How will the Renters’ Rights Bill impact schools?

The Renters’ Rights Bill (“RRB”) is transforming the landscape of residential letting and will impact schools which rent properties to staff members or families. The RRB recently concluded the Committee Stage in the House of Lords, where the majority of proposed amendments were rejected. It’s currently awaiting a date for the Report Stage and is expected to become law this summer.

Rationale behind the Renters’ Rights Bill

The RRB is based on the Conservative’s Renters (Reform) Bill, but it goes further than its predecessor. It aims to address the perceived imbalance between landlords and tenants, placing the former under greater scrutiny and giving the latter greater security.

Types of school tenancies

Schools primarily grant occupational rights on two bases:

1. A service occupancy
2. A service tenancy.

The RRB will not apply to service occupancies but will apply to service tenancies, as service tenancies are a form of Assured Shorthold Tenancy (“AST”).

When the RRB becomes law ASTs will cease to exist. They will automatically become monthly periodic assured tenancies (“Assured Tenancies”) and the fixed term in the written AST will no longer apply. This change will happen at the end of the first rental period in the tenancy after the RRB comes into force – the changeover date, therefore, may differ on a case-by-case basis.

How can schools terminate Assured Tenancies?

As it will no longer be possible to restrict the length of a tenant’s occupation, how these Assured Tenancies can be terminated is key.

No fault evictions, which are currently commenced by giving a tenant two months’ notice via the section 21 notice procedure, are being abolished. Schools (and other landlords) will only be able to terminate Assured Tenancies by serving a section 8 notice. To serve a section 8 notice landlords need to rely on a specific section 8 ground justifying their reasons for ending the tenancy.

The section 8 notice procedure is currently available to landlords. The RRB expands the current section 8 grounds to include new grounds, and the notice periods for existing grounds are being extended. The section 8 grounds are a mix of mandatory and discretionary – if relying on a discretionary ground, a court may still decline to grant possession even if you can satisfy that ground.

Section 8 grounds which are likely to be of most relevance to schools are:

• The tenancy was granted as a result of the tenant’s employment with the landlord and that employment has ended, which would be mandatory grounds for a two-month notice period
• The tenancy was not meant to last the duration of the employment and the property is now required by a new employee – also grounds for a two-month notice period
• The landlord is looking to sell the property, which is mandatory grounds for a four-month notice period.

The above are both new grounds for terminating an Assured Tenancy.

Where there are safeguarding concerns regarding the tenant, the following grounds may allow schools to issue court proceedings as soon as a section 8 notice is served:

• The tenant or anyone living in or visiting the property has behaved in such a way to cause nuisance or annoyance to the landlord or anyone living in or visiting the property’s locality
• The tenant has been convicted of using the property for illegal/immoral purposes or has been convicted of an indictable offence
• The tenant has been convicted of a specified criminal offence or has breached a relevant order put in place to prevent anti-social behaviour.

In the first two instances, proceedings can be started immediately on a discretionary basis, while in the final instance proceedings can be started immediately on a mandatory basis.

It will remain the case that any residential tenant, regardless of whether their tenancy is caught by the RRB or not, cannot be evicted without obtaining a possession order via the courts.

Which requirements will landlords need to comply with?

One of the advantages of the section 8 process is that landlords do not currently need to comply with the requirements concerning gas safety certificates, energy performance certificates, the how to rent guide or any deposit in order to obtain possession.

However, under the RRB landlords will likely need to comply with the requirements in relation to how deposits are protected and how and when information about that protected deposit is given to tenants in order to serve a section 8 notice.

Other key changes

Whilst the RRB is likely to have the most noticeable impact on possession, other key changes are:

• Landlords will need to join the new Private Rented Sector Database for a small fee
• A Private Rental Sector Ombudsman is being introduced to deal with tenant complaints. This may increase the volume of complaints, particularly since the Ombudsman’s powers are likely to extend to awarding compensation and/or compelling landlord apologies
• The Decent Homes Standard is being extended from Social Housing to the entirety of the Private Rented Sector; and landlords will be placed under stricter requirements to deal with health hazards such as damp and mould
• Landlords cannot unreasonably refuse a tenant’s request to keep a pet. This right will be implied into every Assured Tenancy once the RRB becomes law. Landlords will be placed under a time limit to respond to such requests
• Rent must be limited to “open market rent”
• Only one month’s rent in advance can be accepted. The first month’s rent cannot be paid until the Assured Tenancy is signed
• Rent can only be increased once a year. To trigger a rent review a landlord needs to serve notice, but the rent review can be contested by a tenant in the First-tier Tribunal
• Landlords falling foul of the RRB can be fined up to £40,000 (this being for repeat offenders).

How can schools prepare for the Renters Rights Bill?

Whilst the RRB is not yet in final form, most of the above points are expected to remain unchanged.

In advance of the RRB coming into force, it would be prudent for schools to:

• Identify what Service Tenancies/ASTs they currently have
• Identify which specific entity owns the properties subject to the Service Tenancies/ASTs to ensure the appropriate entity is registered as landlord on the Private Rented Sector Database
• Carry out inspections to ensure that the standard of accommodation will meet the new requirements under the RRB
• Review whether the requirements concerning deposits have been appropriately observed
• If the school is considering removing any tenants subject to ASTs/Service Tenancies, they should seek advice on this now as they may still be able to rely on the section 21 notice no fault process.

Schools are unlikely to have much time to “get their house in order” before the RRB becomes law, so seeking expert advice during this window is essential.