Stay Ahead Of Planned Changes To Letting Property In England
I know what you’re thinking… I would love some more changes to legislation to keep me busy with my portfolio. Hmm, I thought not!
But as part of the white paper rental reform, it is expected that a new way to let property in England is to be adopted. And while no formal direction has been given, industry intel informs us that it will be based largely on The Renting Homes (Wales) Act 2016, which comes into effect on 15 July 2022.
So here’s what we know about changes in Walsh legislation to help you stay ahead of planned changes to letting property in England —
1. What Is Happening In Wales?
The Renting Homes (Wales) Act 2016 comes into effect on 15 July 2022 and all of the regulations made under the Act (e.g. the Fitness for Human Habitation Regulations) will also come into effect on the same date.
2. A Change From Tenancy Agreements To Occupation Contracts
Under the new law ‘occupation contracts’ will replace existing tenancies and licences and this is expected to be replicated in England.
There are two main types of occupation contract: standard and secure — Standard contracts will replace assured shorthold tenancies which are currently used mainly in the private rented sector, and secure contracts will replace the secure tenancies used mainly in the social rented sector.
On 15 July 2022, all existing tenancy agreements will automatically convert to an occupation contract. For example, if an existing tenancy is a fixed term assured shorthold tenancy, it will convert to a fixed term standard occupation contract. If it is a periodic assured shorthold tenancy, it will convert to a periodic standard contract.
Whilst an occupation contract can be initiated verbally, it needs to be followed up with a written statement of the contract. Written statements need to be given within 14 days of the occupation date for new contracts from 15 July 2022.
In Wales, written statements for converted contracts need to be issued by 15 January 2023.
3. Mandatory Inventories?
The Renting Homes legislation includes a supplementary provision requiring an inventory to be provided — even if the property is unfurnished.
The provision states, ‘the inventory must set out the dwelling’s contents’. If the property is unfurnished the inventory would reflect this and may refer only to fixtures.
It is in both parties interests to have an accurate inventory.
4. Is This The End Of Section 21 Notices As We Know It?
Probably. But you will still be able to issue a ‘no-fault’ notice to end a periodic standard contract – this is called a Landlord’s Notice – under Section 173 of the new law. Section 173 enables a landlord to regain possession without having to give a reason for doing so.
The main difference is that under the new law landlords will be required to give the contract-holder six months’ notice, rather than the two months required under Section 21 of the Housing Act 1988.
Also, a Section 173 notice cannot be served during a fixed term standard contract (the equivalent to a fixed term AST) and can only be served during a periodic standard contract after the first six months of occupation. This means that a contract-holder who does not breach the terms of their contract is entitled to occupy for a minimum of one year from the occupation date of a new contract.
However, for all tenancies which began before 15 July 2022 landlords will only be required to give two months’ notice under Section 173.
The six month notice period only applies to occupation contracts which begin on or after 15 July 2022.
5. Are There Planned Changes To Gas Safety, EICR and EPC Certs?
Yes. As set out in the Fitness for Human Habitation Guidance, landlords will be required to ensure that a valid Gas Safety Certificate, Electrical Inspection Condition Report, and Energy Performance Certificate are provided to the contract-holder.
Under the new law, a contract-holder is entitled to withhold rent for any period when the property is unfit, which includes failing to meet these requirements. A landlord will not be able to serve a Landlord’s Notice until such time as they are in compliance with these requirements.
These requirements will apply to all new contracts which begin on or after 15 July 2022. For landlords with existing tenancies which will convert to occupation contracts on 15 July 2022, the landlord has a period of 12 months from that date to undertake the EICR to avoid the dwelling becoming unfit for human habitation.
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Meet The Writer:
Alex Babouris is a HMO investor with more than 10 years of experience. He is the founder of Cambridge Property People – a community of local property professionals, investors and enthusiasts, and Alex is the founder and lettings director at Babouris – a specialist HMO property investment and management agency.