What the UK's Housing Act of 1988 Means for Landlords Today
The Housing Act, 1988 is one of the most important statutes governing housing law in the UK and is where many of the current rights enjoyed by tenants and landlords are enshrined. In its simplest form, the 1988 Housing Act gives us the modern tenancy agreement whereby a tenant has the right to live, undisturbed, in a property for an agreed period of time and for an agreed amount of rent. The landlord, on the other hand, has the right to set that rent and also has the power to evict.
The passing of the Act was a watershed moment for the UK rental market. It handed much more power to landlords than they had enjoyed previously and was a bold leap, perfectly illustrative of the ideals of the Thatcher government, towards greater free-market autonomy in the rented housing sector.
And yet, despite principally handing over more rights to landlords, the Act arguably created a more equitable arrangement between tenants and landlords, being a departure from the previous system where tenants had almost total control but landlords had almost no responsibilities for their safety or the quality of their homes.
But, In order to understand the reasons for the Thatcher government passing this Act we need to look at the history of it.
Please note: Nothing here should be construed as legal advice. We will try and share key points from the Housing Act but there is too much to this topic for us to cover everything. If you want to know more about your rights and responsibilities as a tenant or as a landlord we strongly recommend that you seek expert legal advice.
Where Did the Housing Act 1988 Come From?
When Margaret Thatcher was elected in 1979, one of the stated aims of her government was to reform the rental market where, under the system of protected and statutory tenancies, tenants had the right to stay in a property they were renting, almost indefinitely and could even pass it on to relatives in the event of their death.
Some of these protected and statutory tenancies were new, stemming from the Rent Act of 1977, passed by a Labour government and they were disincentivising homeowners to let out their properties, contributing to a housing shortage (though, this wasn’t the only factor at play). The private rental sector, at this time, accounted for about 8% of homes, whereas the public rental sector (council housing) was at about 30%. Noting that private rental homes made up for 78% of housing in 1918, the Tory government was not happy with the way that things were going.
A white paper, drawn up in 1987, by the Department for the Environment and entitled ‘Housing: The Government’s Proposals’, set out a plan for increasing the amount of private rental accommodation, decreasing the number of council houses and increasing house ownership. These aims, it was argued, could be achieved through greater tenant choice, a strengthening of rights for landlords, the end of rent control and most infamously by giving council tenants the right to buy their homes (a policy that has arguably cast a long shadow).
The next year these proposals were passed into law with the Housing Act 1988 and came into force in January 1989.
Key Parts of the Act
The Housing Act 1988 dramatically changed the laws regulating the rental market in three key areas: Rent regulation, succession and security of tenure. Let’s look at these independently.
1/ Rent Regulation
Rent control was introduced during WWI with The Increase of Rent and Mortgage Interest (War Restrictions) Act 1915 because of a worry that landlords would seek to profit from a wartime housing shortage where demand was badly exceeding supply. It was meant as a temporary measure, to solve a specific problem and yet, rent control continued in one form or another until January 1989.
There were various iterations of rent control. The initial act of 1915 held rents at their 1914 level. The Rent Act of 1957 tied rents to the gross value of the property concerned. In 1965 another Rent Act was passed which introduced regulated tenancies and the concept of ‘fair rents’ which would be set by independent rent officers.
But it wasn’t until the Housing Act 1988 that rents were de-regulated allowing landlords to decide on the rent they wanted to set, which is still the case today.
And yet, there are still rules around this. A tenant has the right to challenge a rent if they feel that what they are paying is above market value. But they can only do this in the first six months (with an Assured Shorthold Tenancy) or when they receive a notice to increase the rent from the landlord.
Rent increases can take different forms. They might be contained within the tenancy agreement, so the tenant is aware of them. If they are not in the agreement then the landlord cannot seek to increase the rent during the term of the contract, unless the tenant agrees to it.
When the AST agreement has expired then the landlord can increase the rent as long as they provide adequate notice (so, the case of a month-by-month tenancy then 1 month would be adequate). To an extent, the rent increase needs to be mutually agreed but should a tenant object to the increase then the landlord can serve a Section 13 Notice, a legal notification of a rent increase.
