Please Read This Before Deciding Where to Invest

As 2022 comes to an end it’s no wonder that landlords are concerned and confused when, on our little island, we have three different legislative regimes to contend with.

Scotland’s Legislative Regime

On 6th September 2022 Scottish Government announced: “A combined rent freeze and moratorium on evictions to help people through the cost crisis has been announced as the centrepiece of the 2022-23 Programme for Government”.

On 3rd October 2022, The Cost of Living (Tenant Protection) (Scotland) Bill went to the Scottish Parliament.

On 6th October parliament passed The Cost of Living (Tenant Protection) (Scotland) Bill.

On 27th October 2022 Cost of Living (Tenant Protection) (Scotland) Act 2022 received Royal Assent.

Cost of Living (Tenant Protection) (Scotland) Act 2022 (legislation.gov.uk)

MAIN POINTS:

This does not apply to a tenant who was given a rent increase notice before 6 September 2022.

Rent cap controls.

“(1)On or after 6 September 2022, the landlord under a private residential tenancy may not increase the rent payable under the tenancy by more than the permitted rate.

(2)For the purposes of this Chapter, the “permitted rate” is 0%.

(3)The Scottish Ministers may by regulations substitute a different percentage for the one for the time being mentioned in subsection (2).

(4)Any rent-increase notice given on or after 6 September 2022 during a period when the permitted rate is 0% is of no effect.

Landlord application to rent officer to increase rent above permitted rate.

(1)A landlord under a private rented tenancy may make an application to the relevant rent officer to increase the rent payable under the tenancy by more than the permitted rate in order to recover up to 50% of the increase in any prescribed property costs that the landlord has incurred during the relevant period.

(2)An application must include—

(a)evidence of an increase in any prescribed property costs of the landlord incurred during the relevant period, and

(b)a statement of—

(i)the rent payable under the tenancy, and

(ii)the rent that would be payable under the tenancy if the proposed rent increase took effect (“the proposed rent”).

(3)The landlord must give notice in writing to the tenant under the private residential tenancy of any application.

(1)Where a rent officer receives an application, the rent officer must decide whether the following conditions are met—

(a)the rent officer is satisfied that the landlord’s prescribed property costs that are specified in the application have increased during the relevant period, and

(b)the rent officer is satisfied that the amount of the proposed increase to the rent payable under the tenancy represents no more than 50% of the increase in the landlord’s prescribed property costs incurred during the relevant period as specified in the application.

(2)If both conditions mentioned in subsection 1 are met, the rent officer must make an order stating that from the effective date the rent under the tenancy is the lower of—

(a)the proposed rent, or

(b)the rent payable under the tenancy as increased by 3%.”

Protection against eviction from residential properties

Eviction from residential properties: restrictions on enforcement

“1(1)Where a decree for removing is granted in proceedings raised after this comes into force (27^th October), no person may—

(a)serve a charge for removing in respect of the decree,

(b)execute the decree.

(2)Where a decree of removing is or was granted in proceedings raised before this comes into force (27^th October) in relation to an eviction notice served on or after 6 September 2022 or, in proceedings raised on or after that date (and before this paragraph comes into force) without the need for an eviction notice, no person may—

(a)if a charge for removing has not been served in respect of the decree, serve any such charge,

(b) if the decree has not been executed, execute the decree.

(3)Sub-paragraphs (1) and (2) apply until the earlier of—

(a)the end of a period of 6 months beginning with the day on which the decree for removing is or was granted,

(b)the expiry or suspension of this paragraph in accordance with Part 2.

(4)In a case where the decree for removing relates to a student residential tenancy, sub-paragraphs (1) and (2) do not apply where the decree is or was granted in respect of circumstances which are the same as those described in either of the following paragraphs—

(a)paragraph 2 (criminal behaviour),

(b)paragraph 3 (anti-social behaviour).

