What Landlords Need to Know

A legislative shift is on the horizon. The Renters’ Rights Bill, now making its way through Parliament, promises to reshape the residential rental market in England. While its provisions significantly boost protection for tenants, the impact on landlords is less straightforward.

In the first of a series of articles guiding landlords through the implications of the Bill, we focus on one of the most prominent changes: the abolition of Assured Shorthold Tenancies (ASTs).

ASTs and Assured Tenancies: what’s changing?

For decades, the Housing Act 1988 has laid the groundwork for the two principal types of tenancies in England, Assured Tenancies and ASTs. Originally, the default was an Assured Tenancy, but amendments in 1996 reversed that, making ASTs the norm unless a landlord opted otherwise.

Similarities between ASTs and Assured Tenancies

  • Individual Tenants: Both require that the tenant is an individual.
  • Primary Residence: The property must serve as the tenant’s only or principal home.
  • Non-Resident Landlord: The landlord should not be living in the property.

These agreements can be set for a fixed term (for example, six months) or on a rolling, periodic basis.

The main difference: regaining possession

The fundamental difference relates to a landlord’s ability to regain possession of the property.

  • Under an AST: Landlords enjoy an automatic right to regain possession at the end of a fixed term, or after the first six months in a periodic tenancy. This means that, in many cases, they can evict tenants without needing to prove any fault through a swift section 21 notice process.
  • Under an Assured Tenancy: Regaining possession isn’t automatic. Landlords must demonstrate a specific ground for possession, usually via the more formal and judicially scrutinised section 8 procedure. Courts decide whether an eviction is mandatory or discretionary, thereby granting tenants a much higher level of security.

What the Bill proposes

The proposed Bill intends to abolish ASTs entirely, making Assured Tenancies the standard for all residential lettings. This essentially eliminates no fault possessions. With ASTs removed, landlords will no longer be able to rely on section 21 notices to end tenancies without assigning blame or fault.

Additionally, the new default tenancy will be periodic. This gives tenants the right to terminate their agreement at any time – provided they give two months’ notice – eliminating the predictability of fixed-term contracts.

For landlords, these changes mean navigating a more unpredictable rental landscape. The swift, relatively simple possession route via section 21 is replaced by a time-consuming, expensive, and uncertain process. With courts potentially facing an influx of possession cases, the challenge of maintaining long-term income stability becomes all the more pressing.

Preparing for the change

While these legislative changes aim to provide tenants with increased security and certainty, landlords face a significant adjustment period. The new framework demands a more rigorous process to reclaim properties, and it might drive higher tenant turnover, a scenario that many landlords will need to factor into their long-term strategies.

In the coming weeks, we’ll delve deeper into the Renters’ Rights Bill in a series of articles, unpacking its various facets and what they mean for you as a landlord. Our goal is to help you understand these changes from every angle, offering practical insights to navigate this evolving landscape with confidence.

By reframing these changes in a more accessible narrative, we hope to provide clarity and actionable insights during this period of transition. Remember, staying informed is your best tool in adapting to a shifting rental market.

Read the next article – The changes at a glance

 

The above article is for illustrative purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any part of the information given.

Furthermore, the information contained is accurate and up to date as of the date of publication. Readers should be aware that legislative frameworks may have been amended since the original date of publication.