As a solicitor and someone who drafts tenancy agreements, I was particularly interested to see what the Renters Rights Bill has to say about tenancy agreements.
Particularly after my experience of dealing with the new Welsh rules back in 2022.
The Welsh Occupation Contracts
To recap, the Welsh amendments provide that:
- The rules apply to both residential licenses and tenancies
- The vast number of prescribed clauses that need to be used effectively eliminate most of the differences between them (this is why tenancy agreements and residential license agreements must now collectively be referred to as ‘occupation contracts’
- Landlords who fail to provide an occupation contract within 14 days of the ‘occupation date’ ie start of the contract, can be prosecuted and fined
- There were difficult transition rules which some found it impossible to comply with
Is something similar going to happen in England?
Clause 12 of the Renters Rights Bill
Let’s take a look at what the Bill actually says, along with the comments in the explanatory notes provided on the Parliament website.
The relevant clause is Clause 12, which gives the wording for a new clause 16D to be inserted into the Housing Act 1988. So, the citations below are the proposed new Housing Act 1988 clause numbers.
Let’s look first at clause 16D (2)
Statement of terms
This provides that landlords or their agents must give a ‘written statement’’ to tenants.
This can be
- In the form of an agreement in writing between the landlord and tenant, or
- A record of terms otherwise agreed
In most cases, landlords or their agents will provide a written form of tenancy agreement anyway. Which, after the bill becomes law, will have to satisfy the requirements of the act. Landlords will want tenants to sign this to ensure that the clauses are enforceable.
But if they just want to have a list of agreed terms, this, it seems, is permitted. I would not recommend this, though, as how can landlords prove the clasues are agreed without the tenants’ signature? In which case you might as well have a proper tenancy agreement.
What should be in the tenancy agreement?
Clauses 16D(2) states that it must contain
1. ‘Such terms of the tenancy as are specified in regulations’, and
2. Any other information in writing which the Secretary of State provides for in regulations about the following:
- the tenancy;
- the dwelling-house let on the tenancy;
- the tenant;
- the landlord;
- the rights of the landlord or the tenant in relation to the tenancy or the dwelling-house let on it.
and
3. Any statements that are required as a condition for using certain grounds for possession.
In addition to this, there will be many clauses of their own that landlords will want to add. For example, requiring rent to be paid in advance, providing for inspection visits and providing the clauses needed if they take a deposit.
Superficially, the new statement of terms rule seems similar to what we have now. Section 20A of the current Housing Act 1988 sets out the duty of landlords to provide statements as to the terms of the tenancy.
However, the statement of terms under s20A only needs to be provided if tenants ask for it. Clause 12 makes it a legal obligation for landlords and their agents.
Its also possible (indeed probable) that this section could bring forth statutory instruments setting out other terms which need to be provided in tenancy agreements.
Whether these will be as extensive as those in the Welsh occupation contracts, we don’t know, but I think it likely that government will require landlords to notify tenants of their rights. For example, as regards landlords repairing obligations and the requirement to maintain the property in a condition which is fit for human habitation.
Further required clauses will probably be prescribed as and when other parts of the act come into force. For example, the decent homes regulations and ‘Awaabs law’ which will specify time limits for landlords to deal with dangerous hazards in the property.
So landlords need to watch out for this as they may well need to re-draft tenancy agreements and serve them on tenants when this happens.
It looks though government do not intend to prescribe as many clauses as the Welsh government have though, as the notes to the act refer to
‘a written statement setting out basic information about the tenancy and both parties’ responsibilities.’
However the note goes on to say
‘The intention in mandating written statements is to help avoid and resolve disputes, and provide evidence if disputes go to court.
So when drawing up prescribed terms, the draftsmen may find that more are necessary than they originally thought. If the terms are going to be sufficient to ‘help avoid and resolve disputes’
Note incidentally that the explanatory notes tell us that regulations will be subject to the ‘negative procedure’. This means that they will come into effect immediately and will only be considered by Parliament if, within 40 sitting days, an MP raises a motion (or ‘prayer’) that it be annulled.
So new rules could be introduced without much notice.
Will this make landlords subject to penalties if they don’t realise this and don’t amend their tenancy agreements? Something to watch out for.
When do these rules apply?
The wording of the act just refers to ‘tenancies’, so it looks as if it will not apply to residential licenses. However don’t count on this as s16D(8) provides for ‘different provision for different purposes’. Which could mean anything!
The first subsection refers to ‘assured’ tenancies other than those where there is an implied surrender and grant following an agreement between the landlord and tenant to vary the terms.
So if, presumably, the landlord agrees to, say, allow the tenant to run a business from the property, where this would normally be prohibited, it is enough just to have a document setting out the new terms relating to the agreement.
