Assured shorthold tenancies – what’s changing?

In June 2022, the government announced the introduction of the Renters Reform Bill, which would result in sweeping changes across the private rented sector to level the long-perceived power imbalance between landlords and tenants.

The bill is finally due to be published and introduced into Parliament next week. More information to follow once the legislation has been published.

Two major changes have been proposed:

1. The abolition of ‘no-fault’ Section 21 Notices, which currently allow landlords to evict tenants without having to give a reason, provided that various requirements are met.
2. The transition of all assured shorthold tenancies (i.e., fixed-term tenancies) to periodic tenancies, allowing tenants to end their tenancy at any time, subject to two months’ notice.

What is an ‘assured shorthold tenancy’?

An assured shorthold tenancy (AST) is a fixed-term tenancy that usually lasts for six months or a year. Tenants on ASTs have increased protection from eviction, because landlords cannot use a Section 21 notice to regain possession of their property during the fixed term.

Once the AST term is up, one of two things will usually happen:

1. The landlord and tenant will negotiate a new AST, which may involve a rent increase
2. The tenancy will become periodic and continue on a rolling basis.

The abolition of ASTs means that, in time, all new and existing tenancies will be periodic. Under the reforms, rent increases will be limited to once per year and the landlord must give two months’ notice (up from the current one month) of any such increase.

New grounds for repossession

To ensure that landlords are still able to repossess their properties when required, the statutory grounds according to which landlords can evict tenants (set out in Section 8 of the Housing Act 1997)  will be expanded.

Many of the existing discretionary grounds will become mandatory, meaning that judges must grant possession if the landlord can prove the ground has been met. This differs from the current situation, where it is up to the judge whether or not to grant possession – even if the landlord has sufficient proof.

Some new grounds will also be introduced, including:

• The landlord’s children or other close family members want to move into the property

Currently, landlords can only repossess if they themselves want to move into the property. The new ground expands this to all close family members. This ground won’t be available during the first six months of the tenancy.

• The landlord wants to sell the property

Once again, a landlord can’t use this ground until six months have passed.

• Repeated serious arrears

Currently, tenants in serious arrears can strategically seek to reduce their arrears to just below the legal threshold in order to avoid appearing in court, which can often result in procedural issues for the landlord. The new ground will enable landlords to evict tenants who have been in at least two months of rent arrears at least three times in the previous three years – irrespective of their arrears balance at the court hearing.

There will also be some changes to existing grounds, including a reduction of the notice period landlords must give to tenants exhibiting antisocial behaviour.

What’s next?

The reforms outlined above will be implemented in two distinct phases. The government will give at least six months’ notice of the dates each phase is to take effect, and there will be at least a year between them.

• First phase:

All new tenancies will become periodic tenancies and will be subject to the new legislation.

• Second phase:

All existing tenancies will be subject to the new legislation.

Our expert team can help you prepare

If you are a landlord and are concerned about the new legislation, our expert Dispute Resolution lawyers can help you get prepared. We can help you understand what the Renters Reform Bill will mean for you, so that you have the information you need to protect your livelihood and move forward with confidence.

Simply get in touch on 0330 221 8855 or email drsupport@attwaters.co.uk