As the Renters’ Rights Bill had its first reading in the House of Commons last week, it might be useful to note a few headline points surrounding the benefits and risks of renewing or granting new assured shorthold tenancies (ASTs) in the future where e.g. you might need to obtain vacant possession of let property prior to sale with vacant possession. Of course, the provisions of the current version of the bill could change as it passes through Parliament, but the current version provides for the following:
- s.21 (‘no fault’) evictions will be abolished.
- Fixed term assured tenancies will also come to an end. All existing and new tenancies will become periodic assured tenancies (e.g. running from month to month), with tenants able to end the tenancy by giving two months’ notice.
- The new system will be implemented in one stage (i.e. on a single date) for both new and existing tenancies, so that the new provisions apply to all tenancies at the same time. On that date, existing tenancies will convert to the new system (i.e. periodic tenancies) and landlords will no longer be able to serve s.21 notices to evict tenants.
- The bill does include a ground for possession (1A) where the landlord wishes to sell the property, but tenants will benefit from a 12-month protected period at the beginning of a tenancy, during which landlords cannot evict them to sell the property. For existing tenancies that are converted to the new system, occupation by the tenant before the conversion should count towards the 12-month period.
- Landlords will need to provide four months’ notice to use this ground for possession.
- As in the current system, a court order is required to evict a tenant if they do not leave. Landlords will need to provide evidence that the ground for possession is met.
- Landlords will be prevented from gaining possession if they have not properly protected a tenant’s deposit or registered their property on a new private rented sector database. Compliance with statutory requirements will therefore remain very important.
In terms of timing, the housing minister, Matthew Pennycook has said that the government hope the Bill will make “very quick progress through the House of Commons and that we have that new tenancy system in place within the first half or around summer next year.” Of course, the Bill could be delayed by more pressing matters or consultation on particular issues, but certainly there seems to be political impetus to progress swiftly with the Bill.
The validity of notices served prior to implementation should be maintained under the new system, but we wanted to highlight that, in its current form, sales of property with ASTs where vacant possession is required could be delayed by the protected 12-month period at the beginning of the AST term. That may mean delayed completion dates to obtain vacant possession which itself is challenging in terms of market practice and availability of mortgage finance (mortgage offers usually last 60 or 90 days).
This is only intended to be a summary and not specific legal advice. If you would like further information, advice or assistance, please contact Hugo Greer-Walker, Partner or another member of our property team.