The Housing Act 1988 is one of the leading statutes governing property law in England. It covers a wide range of areas and contains a number of qualifications and exceptions to the rules that it lays down, which can be confusing. If you’re a landlord struggling to understand what the Act means for you, read on for a breakdown of its purposes and an explanation of the rights that it gives you.
What’s the Housing Act 1988?
Almost every landlord will have encountered the Housing Act 1988 – it’s referenced multiple times in the tenancy agreements that you’ll have signed, for example, and it dictates most of the law regarding the conflicting rights of landlords and their tenants. What the Act is, essentially, is a law that governs the private rental sector and the parties that make it up. The simplest way to think of it is as a rulebook containing the statutory rights and legal responsibilities of both landlords and tenants.
Is the Housing Act 1988 the same as a tenancy agreement then?
A common mistake that many landlords and tenants make is to confuse the law with a tenancy agreement. However, they’re not the same. A tenancy agreement is a legal contract between the two parties, specifying the terms of the individual tenancy, such as its length and the amount of rent that’ll be owed. The Housing Act, on the other hand, stipulates what the conditions within the tenancy agreement can and cannot be.
Do I need to know about the Housing Act 1988?
As a landlord, it’s essential that you ensure that none of the clauses in your tenancy agreement/s conflict with the statutory rights contained within the Housing Act 1988. If you don’t comply with this law, you’ll find that the tenancy agreement is invalid, due to the Housing Acts status as a ruling law (this means that it can’t be overwritten).
The Act is particularly stringent with regards to assured shorthold tenancy agreements, which were introduced alongside the Act itself.
What’s the purpose of the Housing Act 1988?
At the turn of the century, the private rented sector was very different from today. Most tenancies took the form of ‘protected and statutory’ tenancies. The effect of this was to create a legal system that was heavily in favor of tenants. This contributed to a situation whereby tenants essentially had the right to stay in a rented property indefinitely, passing the tenancy down to their relatives upon their death. When this happened, it became incredibly difficult for landlords to regain possession of their own properties.
This legal inequality meant that landlords became increasingly unwilling to let their properties; for fear that they’d lose control over them. Most council properties at this time had been sold, and these two factors combined to cause a housing shortage.
What Did the Housing Act 1988 do to resolve the situation?
The Housing Act 1988 was the solution to this problem. The government desperately needed to revive the private rental sector and ensure that housing became available to those who needed it. Ministers spent over 250 hours formulating laws that would redress this balance of power and therefore entice those who did own property to rent it out again. These proposed laws were passed and came into existence as the Housing Act 1988.
The laws that were introduced put in place a number of safeguards to ensure that landlords had the right to gain possession of their property should they need to, provided they followed the procedures outlined in the statute.
What changes did the Housing Act 1988 implement?
Three main areas of English property law were dramatically altered by the Housing Act 1988, which changed the underlying ‘common law’ on:
• Rent regulation
• Security of tenure, and
Rent regulation was dramatically reduced by the Housing Act 1988. What this means today is that landlords may charge whatever they like for a property, and the only bodies with the right to challenge the prices set by landlords are their tenants.
Tenants may only challenge the rent in the following circumstances:
• During the first six months of an assured shorthold tenancy, and
• Upon service of a notice to increase rent, which can be used by landlords annually to increase the rent after the fixed term’s ended
What does this mean for me?
With regards to the first scenario, this means that tenants who believe their rent’s higher than the current market value have the option to refer their case to the Rent Assessment Panel for review. Most tenants will be very reluctant to do this in light of your power, as a landlord, to end the tenancy in accordance with Section 21 of the Housing Act 1988.
In the second situation, landlords now have the power to avoid using the notice procedure, and can instead opt to increase the rent via a ‘renewal’ tenancy agreement.
These changes mean that the tenants’ rights outlined above have less influence upon landlords and are used less frequently. It’s these amendments that are largely responsible for the rapid increase in rental prices since the 1980s.
Security of tenure
According to the Housing Act 1988, two types of tenancy exist: those with long-term security and those without it. The former is known as an ‘assured’ tenancy. An assured tenancy is very similar to the old protected tenancy, with the exception that there’s a mandatory ground for possession in the case of serious rent arrears. This type of tenancy is very infrequently used by private landlords, and tends to be, instead, the reserve of social landlords such as housing associations.
Most private landlords instead favour ‘assured shorthold tenancies’. This is still a type of assured tenancy but it differs in two ways from the more traditional concept: the right to challenge the rent in the first six months (explored above) and an additional shorthold ground for possession – set out in Section 21 of the Housing Act 1988.
What does this mean for me?
An assured or assured shorthold tenancy will continue as a statutory periodic tenancy after the end of the contractual fixed term, according to Section 5 of the Housing Act 1988. This is what gives tenants with an assured tenancy long-term security. With a periodic assured shorthold tenancy, however, the let can be terminated at any time provided a properly drafted Section 21 notice has been provided.
This right under Section 21 of the Housing Act 1988, for the landlord to recover possession of the property after the end of the fixed term, has radically changed the rental sector in the UK. Far more people are now willing to let their property with the guarantee that they can evict tenants within six months of the contractual fixed term ending, as opposed to the previous position, whereby they might find themselves obligated to rent the property to two generations of a family.
With regards to assured tenancies, the rules are similar to those under the Rent Act (which was changed in line with the Housing Act 1988). This means that only a spouse can now inherit rental rights.
What does this mean for me?
The changes to the law on succession affect very few landlords, as assured tenancies in the private sector are uncommon.
With respect to an assured shorthold tenancy, succession rights no longer have any relevance, as the landlord has the power to serve a Section 21 notice to evict the tenant through the courts.
Revisions to the Housing Act 1988
The original laws, proposed in 1988, came into effect on the 15th January 1989. In an attempt to update the Act and rectify any shortcomings, modifications were made in 1997, after a review the year before, regarding grounds of possession, rent arrears and various other areas.
How does the Housing Act 1988 affect landlords?
The Housing Act 1988 is very important for landlords, as it stipulates the legal rights of both property owners and their tenants. The effect isn’t to shift all of the power to landlords but rather to ensure that both parties are treated fairly. Although you don’t need to be familiar with the whole law, you should try to gain a broad understanding of the areas that it governs so that you can refer to the Act if problems should arise.
Where can I read about my rights?
The Housing Act covers far too many areas to go over in detail in this article. However, so long as you understand that it governs almost all of your rights with regards to rental property, from serving notice to rental arrears and everything in between, then you’ll know where to turn should you need clarification of you or your tenant’s rights where they conflict.
To read the Housing Act 1988, visit the government’s website.