The end of Assured Shorthold Tenancies and the Rented Homes Bill

The Rented Homes Bill had its first reading on 22 January 2020. The first thing the Bill does is to abolish assured shorthold tenancies (ASTs) in England. ASTs were created by the Housing Act 1988 to strengthen the rights of landlords and increase the supply of private rented accommodation.

An AST is a type of assured tenancy; its advantage from the point of view of a landlord is that, in addition to the grounds for seeking possession that are available to all assured tenancies, possession may also be obtained using the procedure set out in Section 21. The advantage of an AST for a tenant is the possibility of referring excessive rents to a rent assessment committee.

The demise of the AST is intended to ‘reset the balance of rights and responsibilities between landlords and tenants’. This will mean that a landlord will no longer be able to rely on a ‘no fault’ eviction notice under s21 or obtain a possession order without a Court hearing (under the accelerated possession procedure) and he or she will have to prove at a hearing that one of the possession grounds set out in the 1988 Act exists.

The Bill proposes additions and amendments to the 1988 Act grounds for possession some of which will, on the face of it, be helpful to landlords although the devil will undoubtedly be in the detail which may in the form of additional regulations made by statutory instruments.

Ground 1 is amended so that a landlord will now have to satisfy the Court that he intends to occupy the property as his or her only or principal home for an indefinite period or for a period which appears to the court to be ‘proportionate in all the circumstances’ but which must be 12 months or more.

There is a new Ground 2A where a landlord intends to sell the property which will be cautiously welcomed by landlords. A landlord will need to produce evidence of a genuine intention to sell which might include evidence that a draft contract for sale has been submitted to a named prospective purchaser or that arrangements have been made to offer the property for sale at auction. The Secretary of State has the power to make further regulations on the kind of evidence that might be required to support this possession ground.

The existing Ground 6 has been shortened and simplified and can be relied on where a landlord intends to carry out substantial ‘refurbishment’ works to the property and a new discretionary Ground 18 has been added where a landlord’s family member intends to live in the property.

All new tenancies created after the Bill is enacted will be assured tenancies. The new Act will not apply to ASTs created before the Act comes into force or to statutory periodic tenancies that arise when a fixed term AST created before then comes to an end. However, at the end of 3 years after the Bill is enacted, any such AST which is still continuing will automatically become an assured tenancy which cannot be ended using a ‘no fault’ notice.

What happens next? The next stage, which has yet to be scheduled, will be a second reading in the House of Lords. The Bill will then pass through the Committee and Report Stages and a Third Reading before moving to the House of Commons.

We will continue to publish updates on the progress of the Bill or alternatively if you wish to be added to our email newsletter circulation list please contact Rosie.Guenzel@warekay.co.uk.

For any advice regarding the above please contact Johanne Spittle on 01904 716000 , 01653 692247 , 01937 583210 , or email johanne.spittle@warekay.co.uk