1988 provides that landlords can currently serve no less than two months’ notice to bring an AST to an end, and to recover possession of a property, to take effect no earlier than the first six months from the commencement date of the original tenancy.
Church bodies may hold residential properties for a variety of reasons:
to accommodate ministers of religion;
to accommodate those involved with ministry (whether that is in an ordained or lay capacity);
to accommodate people as part of the mission of the Church body or its other charitable work; or
as an income-generating asset, the income from which is then applied to the work and mission of the Church body.
Often, when there is a gap between a minister vacating their office and the appointment of their successor or others involved with ministry, Church bodies will seek to let a property. This may be a short-term measure if there is a need for a period of discernment before making an appointment, or where eventual disposal of a property is a possibility. A letting may, of course, be advantageous if it will generate an income stream and ensure that a property that might otherwise deteriorate is occupied.
This type of letting will have often been structured as an AST, with the certainty of a minimum six-month commitment and the flexibility to continue on a periodic basis.
Section 21 has often been used as a matter of efficacy, rather than applying Ground 5, as set out in Part 1 of the Second Schedule of the Housing Act 1988. Ground 5 is a mandatory ground for possession where a property is held for occupation by a minister of religion as a residence from which to perform the duties of their office. It can only be used when the landlord has given the tenant written notice at or before the beginning of the tenancy that it might be used.
The Bill amends Ground 5 so the requirement that landlords must give tenants prior notice that they may recover possession using the Ground no longer applies. There will, however, be a new “prior notice” requirement, that a landlord must include notice in the written terms of the tenancy that possession might be recovered using this Ground.
Church bodies setting up and managing their own lettings should be alive to the new requirements of Ground 5, and also be clear when instructing any letting or managing agents if there is a need to include prior notice that Ground 5 may be used.
Ministers of religion
With the abolition of Section 21 when the Bill becomes law, Church bodies will have less latitude in relation to the short-term letting of properties. This will especially be the case in circumstances where possession is required for reasons other than the property being required to accommodate a minister of religion.
This has greater significance for many Church organisations. Church bodies have been adapting to a changing landscape, and the pace of change has accelerated in recent years. Churches are often now seeking to innovate and deliver ministry in new ways – financial pressures, deployment considerations and congregation numbers often being the drivers of change. One consequence has been the more frequent deployment of individuals engaged in ministry, but who are not necessarily ministers of religion in the conventional sense.
It is in relation to these types of appointment that the term “minister of religion” will have a greater importance and needs to be considered.
However, an opportunity is potentially being missed in the new law to expand on the definition of ‘minister of religion’ and extend it to the many other roles within Church organisations for which vacant possession of a property may be required. In addition, there may be operational or missional reasons that possession of a property may be required. Perhaps the term “a person engaged in the ministering of religion”, or a similar wording, may better reflect the landscape in which Church bodies work.
Church bodies may in future need to consider whether a letting of the property would be appropriate, particularly if there is a tight timescale within which vacant possession may be required. If Ground 5 needs to be deployed, there may ultimately be a need to persuade the court – if court proceedings to recover possession of the property two months after the notice have been served – that the proposed occupant of a property falls within that Ground.
Where it is planned to let a property before eventual sale, redevelopment, or landlord occupation, four months’ notice to terminate can be given, but vacant possession is only available after the tenancy is over 12 months old.
In conclusion, forward planning, good communication, and management of tenant expectations will become key. One consequence of the Bill may be less short-term lettings of vacant properties given the new 12-month tenancy rule and the more prescriptive circumstances in which possession can be obtained.