ASTs: Another short term solution!
Posted on 21st July 2016
Assured Shorthold Tenancies (“ASTs”) were introduced by the Housing Act (“HA”) 1988. The apparent purpose of their introduction was to effectively “swing the pendulum of control” in favour of landlords in the private sector. Prior to the HA 1988 many tenancies took the form of ‘prescribed and statutory’ tenancies. Under these tenancies, tenants were able to pass down their tenancy to their relatives upon their death, as is still in the case in the public sector, meaning that often it was difficult for landlords to regain control of their own property.
However, there is an argument that ASTs in England have swung too far in favour of the private landlord, leaving tenants with no long term-security. The minimum length of an AST is 6 months which means that tenants are constantly on the lookout for their next property. This is particularly problematic for families with young children or those who wish to start a family. Whilst the HA 1988 brought in rent regulation, these provisions did not apply to ASTs. The position 10 years ago was that 1 in 10 families were renting privately, currently this stands at 1 in 4, a significant increase from 10% to 25% in just a decade.
Due to the lack of council properties in England, many families owed housing duties are being directed to the private sector. Upon expiry of their 6 month tenancy they may again approach the council in what would effectively become a cyclical 6 monthly event, leaving them in limbo with no long-term security.
By comparison with several other European countries tenants in England have much less security of tenure and are left in a far more vulnerable position. In France, the minimum length of a tenancy is affected by whether the property is ‘furnished’ or ‘unfurnished’. A ‘furnished’ property must be let for a minimum for 1 year, whereas an ‘unfurnished property must be for a minimum of 3 years. The definitions of ‘furnished’ and ‘unfurnished’ are set out in French legislation.
In Germany, tenants are offered permanent tenancies which can only be brought to an end upon a breach of the tenancy, e.g. rent arrears or anti-social behaviour. Unlike England, Germany has a culture of renting meaning that families with children are happy to rent. Akin with Germany, from next year Scottish private renters will be able to stay in private rented properties indefinitely. As above, these could only be brought to an end upon a breach of tenancy agreement by the tenant.
The situation in Ireland previously resembled that of England. However, over the last 10-15 years it has been adapted and modified. Irish renters now receive a 6 month probation period, after which they are granted a further 3.5 year tenancy. They can then only be evicted under the grounds in prescribed legislation, to include rent arrears, other breaches of tenancy and anti-social behaviour. Initially the government was hesitant to change the position, for fear of discouraging landlords’ investment. However, these fears didn’t materialise and there is no evidence to suggest that the increase in private tenants’ rights resulted in landlords leaving the sector.
Clearly renters in England are left at a disadvantage when compared with their European counterparts. It is unlikely that any legislative change in England is on the horizon, especially given the greater pressing concern of Brexit. The problem moving forward is establishing a length of tenancy which both encourages continued landlord investment in the sector and provides tenants with the requisite security of tenure.
In the absence of any new legislation in England the onus is on the tenant to pursue the landlord for a longer tenancy. It is in the interests of the landlord to sign for a longer tenancy with a tenant who consistently pays the rent on time, rather than having to frequently find new tenants.
The government has helpfully produced a Model Agreement for those parties who do wish to enter into a longer tenancy. It may be that through this measure tenants will be afforded the security to view their rented properties as a long-term home for their families, rather than a short term measure. However, without the legislative safeguards in place to secure longer fixed term tenancies, the majority of renters, who do not have the confidence or experience to negotiate the duration of their fixed term, will be left with “another short term solution!”