Rent Act 1977

The Rent Act 1977 is the piece of legislation which introduced the category of protected tenancy in the law of England and Wales.

1. Why was it introduced? (Political/Sociological Context)

At the end of World War I, the private rented sector was the prevalent housing sector in the UK. The origins of the legislation whose aim was to protect the rights of tenants was during World War I when the government wanted to protect the housing of workers needed for the war effort. The rent protection and the security of tenure measures introduced at the time were meant to be a temporary measure while the war lasted. However, after the war it became politically unreasonable to repeal them and the existing legislation was subsequently consolidated into the Rent Act 1977.

2. What was the aim of the Act? (Legal Context)

The purpose of the Act was to establish the category of protected tenants in order to give long-term security of tenure of tenants whose agreements started prior to 15 January 1989. Another objective of the Rent Act 1977 was to define which properties and tenancies are to be excluded from the possibility of giving rise to a protected tenancy. The reason why it was deemed necessary to introduce protected tenancy legislation as part of the raft of legislation in 1977 relating to housing was to clarify in statutory terms the extent of the tenant’s rights to remain in the property and to outline the limited circumstances in which the landlord may recover possession of the property and evict the tenant.

The additional protection afforded to tenants whose tenancies started prior to 15 January 1989 was not considered to be disproportionate because the number of this type of tenancies was expected to progressively decrease.

The Act aimed to determine the rules of succession of protected tenancies, so that it is in line with the Character of Fundamental Rights. The rules of succession of protected tenancies are the reason why the Rent Act 1977 is bound to remain in force for some time, despite the fact that the number of protected tenancies is constantly decreasing.

3. What main changes did it make to the law?

The three main changes that the Rent Act 1977 introduced to the common law for tenancies was to introduce rent regulation, to introduce long term security of tenure and to introduce new rules of succession, i.e. to define what happens to the tenancy after the tenant dies.

In relation to rent control, s. 67 confers to protected tenants the right to apply to register for a fair rent. Once they do so, this is the only rent these tenants can be charged. If the tenant is not registered for fair rent, they must be notified of their right when the rent is increased or otherwise, the increase would be ineffective. The landlord has the right to apply to have this rent reviewed but only if they have carried out major improvement works on the property. Subsequently, the Rent Acts (Maximum Fair Rents) Order 1999 limited the amount by which a fair rent could be increased.

In regards to the security of tenure, under s. 2 once the fixed term of protected tenancy expires, it turns in to a statutory tenancy, which can only be ended by the rules set out in the Rent Act 1977. Schedule 15 of the Act sets out the discretionary and mandatory cases in which such a tenancy may be ended. The difference between the two is that the former may be granted if a judge considers it reasonable to do so. The mandatory grounds for ending the tenancy are, for instance, cases in which the owner-occupiers needed to recover possession because they had left their house while living abroad or where the bought a property to retire to but rented it out in the meantime. In these circumstances, the landlord is required to give adequate notice to the tenant. If no mandatory grounds are available and the discretionary grounds do not apply, under s. 98(1)(a), the landlord still has a chance to recover possession, but only if they provide suitable alternative accommodation for the tenant. Under s. 2, the tenant can lose the security of tenure if instead of occupying the property, he moves out or sub-lets it to someone else, in which case his protected tenancy will turn into a common law tenancy and can be terminated at any time by giving an appropriate notice. S. 101 also allows landlords to recover possession if the tenant is guilty of an offence of overcrowding.

Schedule 1 Rent Act 1977 defines the rules of succession, applicable to protected tenancies which became statutory tenancies. The tenant’s spouse or their same sex partner is entitled to stay in the property under the statutory tenancy. If the tenant had no spouse or same sex partner before they died, any family member who was living with the tenant at the time when he died is entitled to take over the tenancy but as an assured tenant under the Housing Act 1988. In cases where a spouse or same sex partner takes over the tenancy, there is a possibility of a second succession if at the time that they died, any of their family members was living with them.

