Legal update
Reform of private tenancies in the care sector
Tom Lumsden, a partner at CooperBurnett LLP, looks at a long-awaited white paper which is intended to deliver a better deal for tenants
In June 2022, the Department for Levelling Up, Housing and Communities published the long-awaited white paper A fairer private rented sector. The objective is to deliver a better deal for tenants. Care home operators may be asking themselves: how is this white paper in any way relevant to their business? While care home residents often occupy their accommodation under personal care contracts (as purely contractual licensees) there are many care developments where the care package is split into two separate contracts: one for personal care, and an entirely separate tenancy agreement (usually an assured shorthold tenancy) that deals only with accommodation. For this reason, care home providers, in their capacity as landlords within the private rented sector (PRS), need to take notice of the new white paper and plan ahead. The key features of the proposed reforms include plans: n To abolish section 21 ‘no-fault’ evictions and introduce a simpler tenancy structure.
n To apply the Decent Homes Standard (DHS) to the private rented sector for the first time.
n To introduce a new Property Portal designed to assist landlords in their understanding of their legal obligations.
n To introduce a housing Ombudsman covering all PRS landlords, which will provide redress for tenants.
The proposed changes are likely to be introduced as the ‘Renters Reform Bill’ this Parliamentary session. One proposal is that new fixed term assured shorthold tenancies (ASTs) will no longer be allowed. At a later date, the law is likely to be changed
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so that any existing fixed term ASTs will be converted to ‘periodic tenancies’. There will also be restrictions on residential rent increases in the rented sector and a ban on rent review clauses. Tenants will have better rights to challenge excessive rent increases. They will also have a right to ask a landlord to keep a pet in the property and the landlord will not be able to refuse permission unreasonably. Landlords will be able to require pet insurance. The white paper sets out a 12-point plan of action. This includes reforming the grounds for possession to ensure that landlords have effective means to gain possession of their properties where necessary. On a practical level, however, county courts throughout England and Wales (in which most possession proceedings are issued) are still struggling with a backlog following COVID. It could, therefore, take some time for possession orders to be granted. Care home providers should remember that any attempt to
remove a residential occupier without a possession order from the court is a criminal offence.
Point 10 of the white paper also states that the government’s intention is to make it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits. What will be the outcome if a particular care provider has a business model which only makes his or her business economically viable so long as the care home is occupied exclusively by privately funded residents? Will there be any exemptions for care homes or other similar institutions?
The Decent Homes Standard The Decent Homes Standard (DHS) is a standard in the social rented sector but there is no requirement for PRS properties to meet any standard of decency. The white paper states that the government will introduce a legally binding DHS in the private rented sector for the first time.
www.thecarehomeenvironment.com September 2022
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