Much has been made about the emotively named "no fault evictions", which bring fixed term tenancies to an end at the end of the term agreed by the landlord and tenant at the beginning of the tenancy. Fixed terms are often set at just one to two years. It is perfectly possible to agree much longer terms but, unfortunately, this has not generally been the case – whether due to landlord / agent greed, lender reticence or tenants not wishing to commit.
If a tenancy is not terminated at the end of the fixed term, it will continue from rental period to rental period until either party decides to terminate it. Landlords must give tenants at least two months' notice to vacate. The Renters Rights Bill ensures that tenants will no longer be forced to accept short term tenancies. When it comes into force, nearly all shorter-term tenancies of residential property will be granted, or convert to rolling tenancies, which will continue until terminated by either party but cannot be terminated by the landlord save on specific grounds.
The grounds for termination will broadly be the same as under current legislation. The Bill is intended to provide more stability for tenants to establish family life in a rental property but although notice periods have been increased, there are at least two grounds under the new Bill which, arguably, make the tenant's position more precarious.
Termination of tenancy for the sale of the property by the landlord
Under current legislation, where a property is let and the landlord wants to sell at any time within the initial fixed term of the tenancy, the tenant is entitled to remain in the property until the end of the fixed term. The sale will take place with the tenant in situ.
Under the new Renters' Rights Bill, the tenant will be in occupation under a rolling periodic tenancy. Provided that the tenant has already been in occupation for at least a year, a new right has been given to landlords to end the tenancy on four months' notice if the landlord intends to sell the property. This would apply whether the tenant has been in occupation for one year or 10 years. This means that, once settled in a property, a tenant could still face eviction at any time on just four months' notice if the landlord decides to sell the property.
Termination of tenancy for sale with vacant possession by mortgagee
An ability for a tenancy to be terminated should a lender need to sell a property used as security for a loan has always existed, however, that right was conditional on (a) the mortgage having been in existence prior to the start of the tenancy agreement and (b) notice having been served on the tenant prior to the grant of the tenancy.
The new Bill strengthens the right of landlords and lenders to regain possession by removing both conditions. This means that if the landlord defaults on any mortgage secured against the property, whether or not the tenant is aware of the mortgage, the lender can require possession. The notice period is just four months. This is good news for landlords and lenders meaning that mortgagees will find it easier to obtain vacant possession if needed and could make it easier for landlords to find a willing lender.
Firm but fair
As well as changes to the grounds of possession, the new Bill makes other changes to the regulation of shorter-term tenancies in an attempt to strike a better balance of power between landlords and tenants. In the next newsletter we will look at other changes which the legislation will bring into force.