(5)In any other case, sub-paragraphs (1) and (2) do not apply where the decree for removing is or was granted on the basis of the application of—

(a)any of the following paragraphs of schedule 3 of the 2016 Act—

(i)intent to sell property to alleviate financial hardship

(ii)property to be sold by lender

(iii)intent to live in property to alleviate financial hardship,

(iv)not an employee

(v)tenant not occupying let property

(vi)substantial rent arrears

(vii)criminal behaviour

(viii)anti-social behaviour

(ix)association with person who has relevant conviction or engaged in relevant anti-social behaviour

(b)any of the following paragraphs of schedule 2 of the 2001 Act—

(i)rent arrears) but only so far as it relates to rent lawfully due from the tenant which has not been paid and the amount of such rent specified in the decree is equal to or greater than £2,250,

(ii)conviction for certain offences

(iii)tenant absent or not occupying house

(iv)anti-social behaviour or harassment

(v)nuisance, annoyance or harassment

(vi)demolition of, or substantial work on, the property

(vii)council as education authority

(c)any of the following Grounds in schedule 5 of the 1988 Act—

(i)Ground 1A (intent to live in house to alleviate financial hardship),

(ii)Ground 2 (house to be sold by lender),

(iii)Ground 8A (substantial rent arrears),

(iv)Ground 15 (conviction for certain offences, acting in an anti-social manner or pursuing a course of anti-social conduct),

(v)Ground 17 (employment with landlord ceases), or

(d)any of the following Cases in, or paragraphs of, schedule 2 of the 1984 Act—

(i)Case 1A (substantial rent arrears),

(ii)Case 2 (nuisance, annoyance or conviction for using or allowing dwelling-house to be used for immoral or illegal purposes),

(iii)Case 7 (employment with landlord ceases),

(iv)Case 8A (intent to live in house to alleviate financial hardship),

(v)paragraph (c)(vi) in Case 11 (owner-occupier’s house to be sold by lender),

(vi)paragraph (c)(iv) in Case 12 (owner’s house to be sold by lender).”

If all this isn’t enough there is also –

Rent Pressure Zones in Scotland

Local councils can apply to Scottish Ministers to have an area designated as a rent pressure zone if they can prove that:

rents in the area are rising too much
the rent rises are causing problems for the tenants

the local council is coming under pressure to provide housing or subsidise the cost of housing as a result
A rent pressure zone will only apply to rent increases for tenants with a private residential tenancy
If an area is designated a cap is set on the maximum rents are allowed to increase for existing tenants with a private residential tenancy each year in that area.

Rent pressure zones – Private renting – gov.scot (www.gov.scot)

The Legislative Regime in Wales

On 18^th January 2016, The Renting Homes (Wales) Act 2016 was enacted.

Renting Homes (Wales) Act 2016 (legislation.gov.uk)

21^st January 2020 Timetable for the Renting Homes (Amendment) (Wales) Bill was agreed upon.

1^st October 2020 The report of the Equality, Local Government and Communities Committee on the Renting Homes (Amendment) (Wales) Bill was laid before the Senedd.

On 1^st December 2022, The Renting Homes (Amendment) (Wales) Act 2021 is amended.

Renting Homes (Amendment) (Wales) Act 2021 (legislation.gov.uk)

Main Points:

the Renting Homes (Wales) Act 2016

Under the 2016 Act, most tenancies and licences of dwellings occupied by individuals as homes in Wales are occupation contracts. These are either secure (periodic contracts) or standard (fixed term or periodic contracts)
Section 173 of the 2016 Act states that a landlord can end a periodic standard contract by giving the contract-holder a notice that the contract-holder must give up possession of the dwelling with two months’ notice, under the amended Act this will be 6 months’ notice

Section 186 states that the landlord can give a contract-holder of a fixed-term standard contract a notice that the contract-holder must give up possession of the dwelling on a particular date but not before the last day of the fixed term
Section 194 states that a fixed-term standard contract can contain a landlord’s break clause. A landlord’s break clause enables a landlord to bring a fixed-term standard contract to an end before the end of the fixed term by giving the contract holder a notice this period has increased from two to six months unless it is one of the new contracts under Schedule 8A but a break clause can only be included to kick in after 18months of the start of the contract rather than the current 4 months
This Act amends the provisions relating to section 173 notices, section 186 notices and landlords’ break clauses to increase the security of occupation of a contract-holder under a standard occupation contract unless certain circumstances apply for example where there is Anti-Social Behaviour or where an institute is providing housing for a person in full-time education, supported accommodation, temporary accommodation for a homeless person, accommodation tied to employment
The 2016 Act also states the date when most existing tenancies and licences of dwellings occupied by individuals as homes in Wales will convert into an occupation contract. Schedule 12 to the 2016 Act makes further provision about the conversion of existing tenancies and licences into occupation contracts on the appointed date
If a Section 173 notice has failed because of retaliatory eviction, a new notice cannot be served for 6 months from the court hearing date. The same applies if the landlord has failed to make a claim in court within 6 months of serving a Section 173 notice.

