Landlords should brace themselves for more legal challenges as they face the threat of being sued by tenants if the new Homes Bill becomes law and the property is ruled as unfit for human habitation. This is on top of stronger fines up to £30,000 they can face for not meeting HMO standards after October 2018 and the banning orders now in place to eradicate rogue landlords.
The Homes (Fitness for Human Habitation) Bill will enter the Report stage in October 2018 and following any further debates or amendments is expected to pass through the House of Lords and become law in the future. The bill was passed in January 2018 after gaining cross-party support as well as backing from industry bodies like the Residential Landlords Association (RLA), National Landlords Association (NLA), and Association of Residential Letting Agents (ARLA).
Labour MP Karen Buck first tabled the Private Members’ Bill in 2015 (it’s unofficially called the Buck Bill) as she campaigned for improved standards in rental properties and to amend the Landlord and Tenant Act 1985. If it becomes law then all landlords, from the social and private sector, must ensure their property is fit for human habitation at the beginning and throughout the tenancy. Otherwise the tenant has the right to take legal action for a breach of contract on the grounds that the property is unfit for human habitation.
Existing legislation already gives local authorities the power to prosecute landlords, so what will this new law mean for landlords across the industry?
What if it’s Not Their Fault?
The new Bill would serve as an added deterrent because the threat of action from local authorities already exists. From October 2018, the punishments will become more severe as landlords that don’t comply with standards for Houses in Multiple Occupations (HMOs) can be fined up to £30,000. Banning orders can now be issued to the worst-offending rogue landlords and there is also a database for rogue landlords and letting agents.
This Bill would allow tenants to take out private prosecutions against landlords whose properties aren’t meeting the mark on the Housing Health and Safety Regulation System (HHSRS). One of the main concerns being raised among landlords is what happens if the property’s condition deteriorates significantly because of the tenant’s lifestyle and actions? It can be difficult to remove a tenant even if they’ve caused damage.
With the burden of new legislation some landlords are wondering if they will be given powers to prosecute tenants for criminal damage but they do already have those powers. They can sue anyone for criminal damage and Schedule II of the Housing Act 1988 gives the landlord the right to evict tenants for damaging their property or even simply allowing the condition to deteriorate. They can also draw down on the deposit.
Be Covered for Damage with a Comprehensive Inventory
Suing a tenant can take a considerable amount of time and money and is stressful for all concerned. Similar to the database of rogue landlords and agents, there are calls for a ‘bad tenants’ register, compliant with GDPR. This would help landlords before they decide whether to take on a particular tenant.
If both parties have entered into a difficult tenancy then an inventory report signed off by the tenant exists as proof of the property’s condition at the start of the process. Provided with a detailed and accurate inventory then their chances for a quicker settlement can be increased and it will strengthen a landlord’s case in a dispute if the report can clearly show that damage has been caused by the tenant’s carelessness, negligence, misuse or deliberate damage.
Local Authorities Held to Account Like PRS Landlords
Councils have prosecution powers for dealing with property conditions but came under fire when figures revealed how few rogue landlords had been prosecuted across Britain. The laws exist to protect tenants but the problem is whether they’re being enforced enough throughout the country. Enforcement could often be a last resort for councils, who weigh up whether expensive prosecutions are a cost-effective use of taxpayers’ money. This is during a time when councils face a £5.8bn shortfall in funding by 2020.
However, what happens when local authorities and housing associations are guilty of poorly maintained properties? Social tenants don’t currently have the same rights as private tenants which is why the new Bill aims to extend beyond the private sector and include these people as well. Facing a threat of private prosecutions, it will have financial implications on councils who would have to spend more on maintenance and repairs.
Consequences of Industry Reforms for the Growing Rental Market
According to recent statistics, between two and a half to three million people live in properties with hazards rated as Category 1 under the HHSRS rating. These hazards mean the conditions within those properties present a serious risk to the health and safety of the occupants.
The new Homes Bill supporting tenants, combined with existing legislation for local authorities to enforce, should improve living standards. However, the rental market will suffer if the laws are seen as overbearing for good landlords who could potentially exit the market. This is another measure being taken by the government along with the property industry to send a clear message that rogue landlords aren’t wanted.
No Detailed Inventory Means No Satisfactory Evidence
The outcome of a dispute is often decided at the start of a tenancy – not the end. To protect a property and provide the evidence needed for an easier and quicker resolution to any dispute then equip yourself with a professional and unbiased inventory. Assist Inventories provide the whole of London and surrounding areas with high-standard reports that landlords and tenants can have confidence in when they sign and agree to a property’s condition.