Yashmin Mistry, Partner at JPC Law looks at the significant changes to the Housing Act. The 2016 Act was passed on 12th May 2016 but not published until 24th May.
There are a number of significant changes to housing law.
Part 1: New homes in England
Starter Homes
The government may limit the power of local authorities in England to grant planning permission for specified residential developments by imposing conditions which will require the developer to sell a proportion of the development at a discount from a maximum price to first-time buyers (s.5).
The price cap set by the Act is £450,000 in Greater London and £250,000 elsewhere.
The discount is 20% and the first-time buyer (as defined in the Finance Act 2003), must be aged between 23 and 40. Other criteria may also apply and can include nationality (s.2).
Local authorities will have a duty to promote the supply of starter homes.
Part 2: Rogue landlords and property agents in England
Banning orders
A local housing authority may apply to the First Tier Tribunal (FTT) for a “banning order”, prohibiting a person from letting, housing, working as a letting agent or property manager (or any combination of these activities) (ss.14, 15).
If the offence is committed by a company, the ban may be sought against an officer of the company (s.18).
The Act does not specify what offences amount to a “banning order offence” which is to be defined by regulation (s.14 (3)).
In deciding whether to impose a ban, the FTT must consider the seriousness of the offence, any previous convictions and the effect of making such an order on the person against whom it is sought (s.16).
Any ban must last for at least 12 months (s.17), although it may be varied or revoked (s.20). Breach of a banning order (without reasonable excuse) is an offence punishable by imprisonment, a fine, or both (s.21). As an alternative to prosecution, the local authority may impose a financial penalty of up to £30,000 (s.23, Sch.1).
The Secretary of State must establish a database of persons against whom a banning order has been made (s.28).
Part 3: Recovering abandoned premises in England
A private landlord of a property let on an assured shorthold tenancy may recover possession of abandoned property without first obtaining a court order.
The power arises only if:
(a) there are specified rent arrears (s.58, e.g. eight consecutive weeks if weekly, two consecutive months if monthly); and,
(b) the landlord has given sufficient notice to which the tenant (and any other named occupier or person who paid a deposit) has not responded (s.59); three notices must be given, the second between two and four weeks after the first and the third at least five days before possession is recovered (s.59).
A tenant may apply to the county court for reinstatement within six months of the recovery of possession and the court may grant reinstatement if there is a good reason for failing to respond to the warning notice (s.60).
Part 4: Social Housing in England
Right to Buy
The government may make grants to private registered providers of social housing who have agreed to implement the Right to Buy on a voluntary basis (s.64).
Secure tenancies
The Housing Act 1985 is amended so that, in general, a new secure or introductory tenancy in England must be for a fixed term of between 2 and 10 years (s.118, Sch.7, inserting new s.81A).
The fixed term does not give rise to any automatic periodic tenancy to follow. If the grant is to a person who has a child under 9 who will be living with that person, then the maximum period is extended to the day on which the child turns 19.
The 2016 Act also makes changes to succession to periodic old-style secure tenancies (s.120, Sch.8). Where the tenancy vests in a person other than a spouse or civil partner, the periodic tenancy comes to an end and that person then has a fixed-term secure tenancy for 5 years.
Part 5: Housing, Estate Agents and Rentcharges and other changes
Electrical Safety
The government may, by regulation, impose duties on private landlords of residential premises to ensure that electrical safety standards are met (s.122). The regulations may provide for covenants to be implied into the tenancy so as to enable enforcement by a tenant; enforcement functions may also be conferred on local housing authorities (s.123)
HMO licensing
The Housing Act 2004 is amended so as to provide that, before granting a HMO licence, an authority must additionally have regard to whether the applicant (or any person associated with him) is unlawfully present in the UK or is insolvent/an undischarged bankrupt (s.125).
Tenancy deposits
Tenancy deposit schemes may be required to share their records with local housing authorities (ss.128, 129).
Long leases
The government may make regulations requiring landlords to give details of the tenants in a building to any recognised tenants’ association for that building (s.130): these provisions come into force on 12th July 2016 (s.216).
Where a long lease permits the recovery of legal costs as an administration charge (Sch.11, Commonhold and Leasehold Reform Act 2002), the tenant may seek an order reducing or extinguishing the tenant’s liability for those costs (s.131).
A new statutory method for valuing short intermediate leases in enfranchisement claims is introduced (s.136; Sch.10). This valuation method is already in force (s.216).
Letting agents
The government may require letting agents to join a client money protection scheme (ss.133, 135).
About Yashmin
As Partner and Enfranchisement Specialist, Yashmin is also Head of JPC’s Property Practice Group.
Recommended by the Legal 500, Yashmin specialises in Residential Leasehold and General Landlord and Tenant work, which includes Collective Enfranchisement, Lease Extensions/Variations, Right to Manage claims, Appointment of Manager Applications, Rights of First Refusal and granting new Leases. Yashmin also has experience in dealing with actions before Leasehold Valuation Tribunals, Upper Tribunal, enforcing lease covenants, forfeiture claims, Section 146 notices, and dealing with service charge disputes.
Yashmin contributes to the Dealing with Problems and Service Charges sections on the Isurv Residential website as well as providing guidance and content to Westlaw.
