Housing Act 1988
What is the Housing Act 1988 and what rights are landlords given?
The Housing Act 1988, one of the most important property rights laws in England, covers a wide range of areas and has the most rights and obligations of tenants and landlords. It also contains a number of qualifications and exceptions to the rules, which can be confusing.
What is the law and is the same as a lease?
As a landlord, you are more likely to have met with the Housing Act of 1988. It is often mentioned in the leases you have signed and is essentially the law governing the private sector rented (PRS) and the people who work in it.
Perhaps the easiest way to think about it is as a regulation that contains the legal rights and obligations of landlords and tenants.
But this is not the same as a lease - which is a common mistake for landlords and tenants, who often confuse both. Although a lease is a legal contract between the two parties to a lease, which specifies the terms of the individual lease (for example, the duration and amount of the monthly rent), the Housing Act is there to clarify the terms of the lease.
Why did the Housing Act of 1988 come into force?
Before 1988, the rented private sector looked very different, with most rentals taking the form of "protected and legal" rents. This, in turn, created a legal system that fell largely on the part of the tenants.
As a result, there was a situation where tenants actually had the right to stay in a rented apartment indefinitely and to pass the lease to their relatives after their death. In these scenarios, it has become very difficult for owners to restore ownership of their own properties.
The owners are much less willing to leave their properties because of this legal inequality, for fear that they will eventually lose control of them. This, along with the massive sale of council property as a result of Margaret Thatcher's right-to-buy policy, led to a housing shortage that the Housing Act of 1988 sought to address.
How did the law help solve the problem?
In a desperate attempt to revive the rented private sector and address housing shortages, ministers spent more than 250 hours formulating laws that would correct the power imbalance and encourage landlords to rent again. The proposed new legislation was adopted and created on 15 January 1989 as a housing law of 1988.
There are a number of safeguards to ensure that landlords have the right to own their assets if they are to be established, provided they follow the procedures set out in the legislation.
The Housing Act of 1988 radically changed three main areas of the English property law: rent regulation, Succession and rental security.
The Housing Act of 1988 significantly reduced rental regulations and gave landlords the opportunity to collect what they wanted for a property (which remains the case today, despite the growing demands of some for the return of rent control from a particular description). The change also meant that the only party entitled to challenge the prices set by the landlords were their tenants.
There are only certain circumstances in which tenants can challenge the rent that is in the first six months of a short-term insured lease or based on a rent increase notice that can be used annually by landlords to increase rent after the end of the fixed term.
The Housing Act of 1988 made succession regulations similar to those of the Leasing Act, in which only a spouse can inherit lease rights.
Changes in inheritance law have a direct impact on very few landlords - mainly because insured rents, which require that only a spouse can inherit rental rights, are rare in the rented private sector.
There is no inheritance tax on the ten insured rental apartments, which also came into force in the late 1980s and now make up the majority of rents in the private rented sector. In other words, if the tenant dies, the spouse or other beneficiary does not have the right to remain on the property. With this type of income, inheritance tax has become irrelevant precisely because the landlord is now authorised to hear a notification under paragraph 21 in order to expel the tenant in court.
Security of Tenure
The Housing Act of 1988 divides the proposed types of rent into two: one with long-term security and the other without them. The first is a so-called insured rent, which is very similar to the old "red" rent, but with the warning that there is a compelling reason to possess in the case of severe rent arrears.
Insured rentals are rarely used by private landlords, but are much more likely to be used by social housing providers as housing associations.
Insured short rentals (or STAs) are much more popular among homeowners - an insured type of rental that differs from the more traditional version in two ways. On the one hand, it grants tenants the right to challenge the rent they have set in the first six months of a lease (examined above) and, on the other hand, provides additional short-term land for the property, as set out in section 21 of the Housing Act 1988.
How important is the Housing Act 1988?
Like the law that sets the legal rights of landlords and their tenants, this is something that is extremely important to landlords. It is important to remember that the purpose of the Housing Act of 1988 is not to change all power towards homeowners, but to ensure that both sides are treated fairly.
It is important to have a broad understanding of the areas that the law regulates so that you can refer to them when problems arise, but it will not be necessary to know the law as a whole. As a landlord, it is important that you know your rights and obligations, and that gaining control over the Housing Act of 1988 will help you.
It is also important that you, as a landlord, ensure that none of the terms of your lease conflicts with the rights under the Housing Act of 1988. Failure to comply with this law would result in an invalid lease, as the Housing Act has the status of a decision-making law that cannot be revoked.
In particular, the law is very strict when it comes to short-term lease insurance that have come into force at the same time as the law itself.