Background to the Private Rental Sector
At the time of the First World War, 90% of all housing in Britain was privately rented because people’s work and accommodation were tied. Problems for tenants began when landlords started taking advantage of their increased wages as munitions workers by arbitrarily raising rents. In an attempt to control this, the first (temporary) Rent Act was passed in 1915 but it didn’t work and a further 12 Rent Acts were passed between 1920 and 1946. These not only limited the amounts by which the rents could be increased but also restricted the ability of the freeholder to evict.
It was however the Rent Act 1977 that really swung it to the side of tenants with ‘Protected’ and ‘Statutory’ tenancies favouring them to the degree that they were allowed to not only stay in the property virtually indefinitely but to pass the tenancy down to relatives.
This did however bring some unwelcome side effects. Freehold land costs increased as prospective landlords purchased instead of rented as they had no desire to risk never see their properties returned to them in their own lifetimes. By 1987, only 7% of all housing stock was privately rented. Add to all this a major recession and councils who were selling their stock under Right to Buy but not replacing them by building new stock, it was easy to see why the private rental sector needed its fortunes reversing.
So what did Government do to try and revive a stagnant rental market and entice landlords? They created the Assured Tenancy but landlords weren’t happy with this because a) the tenancy did not go far enough in reviving the rental market which is what they were created for and b) they didn’t have an automatic right to get their property back at the end of the tenancy agreement. So the Government created the Assured Shorthold Tenancy under the Housing Act 1996 which came into effect from 28th February 1997.
What also came into effect at the same time into were revisions to the Housing Act 1988 which are that:
- All tenancies are now automatically Assured Shorthold Tenancies and landlords don’t need to automatically serve a s20 Notice before the tenancy begins (previously tenancies were automatically
an Assured Tenancy);
- There is no minimum period for a let although landlords must be aware they CANNOT gain
possession of a tenancy before 6 months (even if the tenancy was only originally agreed for less than that);
- If there is no tenancy then, if the tenant requests it, information in the form of a statement of terms must be provided by the landlord containing the following
a) The date on which the tenancy began;
b) The rent payable under the tenancy and when the rent is payable;
c) Any rent review term applicable to the tenancy; and
d) In the case of a fixed term tenancy, the length of the fixed term.
The AST is now the most common form of tenancy agreement in the UK with an initial fixed term of 6-12 months but if the tenancy is not renewed it becomes a periodic tenancy of monthly or weekly duration depending on how the rent is paid.
AST’s can only be used where:
- The tenant is an individual;
- The dwelling is let as a separate accommodation;
- The dwelling is the tenant’s main or principal home;
- The Landlord does not live on the premises.
Under this type of tenancy landlords are able to evict tenants under s21 (accelerated possession) and if a tenant is in arrears it allows the serving of a s8 notice.
Tenants with this kind of agreement also have the right to have their deposits protected in an approved deposit protection scheme.
The following tenancy types are not AST’s as they are what are commonly known as ‘common law’ tenancy, and will be outside the Housing Act:
- The tenancy began before 15th January 1989;
- The tenancy was previously a protected tenancy;
- Rent comes to more than £100,000 per annum;
- Rent is less than £250 a year – this becomes £1,000 in London;
- Business tenancies;
- Tenancies of licenced premises;
- Holiday let;
- The landlord is a local council;
- The landlord lives on the premises.
- Tenancies of property let with more than two acres of agricultural land, or an agricultural
Like the long leasehold sector, the private rental sector has seen legislation continually introduced to balance the rights of tenants against the powers of the landlords. From the first Rent Acts the regulatory burden on landlords has become increasingly more involved with many perceiving some elements to be downright wrong such as the legal requirement for them to check the immigration status of their tenants for example, more of which can be read here. There has also been extensive lobbying by landlord trade associations against landlord licensing and whilst a national scheme was never established after the ‘Rugg Review’ in 2008, selective licensing has taken a hold across many London Boroughs (started by the London Borough of Newham) and other parts of the country.
Even their power to evict under s21 has been made increasingly tougher, especially since the introduction of the Deregulation Act 2015 which contains steps to curtail the process under ‘retaliatory eviction’, more on which can be read here.
So what can tenants look for when choosing a property when it comes to whether they will get a good or bad landlord? One of the best things to check is whether the landlord has any accreditation.
The London Landlord Accreditation Scheme (LLAS) was launched in 2004 as a partnership of London boroughs, landlord organisations and educational organisations. It aims to recognise good practice and improve conditions in the private rented sector.
With over 18,000 landlords and 1300 agents and growing, plus 7500 outside of London, LLAS is the biggest and most established scheme of its kind operating throughout London and in many parts of the UK.
There is also the Private Sector Accreditation Scheme for both landlords and letting agents.
If landlords are already accredited with some other scheme such as London Landlord Accreditation Scheme or other approved scheme, the Guild of Residential Landlords allows landlords to passport into their accreditation scheme for free.
Local Authorities have also adopted accreditation, basing their schemes on property inspections and after a percentage of their properties have been inspected, awarding accreditation. Some local authorities offer discounts to accredited landlords such as HMO and License fees
Not all landlords manage their rental properties, instead preferring to hand the role to letting agents. These agents can gain accreditation through the UK Association of Letting Agents (AKALA) although it is the office which become accredited, not the individual landlord.