New measures will encourage longer fixed-term, family-friendly tenancies and raise standards in the private rented sector, Communities Secretary Eric Pickles announced today (1 October 2013).
Tenants will be able to request longer tenancies that provide stability for their family, avoid hidden fees when renting a home and demand a fair deal from their landlords and letting agents.
Mr Pickles said the government is determined to match support for home ownership with steps to improve the rental market, without strangling the sector with unnecessary rules and red tape.
A new package of measures will ensure sensible reforms are made to the sector, so tenants can get the best deal when they rent a home.
A model tenancy agreement, developed with the sector, will clearly set out the rights and responsibilities of tenants and landlords, and provide the rental market with an industry benchmark for written tenancy agreements.
- the model agreement will ensure families can benefit from longer tenancies, without changing the existing legal framework for the rental market
- longer tenancies will give families greater certainty and security, especially for those with children at school, and reduce costs for both tenants and landlords who will not have to pay letting agents to arrange frequent contract renewals
- tenants will be able to access better information so they know the types of tenancies they can request
A tenants’ charter will ensure all tenants know what to expect from their tenancy and, if something goes wrong, where to go for help.
- this will include greater transparency about lettings agents’ fees, helping to stop unreasonable practices and unfair charges, and ensuring would-be tenants know the full costs before they sign up to any contract
- the charter will work alongside the new compulsory redress schemes for lettings agents, which will be able to investigate agents that have not been clear about fees and, where a complaint is upheld, require compensation is paid to the tenant
- the new £1 billion Build to Rent Fund, which has already identified forty-five potential schemes, and £10 billion of government-backed guarantees will encourage institutional investment in the sector
- this new approach will revolutionise the way new homes are built for the rental market, and provide more choice and better quality for tenants
- boosting the supply of rental homes, backed by a sensible regulatory framework, will support longer-term tenancies, and increase competition between landlords offering decent, reasonably priced accommodation
The government will encourage mortgage lenders to follow the recent change in policy by the Nationwide, so buy-to-let borrowers can offer longer initial fixed periods in their tenancy agreements.
These initiatives will complement the government’s support for home ownership and steps to help hard-working people with the cost of living.
Mr Pickles said:
The private rented market is a vital asset to this country, and plays an important role providing flexible accommodation for those who do not want to buy, or are saving up for a deposit.
The last thing we want to do is hurt hard-working tenants by increasing costs and strangling the sector with red tape. But families deserve stability for their children, and all tenants deserve a good and transparent service from their landlords and lettings agents.
Today’s proposals will raise the quality and choice of rental accommodation, root out the cowboys and rogue operators in the sector, and give tenants the confidence to request longer fixed-term, family-friendly tenancies that meet their needs.
Today’s move will support existing measures to attract new investment into the sector, including:
- the new Private Rented Sector Taskforce, which is promoting the Build to Rent Fund and the guarantees and liaising between the applicants, councils and government
- new primary legislation will require all letting and managing agents in England to belong to an approved redress scheme; this will offer a clear route for landlords and tenants to pursue complaints, weed out the cowboys that give agents a bad name, and drive up standards
- a £3 million fund for councils in England will help them tackle acute and complex problems with rogue landlords, and build on work to tackle ‘beds in sheds’, where £2.6 million was provided to 9 councils and backed by a ministerial task force; more than 500 illegally rented outhouses have been discovered since 2011 and action is being taken against the owners
- proposals that require private landlords to make simple checks on new tenants will ensure they are entitled to be in this country
- the Legal Aid, Sentencing and Punishment of Offenders Act 2012 will provide magistrates’ courts with the power to impose unlimited fines on landlords who are found guilty of not meeting their statutory responsibilities; these powers will be complemented by Schedule 16 to the Crime and Courts Act 2013, which will allow the courts to take account of an offenders assets as well as his income which will help tackle rogue landlords who have limited documented income but significant assets
- the Mortgage Repossessions (Protection of Tenants etc) Act 2010 has increased protection for tenants from repossession if their landlord faces mortgage difficulties
The Tenants’ charter will be an accessible guide for tenants providing them with a better understanding of what they can expect and, if something goes wrong, where to go for help.
It will include recommended questions to ask before they agree to rent a property, the advantage of written tenancy agreements and what they should expect during the tenancy.
Under the Enterprise and Regulatory Reform Act 2013, the government has the power to require all lettings agents to belong to a redress scheme.
To encourage lettings agents to be transparent about the fees they will charge, government will make clear that the compulsory redress schemes will be able to investigate complaints where the agent has not made clear the fees that will be charged. Where a complaint was upheld, the redress scheme could require the agent to pay compensation to the tenant.
The new model tenancy agreement will not require a single tenancy agreement to be used. However, there is a consensus among landlord and tenant groups that a better understanding is needed on a number of issues, in addition to encouraging longer tenancies and rental certainty, for both landlords and tenants when they enter into agreement.
The government will build on this consensus to develop and promote clear information that should be available to tenants and landlords, and what should be included in a new model tenancy agreement.
Both the Residential Landlords Association and Shelter have developed models to encourage longer tenancies but within the existing legal framework.
Any model for longer fixed-term tenancies should highlight that:
- tenants can request a longer tenancy which enables greater stability, where both parties agree, while maintaining the flexibility within the private rented sector that many tenants value
- rent review clauses, which are index linked to inflation, will provide both landlords and tenants with greater financial certainty to plan over a longer period
The additional advantages to landlords in entering longer fixed-term tenancies include:
- avoiding potential periods of vacancy between tenants
- reduce their costs of having to find new tenants on a regular basis
- tenants who live in properties for longer will also be encouraged to take greater care of the property
- any model tenancy agreement should include break clauses, so that landlords and tenants will be able to end the tenancy early, for example if the landlord wishes to sell the property
- the government would expect any model tenancy agreement to provide an initial probation period for both parties to ensure they are content to enter into a longer agreement with each other (as put forward by the Residential Landlords Association).