One of the leading statutes governing property law in England, The Housing Act 1988 covers a wide range of areas and decrees most of the rights and responsibilities of tenants and landlords. It also contains a number of qualifications and exceptions to the rules, which can prove to be confusing.
If you’re unsure what exactly the Act means for you, we’ve put together an explanation of the rights that it offers you and a breakdown of its main purposes.
What is the Act and is it the same as a tenancy agreement?
As a landlord, you are very likely to have come across the Housing Act 1988 at some point. It’s referenced numerous times in the tenancy agreements you’ll have signed and is, in essence, the law that governs the Private Rental Sector (PRS) and those who operate within it.
The easiest way to think of it, arguably, is as a rulebook containing the statutory rights and legal responsibilities of both landlords and tenants.
It’s not, though, the same thing as a tenancy agreement – which is a common mistake among landlords and tenants who often confuse the two. While a tenancy agreement is a legal contract between the two parties involved in a rental transaction, specifying the terms of the individual tenancy (such as its length and the amount of rent owed each month), the Housing Act is there to stipulate the conditions within the tenancy agreement.
Why did the Housing Act 1988 come into play?
Before 1988, the private rental sector looked very different, with most tenancies taking the form of ‘protected and statutory’ tenancies. This, in turn, created a legal system that came down heavily on the side of tenants.
As a result, a situation arose whereby tenants in effect had the right to stay in a rented property indefinitely, passing the tenancy down to their relatives when they died. In these scenarios, it became very tricky for landlords to get back possession of their own properties.
Landlords, as a consequence of this legal inequality, became far less willing to let their properties over fears that they’d eventually lose control of them. This, combined with the mass sell-off of council properties as a result of Margaret Thatcher’s Right to Buy policy, led to a shortage of housing which the Housing Act 1988 sought to address.
How did the Act help to resolve the problem?
In a desperate attempt to revive the private rental sector, and address the shortage of housing, Government ministers spent more than 250 hours formulating laws that would redress the imbalance of power and encourage homeowners to rent out property again. The proposed new laws were passed and came into being as the Housing Act 1988 on January 15 1989.
A number of safeguards to ensure that landlords had the right to gain possession of their property should they need to were put in place, provided they followed the procedures set out in the statute.
The Housing Act 1988 dramatically changed three main areas of English property law in particular, namely:
- Rent regulation
- Succession, and
- Security of tenure
Here, we explain in more detail what changed and what it meant for landlords…
The Housing Act 1988 significantly reduced rent regulation, giving landlords the opportunity to charge whatever they liked for a property (something that is still the case today, despite growing calls from some for the return of rent controls of some description). The change also meant that the only party with the right to challenge the prices set by landlords are their tenants.
There are only certain circumstances in which tenants may challenge the rent, which are during the first six months of an assured shorthold tenancy or upon service of a notice to increase rent, which can be used by landlords on an annual basis to raise the rent after the fixed term has come to an end.
How does this affect me?
Tenants who believe their rent is higher than the current market value can, in the first six months of an assured shorthold tenancy, refer their case to a Rent Assessment Panel (an independent decision-making body sometimes known as a Rent Assessment Committee or Rent Assessment Tribunal) for review.
Most tenants, however, are unlikely to take this step in light of the powers you have, as a landlord, to end the tenancy in accordance with Section 21 of the Housing Act 1988.
What’s more, landlords now have the ability to increase rents without using the notice procedure, opting instead to do so via a ‘renewal’ tenancy agreement.
The changes to rent regulation mean that tenants’ rights to challenge landlords over rent – outlined above – have less sway over landlords and are, as a result, used less frequently. The amendments made as part of the Housing Act, and the rebalancing of power this caused, are one of the major reasons rental prices have grown so rapidly since the late 1980s.
As a result of the Housing Act 1988, the rules regarding succession became similar to those under the Rent Act, whereby only a spouse can inherit rental rights.
The changes to the succession laws directly impact very few landlords – mostly because assured tenancies, which state that only a spouse can inherit rental rights, are uncommon in the private rental sector.
Under assured shorthold tenancies, which also came into force in the late 1980s and now make up most tenancies in the private rental sector, there are no rights of succession. In other words, if the tenant dies, the spouse or other beneficiary has no right to remain in the property. With this type of tenancy, succession rights have become irrelevant precisely because the landlord now has the power to serve a Section 21 notice to evict the tenant through the courts.