At that point, the tenant can only fight the increase by asking a tribunal to mediate. Normally, such a tribunal would consist of 3 professionals such as solicitors or surveyors, whose role it would be to assess the fairness of the increase in relation to the local housing market.
The issue of succession is quite simple. Prior to 1989, when a tenant died the tenancy could be passed on to a spouse or some other beneficiary. Under an assured shorthold tenancy agreement there is no such right. If the named tenant dies then no one else living in that property has any right to remain there.
Assured tenancies offer greater protections of tenure than assured shorthold tenancies and where an assured tenancy is in place then there is still a right of succession that applies only to a spouse. However, these days, assured tenancies are seldom used in the private sector, with ASTs being very much the norm.
3/ Security of Tenure
As I last mentioned, the Housing Act of 1988 created two types of tenancy. These are the assured shorthold tenancy and the assured tenancy. The assured tenancy offering much greater security of tenure than the AST.
Before 1997, assured tenancies were the most in-use but since then ASTs are the far more popular type of tenancy in private rented accommodation with assured tenancies being more commonly used by housing associations.
The key difference between the two types of tenancy is that under an AST the landlord has the right to regain possession of the property at any point after the term of the tenancy agreement has expired (as long as they give adequate notice). Under an assured tenancy, the landlord does not have this automatic right and the tenant is more protected unless they are significantly in arrears with their rent.
With regard to how a landlord can regain possession of a property, there are two types of eviction notice that a landlord may decide to serve. These are the:
- Section 21 Notice
This gives landlords an automatic right of repossession when the term of the tenancy contract has expired as long as the landlord gives a minimum of two months notice and has fulfilled certain requirements such as protection any deposit. Further information for tenants who have received a Section 21 can be found here.
- Section 8 Notice
This allows landlords to regain possession of a property on grounds including rent arrears or anti-social behaviour. This type of notice can be given during the term of the tenancy agreement but the landlord will need the involvement of the court. Further information for tenants who have received a Section 8 can be found here.
NB The Deregulation Act of 2015 made ‘retaliatory evictions’ using a Section 21 Notice illegal. Essentially what this means is that a Section 21 Notice cannot be used as a response to tenants complaining about the state of their home.
The Assured Shorthold Tenancy Agreement (AST)
Landlords sometimes get confused between ASTs and the 1988 Housing Act. They are, of course, not the same thing. The act enshrines the rights of landlords and tenants in law. The agreement fills in those details that need to be mutually agreed.
The Housing Act stipulates what can and can not be in the tenancy agreement and assigns statutory rights and responsibilities to each party. The law cannot be overruled by a contract and it is important for landlords to make sure that the contracts that they use for their tenants are legal and contain everything that they need to. If a landlord tried to put something into a tenancy agreement that threatened the legal rights of the tenant, then the contract could be rendered invalid.
For more information, please see our article on Assured Shorthold Tenancy Agreements.
Please note, there is usually a process that takes a tenant from registering an interest in a property to the final stage of signing the rental agreement. When a tenant finds somewhere they want to live they will often need to put down a holding deposit. At this point, the property is taken off-market while the agents or the landlord perform background checks on the tenant.
Once these checks are successfully processed and found to be satisfactory then the tenant will have the chance to sign the agreement and move in.
For this period of time, the property is considered to be 'let agreed' with those words added anywhere the property is advertised. For more information about 'let agreed', you can see our article here.
The Rights and Responsibilities of Landlords (What You Need to Know)
Landlords need to make sure that their tenancy agreements do not breach any of the tenant’s rights but when a letting agency is used, they will often take care of the paperwork and shoulder some legal responsibility.
However, it is still important for landlords to understand their rights and responsibilities and not just trust some third party. And when choosing a letting agent to work with, landlords should always do their due diligence and choose wisely. It is best if agents are members of ARLA or RICS.
1/ Landlord Rights
We have already covered the most important landlord rights in the act of 1988, including the right of repossession and the freedom to set rents.
Another important right, secured by the act, is the right to entry, under certain conditions. So, a landlord has the right to enter the property to inspect it or to conduct viewings (as long as 24hrs notice is given to the tenants and if still in the contract term, viewings are allowed only in the last 28 days of the tenancy).
