Budget 2015 – Residential tenancies – promoting a “sharing economy”

shutterstock_96334607Perhaps the most interesting announcement in this year's Budget, certainly for residential landlords and tenants - and their lawyers - was actually buried deep within the Budget papers...
The announcement concerned a diverse package of measures aimed at promoting a “sharing economy” – including some relating to residential tenancies.
What measures were included?

Included in the package of measures was confirmation that the government:

  • will amend its model agreement for an assured shorthold tenancy by summer 2015, to provide that tenants in private rented accommodation can request their landlord’s permission to sub-let or otherwise share space, on a short-term basis;
  • will look to clarify and strengthen private residential landlords’ legal responsibilities when considering requests from tenants to sub-let, and will look to extend these responsibilities to requests from tenants on the sharing of space more generally; and
  • intends to legislate on preventing the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and will consider extending this to statutory periodic tenancies. This will ensure that landlords always have to consider tenants’ requests reasonably.
What would these measures change?

Traditionally, ASTs are designed to be short-term lettings and so usually contain an absolute prohibition on sub-letting. The exact form of any mandatory measures is unclear, but it would certainly appear from the language used that the government intends to legislate so that tenants must be permitted to sub-let.

How will the market react?

If the measures come to fruition, it will be interesting to see what impact this will have on the private residential lettings market where landlords are no doubt feeling the squeeze from a number of recent measures (implemented or proposed) including:

  • measures in the Deregulation Bill currently going through Parliament (with Royal Assent expected imminently) designed to protect tenants against the practice of retaliatory eviction;
  • clarification in the same Bill in relation to tenancy deposits, with the upshot being that all deposits whenever taken (and whenever the tenancy began) will have to be protected by landlords;
  • requirements in Immigration Act 2014 for landlords to conduct necessary document checks to establish whether a person has a right to rent (currently a pilot scheme rolled out from 1 December 2014, the new measures will be piloted in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton before being rolled out across the country); and
  • proposals to introduce powers for councils to licence landlords in neighbourhoods blighted by poor quality accommodation, deprivation and high levels of crime.
The Chancellor’s central message for the Budget 2015 was growth and fairness, including investment in housing. However, private sector residential landlords may not be “feeling the love”.

Comment by Joanna Bhatia.

Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.

Filed Under: Property

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