Although, it is interesting that the bill seems to assume that a change of terms will mean a surrender and regrant of the tenancy rather than just an amendment to the terms. Unless I have read that wrong.
As the act names ‘assured tenancies’ then this must presumably mean that it will not apply to tenancies protected under the Rent Act 1977 or common law / unregulated tenancies.
I suspect that protected tenancies under the Rent Act 1977 will fall completely outside the scope of the Renters Reform Bill, but I would not be surprised if it tried to include some common law tenancies within its scope. In fact, I think they should, as it would make the law less complex. For example, some common law tenancy types are included in Welsh law as an ‘occupation contract’.
When must the statement be provided?
16D(4) says that the statement must be given ‘before the tenancy is entered into’. Unless it is a tenancy arising by succession or an agricultural occupancy, in which case it must be provided within 28 days.
Most landlords and agents who know what they are doing will insist on tenants signing a tenancy agreement before giving them the keys and allowing them into occupation anyway. Clause 12 makes this even more necessary.
Note that 16D(6) appears to be referring to letting agents.
What about enforcement?
The Wales legislation provided for a fixed penalty of up to two months’ worth of rent where landlords fail to provide a written ‘occupation contract’.
Clause 15 in the Renters Rights Bill (which sets out new clauses to be inserted in the Housing Act 1988, clause 16I – L) provides for enforcement of clause 16D (along with others we are not discussing in this post) by way of a financial penalty of not more than £7,000. Although 16L(2) allows the Secretay of State to amend this sum ‘to reflect changes in the value of money’. The financial penalty to be imposed by the Local Housing Authority.
There is a useful example given in the explanatory notes:
Example 1: Offering a fixed-term contract
A landlord offers a tenant a fixed-term contract, which is in contravention of the new tenancy system (so, the landlord committed a breach under section 16I(1)). No criminal proceedings have been initiated against the landlord. If the local housing authority is satisfied beyond reasonable doubt that this has taken place, they could fine the landlord up to £7,000.
A few other items.
I’m a bit confused by 16I(2) which says:
Where a landlord fulfils the requirement in section 16D, a local housing authority may not impose a financial penalty on a person who contravenes section 16D only by virtue of subsection (6) of that section.
Subsection (6) saying:
Where a landlord has entered into a contract with a person which requires that person to ensure compliance with this section (whether or not this section is referred to individually), subsection (2) also applies to that person, as it applies to the landlord.
At first, I wondered if it was saying that a landlord cannot be blamed if he instructs an agent to deal with his property and the agent fails to comply with 16D. However, the explanatory notes say
Subsection 16I(2) provides that where a landlord has already provided a written statement of terms, a person contracted by that landlord cannot be fined for non-compliance only by virtue of 16D(6).
Which seems a bit weird. Why would they want to fine the agent if the landlord has already provided a compliant tenancy agreement?
It would be nice if the draftsmen could make this all a bit clearer. Why do they have to approach everything so obliquely in legislation?
Then 16I says that if the landlord (or his agent) fail to provide a correctly drafted written statement within 28 days of the imposition of a penalty, the Local Housing Authority can impose another penalty – although the 28 day time limit is extended if the landlord or agent appeal.
Financial penalties can also be imposed on persons jointly. Presumably, if there are joint landlords or maybe a landlord and agent.
However, I cannot see any reference to 16D in 16J which is about offences and prosecutions. So I assume that landlords can only be fined by way of a penalty notice if they fail to comply with the tenancy agreement requirements. They cannot be prosecuted in the Magistrates Courts.
Although, if I am wrong on this or any other of the assumptions above, no doubt someone will leave a comment letting me know.
And finally
One of the most problematic issues when the new Welsh legislation came into force in December 2022 was the requirement for new tenancy agreements/occupation contracts and the various rules surrounding this.
The Welsh clauses themselves are hard to understand due to the constant cross-referencing which makes it difficult for readers to work out exactly what they are talking about. Which to a certain extent, defeats their purpose as a source of information for tenants/contract holders about their contract.
It is to be hoped that the new English rules are introduced in a more sympathetic way and that the prescribed clauses avoid the excessive cross-referencing of the Welsh clauses. Otherwise, the tenants they are supposed to help won’t understand them.
I discussed the issue of clarity in legislation in a previous post where I made a plea for ‘plain English legislation’.
However, that aside, there is a lot to be said for requiring tenancy agreements to set out clearly what tenants’ rights are. For example rogue landlords will often try to mislead tenants and often introduce clauses which deliberately misrepresent their rights. If they do that once this bill becomes law they can be fined.
It will be interesting to see how clause 12 is developed over time in regulations. It could end up being one of the most significant parts of the act.
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