Fixed-term tenancies MUST remain says The Lettings Industry Council

The Lettings Industry Council (TLIC) says that if Section 21 is to be abolished under Government proposals, then fixed term tenancies should remain to help negate many of the unintended consequences – whilst still giving tenants more security.

The ideas are in a TLIC published a report in response to proposed changes as part of the ‘Fairer Private Rented Sector‘ White Paper.

According to research referred to in the report, the private rented sector is losing around 59% of rental properties because they are sold off by landlords and are no longer rented.

As a result, the selling of rental homes is having a devastating financial impact on tenants who are seeing rents increase to record levels.

Protect the rapidly declining rental stock

The report makes several recommendations to protect the rapidly declining rental stock including, most crucially, making the case for allowing fixed term tenancies to remain.

TLIC considers the proposal to move all tenancies to periodic to be one of the biggest risks in terms of landlords exiting the PRS, noting that the Welsh Government had planned the same, only to revert back to allowing fixed-term tenancies.

The report suggests that removing Section 21 within the current fixed-term AST set up would provide much more security for both sides compared to the proposed periodic setup.

That’s because the move would negatively impact shared households, lead to significant job losses in the sector and prejudice applicants who require a guarantor.

How to improve the court system

In addition, The Lettings Industry Council, which is made up of industry stakeholders from across the Private Rented Sector (PRS), has made several suggestions on how to improve the court system.

These include accelerated claims issued online, reducing the listing of PRS claims to no later than four weeks, automatically transferring rent arrears cases with more than six months arrears up to the High Court, approval of an affordability assessment when making a Possession Order, and abandonment cases to be determined without recourse to the court.

Theresa Wallace, chair of TLIC, aid: “It is vital to maintain the supply of desperately needed properties to rent, to prevent a further rise in homelessness and living costs which will inevitably affect the most vulnerable tenants on the lowest incomes.

“Although it is growing, the Build to Rent (B2R) sector predominantly provides one and two bed apartments but it is family homes that the PRS has a severe shortage of. B2R is not currently the solution to filling this gap.”

‘Proposed changes do not cause more landlords to exit the sector’

She added: “We are calling for any changes to the PRS to be very carefully considered and thorough impact assessments conducted, so as to ensure that the proposed changes do not cause more landlords to exit the sector at a point where property is so desperately needed by tenants.”

Paul Shamplina, founder of Landlord Action and the chief commercial officer at Hamilton Fraser, has been working closely with TLIC to find workable solutions to the abolition of Section 21.

He said: “Landlords need to have quick and simple routes for gaining possession of their property, and the courts need to improve to facilitate this.

“In addition, without bailiff reform, enforcement will be even more challenging.

“We believe the suggestions in this report help strike a better balance between the need to give tenants more security and offering landlords greater confidence in the system.”

The TLIC’s report

Other suggestions in the TLIC’s report include:

• Council Tax: Where the tenant moves out of the property without notice, the landlord will immediately become liable for the council tax and will not be able to recharge it to the tenant – Amend the Tenant Fees Act to allow council tax to be paid to landlords
• Decent Homes Standard: TLIC would like to see a guidance note to tenants on what are reasonable expectations in terms of time frames for maintenance
• Enforcement: Local authorities should have the power to issue fines to landlords who fail to meet requirements of the new tenancy system
• Landlord Ombudsman: If agents must be part of redress and landlord must be part of another scheme, it will be more confusing for tenants to know to whom they should complain. There should be one single ombudsman for all landlords and agents, thereby giving a single ‘complaints mechanism’
• Property Portal: To avoid the uploading of fraudulent documents, properties should be registered by their Unique Property Reference Number (UPRN). The portal could then ‘look across’ to the EPC register and check there is an EPC registered and, in time, gas and electrical safety reports
• Selective and HMO Licensing Schemes: TLIC suggests with a property register identifying landlords and the PRS Decent Homes Standard, selective licensing which has had limited success will not be needed
• Timings: The changes should be introduced in such a way that the sector has sufficient time to adjust and prepare for them. The proposal of six months from implementation of the Bill for all new tenancies and 12 months for existing tenancies is too short a time scale. It should be at least 18 months before new tenancies have to comply and a further 12-18 months before existing tenancies must comply, given the huge impact of the changes.

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