Security of tenure
The Housing Act 1988 split the types of tenancy on offer into two: one offering long-term security and one without it. The former is what is known as an assured tenancy, which is very similar to the old ‘protected’ tenancy, albeit with the caveat that there’s mandatory ground for possession in the case of serious rent arrears.
Assured tenancies are seldom used by private landlords, but are much more likely to be utilised by social housing providers such as housing associations.
Assured shorthold tenancies (or ASTs), by contrast, are much more popular among landlords – a type of assured tenancy which differs in two ways from the more traditional version. Firstly, it offers tenants the right to challenge the rent they are set in the first six months of a tenancy (explored above) and, secondly, it offers an additional shorthold ground for possession, set out in Section 21 of the Housing Act 1988.
How does this affect me?
According to Section 5 of the Housing Act 1988, an assured or assured shorthold tenancy continues as a statutory periodic tenancy after the end of the contractual fixed term. While this offers tenants with an assured tenancy long-term security, a periodic assured shorthold tenancy means the let can be ended at any time on the proviso that a properly drafted Section 21 notice has been issued.
The right for the landlord to recover possession of the property after the end of the fixed term, under Section 21 of the Act, has helped to radically alter the rental sector. As a result of Section 21, there are a far higher number of people willing to rent their property out knowing that they can evict tenants and take possession of the property within six months of the contractual fixed term ending if required. This is starkly different to the previous state of play, where a landlord could have found themselves obliged to rent the property to two generations of a family.
Changes to Section 21
A few years ago, the Deregulation Act 2015 introduced changes to prevent ‘retaliatory evictions’, with all new tenancies starting on or after October 1 2015 needing to adhere to new guidelines as to when and how a Section 21 notice can be served by a landlord.
From October 1 2018, this now applies to all assured shorthold tenancies, regardless of their start date.
Under the new rules, landlords (or letting agents working on their behalf) wishing to serve their tenants with a Section 21 or no-fault eviction need to do a number of things. This includes:
- Providing a copy of the license to all of the property’s tenants (if a property is subject to licensing)
- Providing tenants with the Prescribed Information relating to the protection of their deposit
- Issuing the property’s Energy Performance Certificate (EPC)
- Providing tenants with an up-to-date Gas Safety Certificate
- Ensuring that a “How to Rent” guide – either digitally or in hard copy – has been issued to tenants.
For the Section 21 notice to be valid, all the above documents need to be right up-to-date. An EPC isn’t required if you are letting a single room on an assured shorthold tenancy in a house of multiple occupation.
What’s more, landlords wishing to use the Section 21 notice – which is often used to regain possession of a property to extend, refurbish or sell it – must now use Form 6a, which amalgamates the two former types of notices into a single notice for both periodic and fixed-term tenancies. Since October 1 2018, the old forms have no longer been valid.
How important is the Housing Act 1988?
As the Act that specifies the legal rights of both property owners and their tenants, it’s something that is hugely important for landlords. It’s crucial to remember that the goal of the Housing Act 1988 isn’t to shift all of the power in the direction of landlords – instead, it’s there to make sure that both parties are treated fairly.
It’s key to have a broad understanding of the areas the Act governs to allow you to refer to it if issues arise, but being familiar with the law in its entirety won’t be necessary. As a landlord, it’s vital that you know your rights and responsibilities – and getting a good hold on the Housing Act 1988 will help you to achieve that.
It’s also essential that, as a landlord, you make sure that none of the clauses in your tenancy agreement(s) conflict with the statutory rights outlined within the Housing Act 1988. By not complying with this law, your tenancy agreement would become invalid, with the Housing Act having the status as a ruling law which can’t be overwritten.
In particular, the Act is very strict when it comes to assured shorthold tenancy agreements, which came into force at the same time as the Act itself.
- January 1989 – the original laws, proposed in 1988, come into effect
- 1996 – review of the Act to identify potential shortcomings
- 1997 – in an effort to update the Act and amend the deficiencies found in the review, revisions were made regarding grounds of possession, rent arrears and various other areas
- October 2015 – changes are made to Section 21 notices for all new assured shorthold tenancies in England starting on or after October 1 2015
- October 2018 – all remaining assured shorthold tenancies are subject to the new rules
The Housing Act 1988 is far too detailed and complex to cover comprehensively in one article alone. To read the Act in full, visit the government’s page here.
As long as you understand that it governs nearly all of your rights in relation to rental property - from serving notice of eviction to rental arrears and pretty much everything in between, then you’ll know where to turn should you require explanation of you or your tenant’s rights in scenarios where they conflict.
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