For and against: The six-month moratorium in the private rented sector
The case for abolition: Martin Partington
I was the person who led the programme for the reform of housing law which the Law Commission for England and Wales carried out in the period 2001 to 2006.Our aim was to create a framework which – once in force – would make the rights and responsibilities of both landlords and tenants clearer.
Under our terms of reference, we were asked, in effect, to recast the then existing law into a more rational framework. At the same time we were asked to increase flexibility in the market by enabling local authorities, social landlords and private landlords to work together to offer rented housing services to those who needed them in innovative ways, and bring investment into the market.
Thus, we should not seek to change the rights and obligations that existed under the current law, unless the existing rules created an impenetrable obstacle to achievement of the principal objectives of clarity and flexibility.
Two key issues emerged in relation to which we had to balance the retention of the status quo and the desire for clarity and flexibility. The first was abolition of Ground 8 – which gave a mandatory ground for possession to landlords where their tenants were more than two months in arrear of rent. This proposal was resisted by housing associations. But to have retained it would have prevented housing associations from being able to let on exactly the same terms as local authorities – a key objective to promote flexibility.
The second was abolition of the six-month moratorium, to which I now turn.
The private rented sector is currently based on assured shorthold tenancies, where tenants do not have long-term security of tenure guaranteed by legislation, but they do have a minimum period of six months’ occupation before a court can make an order for possession against them (on the assumption that there was no breach of the tenancy agreement). We asked whether this vestige of statutory security of tenure should be retained under our proposed scheme.
The Commission received many submissions that the six-month moratorium should be retained. But on the basis of the evidence we received there was little evidence that it retained any practical value.
On the contrary. In general landlords do not want to bring tenancies to an end after only a short period of time. It is better for business to keep tenants in occupation rather than risk period of voids when no income is coming in. The Explanatory Memorandum on the Renting Homes (Wales) Bill offers the latest figures on this point.
It could be argued that if most tenancy contracts are for at least six months, then no harm is done by retaining the moratorium. We nonetheless recommended abolition for two main reasons:
- The moratorium did cause some unnecessary inflexibility in the private rented sector. There is a potential demand for one month or three-month tenancies. We did not see why these should be excluded from the scheme of standard contracts we were proposing
- More importantly, we wanted to change the way people thought about their obligations when they rent. We wanted to encourage parties to agree the period of the tenancy, and then have a clear regulatory framework that would enforce those agreements. We were not against the idea of security of tenure. But we argued that security should be created by the parties’ agreement, not by a rigid statutory framework to which all tenancies had to conform.
In Wales, I understand that discussions are already under way between some landlords’ organisations and the Welsh Assembly Government about the creation of a five-year tenancy. That would be completely possible under the Renting Homes scheme. This would not be the only option: you could have two- year tenancies; or tenancies which last until the children in the household reach school leaving age.
Special contractual arrangements could be made between local authorities and private landlords for longer-term tenancy contracts for housing homeless persons or people in need of social housing from the housing waiting list.
Some may argue that abolishing the six-month moratorium will encourage that minority of really bad landlords to carry on evicting tenants as and when they please. Our response to that is that the six-month moratorium is not deterring bad landlords from behaving badly. Dealing with bad landlords needs to be done by ensuring that enforcement measures are in place to prevent really bad landlords from continuing to operate in this sector of the market.
Martin Partington is a former Law Commissioner for England and Wales. He writes here in a purely personal capacity
The case for retention: Elle McNeil
Citizens Advice Cymru welcomes the Renting Homes (Wales) Bill as a means of standardising contracts across the rental sector in Wales. The Bill intends to improve legal protection for consumers who rent their homes and as an organisation we have valued the opportunity to engage in consultation on the Bill.
But we do, alongside other information and advice providers in Wales, have deep concerns about the proposal to remove the six-month moratorium on ‘no fault’ eviction which we believe goes against one of the Bill’s main aims.
The Renting Homes (Wales) Bill and the Housing (Wales) Act 2014 state that they aim to create a high quality, sustainable private rented sector (PRS) in Wales that will offer a real alternative to community landlords and owner occupation.
We believe that removing the moratorium will lead to a two-tier private rented sector and fundamentally decrease tenants’ rights and security of tenure. Under the proposals within the Bill, better-off renters should be able to negotiate for fixed-term tenancies, but tenants on low incomes will be left with little choice but to accept monthly periodic contracts, leaving them liable to eviction within two months at any time.
Landlords already hold the balance of power due to the shortage of properties within the sector, and we believe this change puts renters in an even weaker bargaining position regarding the security of their tenure and in terms of meeting their housing aspirations, exposing them to the continual risk of homelessness.
The Bill’s Explanatory Memorandum outlines arguments for removing the moratorium, including ‘what real security is provided solely through imposing an initial six month ‘ban’ on “no-fault” evictions, since evictions on other grounds can still proceed’. While it is certainly true that six months does not represent a great deal of security for tenants, it does offer a minimal level of security, whereas we feel that the proposed changes would eradicate that completely.
The lack of long-term security in the private rented sector is one of the key concerns of households, particularly older people and those with children. Households currently have reassurance that they will not be required to leave for the first six months on a standard assured short-hold contract unless they are in breach of their contract, but the Bill would remove this very minimal level of security.
When arguing that it ‘takes six months to get a tenant out anyway’ this assumes that the tenant knows their rights, and is prepared to challenge their landlords notice to quit by going to court (and incurring costs). We know from the people we see that many tenants start looking for alternative accommodation as soon as they are issued a notice, regardless of whether the notice has been issued lawfully.
Only a few informed and tenacious tenants are willing to fight for their rights and challenge eviction notices. This can be seen in the difference between the number of eviction notices that end up in court and the number of people evicted in Wales for 2013/14, which the Ministry of Justice report as 1,386 possession claims lodged, yet only 230 evictions carried out by bailiffs. This is less than one in five. The drawn out process that is spoken about can therefore be seen as rare rather than the norm.
The Welsh Government also suggests that landlords state the moratorium creates ‘an inflexible barrier to some types of renting’ however the standard contract outlined in the Bill enables tenants and landlords to mutually agree a length of tenancy.
Both parties can negotiate for short-term lets that meet their needs and circumstances as required. If considering the moratorium a barrier to renting to high-risk tenants, under the Housing (Wales) Act 2014, local authorities discharging their homelessness duties into the private rented sector can and must work with landlords to ensure that not only are the properties suitable, but also the landlord and tenancy is. For example, the landlord may have additional support and reassurances, such as rent guarantees, and tenancy support services from the local authority, thereby removing a ‘barrier’ to renting to high-risk tenants.
Given local authorities can only discharge their homelessness duties into the private rented sector where they believe the tenancy will be maintained for six months (or more), we believe the removal of the moratorium is at odds with this.
As the new Bill proposes to improve legal protection for consumers who rent their homes, we believe that taking away any rights that were given to protect tenants would be like stepping back in time and do hope that the Welsh Government will re-think the proposed removal.
Elle McNeil is policy officer at Citizens Advice Cymru