Landlords also have ‘reasonable access’ rights meaning they can go into the property for a good reason, for instance, if there was a flood, a fire or some other emergency.
2/ Landlord Responsibilities
The responsibilities of Landlords as covered in the act come down to three key things:
- Making sure that the property is safe, habitable and in good condition.
- Making sure the tenant knows how much the rent is going to be as well as how and when to pay it. Rent increases are allowed but certain rules apply as we covered above. One key point here is that a landlord is not allowed to refuse to accept rent.
- Landlords must leave their tenants to enjoy their property in peace. They are not allowed to harass them or interfere unnecessarily in their lives.
Of course, over time, the practical responsibilities of landlords have changed. There are many more requirements today than ever before, for example, landlords now must supply:
- An annual gas safety inspection. This was introduced with the Gas Safety (Installation and Use) Regulations of 1998.
- Deposit protection for the tenant’s deposit. This was introduced under the Housing Act of 2004.
- The property must conform to the HHSRS (the Health and Safety Rating System), also introduced with the Housing Act of 2004.
- The Energy Performance of Building Regulations, 2007 to 2012 require every property to have an EPC before being placed on the market.
- In England, each tenant of adult age must have their immigration status checked through a Right-to-Rent Check.
What Comes Next?
We have no crystal ball and yet it is clear that both sides of the house are motivated to reform the Private Rental Sector with landlords, for better or worse, often being much maligned in the press and by politicians.
There are, however, two factors that we see as being most likely to change in the near future.
1/ The Return of Rent Controls
In truth, while the Housing Act 1988 gave landlords the power to set their rent and increase it (with some limitations) the market has a tendency to equilibrate. This means that the market is a greater driving force with regard to rent pricing that are the whims of individual landlords. But, of course, there are examples where the system is abused and greed gets in the way. And due to the current housing shortage, particularly in London, market forces are, arguably, not yielding the most desirable social results.
As such, some are arguing for the return of rent controls and it is entirely plausible that we will see them come back. Labour’s position, for instance, is to introduce a rental rise cap, based on inflation. They also want to make 3-year tenancies the norm.
68% of Londoners agree with the idea of rent control and the Mayor of London, Sadiq Khan, has labelled the current system, not fit for purpose. In January 2019 he “invited Karen Buck, Labour MP for Westminster North, to work with his Deputy Mayor for Housing James Murray to develop proposals for rent stabilisation or control laws that would help make private sector rents genuinely affordable to more Londoners...”
Whether rent control works, however, is another question and since the December election it seems less likely than before that this is a policy that will be pursued any time soon, being, as it was, something that Labour is, primarily, advocating for.
But even though the Conservatives now have a significant majority it doesn't mean rent control is entirely off-the-table.
2/ The End of Section 21
We have already mentioned the Section 21 Eviction Notice (also known as the No-Fault Eviction Notice) as this is part of the 1988 Housing Act. At the time of writing the government are consulting on banning these notices, the argument being that they are one of the biggest causes of homelessness in England.
In Wales, First Minister, Mark Drakeford, has announced (April 2019) that Wales would be banning these notices and in Scotland, a new type of tenancy was introduced in December of 2017 that outlaws evictions where no clear reason has been given.
At this point, it does not look likely that Section 21 Notices will continue to be legal vehicles for eviction for long with their abolition being included in the Queen's Speech, following the 2019 election.
The Housing Act of 1988 was a seismic event in UK property law that saw many tenants’ rights dissolve, handed new powers to landlords and let market forces set much of the tone for the UK’s rental sector with an aim to create a balanced environment for tenants and landlords. Whatever your politics, it is unquestionable that the Act was a great leap forward that has shaped not only the housing market but the economic and social landscape of today.
But everything is far from set in stone. Over time amendments, new acts and regulations have refined the rights and responsibilities of landlords and tenants and in the current environment, facing a housing shortage and runaway prices in the capital, the only thing we can be certain of is change.
Please note: To reiterate. Nothing here should be construed as legal advice. There is too much to this topic for us to cover everything. If you want to know more about your rights and responsibilities as a tenant or as a landlord we strongly recommend that you seek expert legal advice.