Housing Act 1988

The Housing Act 1988 is the legislation which governs most private sector tenancies nowadays and which introduces two types of tenancies – assured shorthold tenancies and assured tenancies.

1. Why was it introduced? (Political/Sociological Context)

In 1979, Margaret Thatcher became the Prime Minister of the UK and the Conservatives took power. At the time, the private rented sector represented a record low portion of the housing sector due to the low level of protection that the law afforded to private landlords.

The private rented sector took another hit due to the property crash in the late 1980s. Private landlording was a small landlord phenomenon – it did not manage to attract large corporations to invest money in building properties for the purposes of letting. It was usually private individuals who bought one or two properties for the purposes of letting as an investment and they did not usually build them themselves. To stimulate the private initiative of buying and building properties with the intent to rent them out, the Conservative government decided to change the balance of landlord – tenant relationships, so that more private landlords are prepared to enter the market for the first time.

2. What was the aim of the Act? (Legal Context)

One of the objectives of the Act was to regenerate the private rented sector through deregulation, stimulate its growth by removing rent controls and introduce new-style assured tenancies.

A second objective was to extend the activities of housing associations to include incidental or ancillary activities to their main housing activity, such as rehabilitation of commercial or industrial property.

A third objective was to extend the choices available to council tenants, given to them through the Tenants’ Charter and the right to buy legislation, enshrined in the Housing Act 1980, by enabling them to transfer their existing homes to another landlord. This option was directed at the council tenants who were not able to or did not wish to exercise their right to buy. By exposing the councils to greater competition, this measure was intended to raise the general standard of housing that they offered.

A fourth objective of the Housing Act 1988 was to set out the ways in which councils could dispose of some of their housing stock to other landlords under the Housing and Planning Act 1986.

A fifth objective was to improve the most badly run council estates by giving tenants the choice over whether these estates should be run by local authorities, housing associations or private companies. This was to be done by introducing housing action trusts.

3. What main changes did it make to the law?

The Housing Act 1988 reduced the terms upon which landlords can raise the tenants’ rents. The landlords were given the right to increase the rents whenever they wanted to, and the burden was placed on the tenants to challenge the increased. The increases can only be challenged during the first six months of an assured shorthold tenancy agreement or upon service of a notice of increase after the fixed term of an assured shorhold tenancy agreement has expired. The first route is underutilised and the second one is in reality rarely used because instead of serving a notice of rent increase under the Act, landlords prefer to put up the rents via a renewal tenancy agreement.

Chapter I Housing Act 1988 introduced a new type of assured tenancy, which was similar to the old protected tenancy under the Rent Act 1977, but unlike with protected tenancies, with assured tenancies, the landlord can recover possession of the property on grounds of serious rent arrears. Assured tenancies are most often used by social landlords, such as housing associations.

Chapter II Housing Act 1988 deals with assured shorthold tenancy agreements, which differ from the assured tenancies under Chapter I in that they allow challenging of the rent in the first six months and they are subject to the ground of possession set out in the famous s. 21 Housing Act 1988. S. 21 allows landlords to serve an eviction notice on tenants with assured shorthold tenancy agreement after the end of the fixed term if they follow the appropriate procedure. In cases where the assured shorthold tenancy agreement was succeeded after the end of its term by a statutory periodic tenancy, the landlord has again the right to rely on s. 21 to serve an eviction notice upon the tenant. As the minimum term of assured shorthold tenancy agreements under the Act is only 6 months, this means that a landlord can evict a tenant just 6 months after the commencement of the tenancy.

The Housing Act 1988 introduced similar rules of succession in regards to assured tenancies as the ones available for protected tenancies under the Rent Act 1977. The only difference was that the assured tenancies could be inherited only by a spouse or a same sex partner of the deceased tenant, but not other family member who was living with the tenant at the time when they died.