A section 173 notice is very similar to a section 21 notice in England and comes with restrictions on not being able to serve a valid notice if we have not conducted our statutory obligations. Perhaps landlords who let in Wales can take comfort from the fact that this “no-fault” notice has not been withdrawn

England’s Legislative Regime

Ben Beadle, CEO of NRLA, posts regularly on social media about his meetings and discussions on proposed legislative changes, there are many in the pipeline and I expect we will see most of them introduced in the next 12 months but the main one:

A Fairer Private Rented Sector is still only White Paper and was last debated in the Commons on 3^rd November.

Find in Hansard – Hansard – UK Parliament

Many ministers expressed their frustration that this is taking so long to become a Bill but most miss the point:

Rachael Maskell (York Central Lab/Co-Op) Some of what she said:

“…. not just a fairer private rented sector and a 12-point plan, but the first step of a comprehensive strategy to address once and for all the housing crisis that we see.

The private rented sector has now become the backstop to housing, as opposed to local authorities, which traditionally had that role. As a result, power has shifted from the state into the hands of private landlords, which is why we face some of these deep-seated crises.

For any tenant I speak to in the private rented sector, renting is not their choice. It is a matter of needing a home and for many people, that home is not satisfactory for them. Since the year began, we have seen a plethora of section 21 notices; they are rising in number.

Some costs fall heavily on people who receive a local housing allowance. I hope that the Minister will talk to colleagues about that—I appreciate that there is a crossover of interest in housing—and how the broad rental market is evaluated. The average rental cost in York is £945 per calendar month, and yet someone would receive only £650 in their LHA for a two-bedded property. That gap means that people cannot afford to live in the privately rented sector and have nowhere to go.

We also see people taking real advantage of section 21 notices because of the short-term holiday let market. The hon. Member for North Devon (Selaine Saxby) focused her speech on that, and I will do so, too, because it is hitting holiday hotspots across the country at such an alarming rate. Private landlords are flipping their properties over from the private rented sector to short-term holiday lets. In York, a landlord can get £700 from a property for a weekend. In light of the measures spoken about by the hon. Member for Harrow East and the changes first in buy-to-let mortgages and then when George Osborne pulled back some tax advantages, landlords say that their margins are too tight to maintain their properties in the private rented sector so, to make any profit on their assets, they need to flip their properties.

We have more than 2,000 short-term holiday lets just in my constituency and the surrounding area, which are hollowing out streets and communities. Ultimately, because of that market, people are being kicked out of their homes, leaving the area and their jobs, and children are being taken out of school. That is why I have a private Member’s Bill—the Short-term and Holiday-let Accommodation (Licensing) Bill—before Parliament.

Short-term and Holiday-let Accommodation (Licensing) Bill – Parliamentary Bills – UK Parliament

I hope that the Department will work with me to bring it into being and regulate and license short-term holiday lets. It is due to have its Second Reading on 9 December, and it could transform our ability to regulate that market. That is where the inequality sits and where we need to see significant change.”

If you want to read more follow the link above. There is no doubt that many MPs understand the results but do not understand the reasons for those results. They usually admit that a lack of social housing cause tenants to move into PRS housing, they then go on to conclude that it is because landlords are buying up private stock that these people cannot afford to buy. These are the people who rent from a private landlord:

Those who want to live in a nice area where they cannot afford to buy.

Those who are not ready to buy because they haven’t got the deposit/earnings/permanent job/stable relationship/prefer to enjoy their money for a while.

Those who are saving a deposit to buy their own home and don’t want to live with their parents/have moved away from the area where their parents live/need to be close to work.

Those who need to move around the country/world with their job.

Those who like to move around rather than stay in one property.

Those who want to live in social housing because they cannot afford to buy/don’t want to buy and need affordable housing.

The last group do not want to live in our properties, I can say this because I grew up in houses owned by Birmingham City Council, there is no other option and often they are under a lot of financial pressure to pay their rent and bills BUT THERE IS NO SOCIAL HOUSING FOR THEM. Why is it so difficult for MPs to understand that not everyone can afford/aspires to home ownership – my father was afraid of “a noose around his neck” by which he meant a mortgage but fortunately in those days Birmingham City council, like many others, was still building family homes in green field sites outside of the city and families like mine were happy to live there. Something else my father would say “there is nothing new under the sun” he meant that there are and always will be a variety of people with different needs and wants and its time it was accepted that there are more people who now want social housing not less and that has nothing to do with private landlords.

Happy Holiday!