Housing
It’s been predicted that the undersupply of houses will worsen in 2024 to a cumulative shortfall of 1.5million.
Although the anticipated fall in house prices and interest rates will make home ownership more affordable for more people, the outlook for build to rent (BTR) remains strong.
The professional part of the private rented sector (PRS) will however need to work on its image. It continues to be damaged by rogue landlords, as well as some corners of the press which tar all landlords with the same broad brush.
The outlook remains bright for the purpose-built student accommodation (PBSA) market. The sector will need to tackle new and forthcoming regulations, such as the Building Safety Act and energy efficiency standards. Nevertheless, rising student numbers and the exit of many private landlords from the PRS will see demand increasing.
PBSA is expected to be exempt from the changes proposed in the Renters Reform bill, as long as the provider is registered for government-approved codes.
Michelle Beaumont
Partner, Real Estate
+44 (0)771 039 8323
michelle.beaumont@irwinmitchell.com
Ben Rogers
Partner, Real Estate
+44 (0)744 286 1340
ben.rogers@irwinmitchell.com
Renters Reform – seeking possession
The Renters (Reform) Bill signals the approach of the long-awaited abolition of ‘no-fault’ Section 21 Notices. To fill the hole left by its removal, additional grounds for serving a notice of possession under Section 8 have been added, and some other existing Section 8 grounds have been extensively modified.
While much attention has focused on the abolition of the ‘no-fault’ Section 21 procedure, the effect of this may be overstated. ‘No-fault’ is often equated with ‘no reason.’ The vast majority of competent landlords will have a legitimate reason for serving a Section 21 Notice, and those reasons appear to be covered by the extended Section 8 grounds. In addition, some of the proposed new Section 8 Grounds are, in fact, no-fault, including Grounds 1 and 1A., Despite the attention-grabbing headlines, ‘no-fault’ evictions will continue under the expanded Section 8 procedure.
It is hoped that the possession process will be more straightforward and less costly for landlords, given that the Section 21 preconditions have not been carried through to Section 8 under the proposed legislation.
The Government seems very keen to push the legislation through. As we enter 2024, the Bill has already passed the first and second readings in the House of Commons.
Key new and amended Section 8 grounds
Ground 1 – The landlord can terminate a tenancy on 2 months’ notice if any of the following intends to move back into the property:
- The landlord
- The landlord’s co-habiting partner, parent, children or grandchildren, parents or grandparents, siblings and children of a cohabiting partner
- Children or grandchildren of any of the above.
- The landlord is no longer required to have lived in the property before the tenancy started for the ground to apply.
- Ground 1A – The landlord can terminate a tenancy on two months’ notice where the landlord intends to sell the property.
- Ground 2 – The tenancy can be terminated by a mortgagee on two months’ notice, where they are entitled to exercise a power of sale. This ground can now be used whether the mortgage was granted before or after the beginning of the tenancy.
- Ground 8A – The landlord can terminate a tenancy on four weeks’ notice where the tenant has been persistently in two months’ arrears or more. The trigger for Ground 8A is where a tenant falls into at least two months’ arrears, for at least a day, on at least three separate occasions.
- Ground 14 – The landlord can terminate a tenancy immediately following service of notice where the tenant is guilty of conduct ‘capable of causing’ (contrast with the wording ‘likely to cause’ in the existing legislation) a nuisance or annoyance.
Prerequisites to possession
Almost all of the existing preconditions required for a Section 21 Notice – including service of an EPC, gas safety certificate and How to Rent Guide – will not prevent a Section 8 claim. The only precondition that will still apply is that the deposit must be registered, and the terms of the deposit given to the tenant.
Paul Henson
Partner, Real Estate +44 (0)788 132 5683
paul.henson@irwinmitchell.com
George Cohen
Associate, Property Litigation +44 (0)738 4907 322
george.cohen@irwinmitchell.com
Material Information
In December 2023, the National Trading Standards Estate and Letting Agency Team (NTSELAT) released new guidance for material information in property lists for both sales and lettings.
The NTSELAT guidance is intended to support agents with existing requirements under the current consumer protection regulations. The guides are effective immediately, and although there will be an implementation period, it is envisaged that a failure to provide the minimum information will prevent a property from being listed on property portals.
The guidance provides clarity on what constitutes ‘material information’ in property listings. It promotes the government’s objective to improve the home buying and selling process by ensuring that buyers have information before even viewing a property.
The release of the guidance has come in two phases. The first (part A), approximately 18 months ago, required property listings to include price, council tax band and details of tenure. Since then there has been further guidance – for example, on removing “price on application” listings.
The new guide represents a more fundamental change which will significantly alter the conveyancing process.
Along with part A, the new guide has two further sections (parts B and C):
- Part B relates to information that is likely to be in the knowledge of the seller, or within their abilities to obtain. This includes details of utility supplies, heating and parking.
- Part C will require specialist advice from a conveyancer, with details including whether the property is a listed building, is in a conservation area or is subject to a tree preservation order. It's also necessary to provide information about any rights, restrictive covenants, planning permits, limitations on subletting, and usage restrictions (such operating a business or renting it out for vacations). For leasehold properties, detail must be provided on covenants and restrictions arising from the lease.
Environmental and local land charges searches will need to be completed. so that details of flood risk, coastal erosion, coalfield mining and relevant planning permissions can be added to the listing. The seller will also have to include whether the property has been adapted and is suitable for accessibility needs.
Shifting the timing of when information is provided, and who collates it, is a task that should not be underestimated by those pushing for the change. Public buy-in, education and a significant mainstream media campaign will be needed to make this work.
Will it experience resistance to change, as home information packs did many years ago? Or will it become a commercial opportunity for technology companies and savvy conveyancers? Only time will tell.
Helen Hutchison
Partner, Residential Property +44 (0)776 527 5128
helen.hutchison@irwinmitchell.com
Hayley Bruce
Associate, Residential Property +44 (0)203 040 3497
hayley.bruce@irwinmitchell.com