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The Law Commission RENTING HOMES 1: STATUS and SECURITY The Law Commission Consultation Paper No 162 RENTING HOMES 1: STATUS AND SECURITY A Consultation Paper London: The Stationery Office The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law. The Law Commissioners are: The Right Honourable Lord Justice Carnwath CVO, Chairman Professor Hugh Beale, QC Mr Stuart Bridge Professor Martin Partington Judge Alan Wilkie, QC The Secretary of the Law Commission is Mr Michael Sayers and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1N 2BQ. This consultation paper, completed on 28 March 2002, is circulated for comment and criticism only. It does not represent the final views of the Law Commission. The Law Commission would be grateful for comments on this consultation paper before 12 July 2002. Comments may be sent – By post to: Helen Carr Law Commission Conquest House 37-38 John Street Theobalds Road London WC1N 2BQ Tel: 020-7453-1290 Fax: 020-7453-1297 By e-mail to: [email protected] It would be helpful if, where possible, comments sent by post could also be sent on disk, or by e-mail to the above address, in any commonly used format. All responses to this Consultation Paper will be treated as public documents, and may be made available to third parties, unless the respondent specifically requests that a response be treated as confidential, in whole or in part. The text of this consultation paper is available on the Internet at: http://www.lawcom.gov.uk 83-250-02 THE LAW COMMISSION RENTING HOMES 1: STATUS AND SECURITY CONTENTS Paragraph Page PART I: INTRODUCTION 1 Background to the project 1.1 1 Scoping paper 1.6 2 Terms of reference 1.8 2 Timetable for the project: a phased approach 1.9 2 Outcomes 1.12 3 Law reform and social policy 1.14 3 Defining housing law: the search for principle 1.17 4 Guaranteeing security of tenure 1.20 5 Possession proceedings – the need for due process 1.25 6 The consumer perspective 1.32 7 Human rights 1.36 8 Outline of the scheme 1.37 8 Focus of our proposals 1.44 9 Limits to the contractual approach – the need for a jurisdiction for the court 1.45 10 Terminology 1.48 10 Contents of the consultation paper 1.50 11 The continued importance of the rented sector of the housing market 1.64 13 England 1.64 13 Wales 1.74 15 Comment 1.78 16 Issues not covered in this paper 1.83 16 Disrepair 1.84 16 Tenancy deposits 1.85 17 Specialist courts 1.86 17 Rent control and regulation 1.88 17 Housing benefit 1.89 17 Exempt sectors of the market 1.90 18 Right to buy 1.91 18 Homelessness 1.94 19 iii Paragraph Page Regulatory impact 1.95 19 Acknowledgements 1.99 20 PART II: THE EVOLUTION OF HOUSING LAW 21 Introduction 2.1 21 First legislative initiatives – the 19th century 2.3 21 Housing conditions and public health 2.3 21 The regulation of the private rented sector 1915 – 1980 2.11 23 Rent control, illegal premiums and security of tenure 2.11 23 Exclusions – payments for board, attendance and the use of furniture 2.15 24 Moves to decontrol 2.17 24 New protective measures 2.19 25 Consolidation 2.30 27 Introduction of housing benefit – rent allowances and rent rebates 2.31 27 Housing conditions 2.34 27 The impact of protective legislation 2.36 28 The development of the public rented sector 1920-1980 2.41 29 Discretion v rights 2.46 30 A national rent rebate scheme – subsidising tenants 2.49 30 The development of the housing association sector to 1980 2.53 31 Security of tenure 2.58 32 Rent regulation 2.61 32 Rent allowances 2.63 32 Housing associations – a hybrid 2.64 33 Developments from 1980 to the present day 2.65 33 The private rented sector 2.69 34 The local authority sector 2.85 37 Introductory tenancies 2.95 39 The housing association/registered social landlord sector 2.97 39 Large Scale Voluntary Transfers 2.107 41 Conclusions: lessons of history 2.119 44 The need for regulation 2.119 44 Legislative strategies 2.122 45 Changing contexts 1: the private sector 2.125 45 Changing contexts 2: the local authority sector 2.134 47 Changing contexts 3: housing associations 2.137 47 The rise of a consumer perspective 2.138 47 Other issues 2.142 48 iv Paragraph Page PART III: HOUSING STATUS AND SECURITY OF TENURE: PROMOTING SIMPLIFICATION 50 Introduction 3.1 50 The challenge of simplification 3.4 50 Housing status: the statutory schemes 3.11 51 Secure tenancies 3.12 51 Introductory tenancies 3.13 52 Assured tenancies 3.14 52 Assured shorthold tenancies 3.15 52 Rent Act protected tenancies 3.17 53 Excluded tenure groups 3.18 53 Tenancies falling within other statutory schemes 3.19 53 Lettings for particular purposes 3.22 54 Tenancies which have been left outside the schemes 3.24 54 Only or principal home 3.25 55 Other exclusions from the secure tenancy regime 3.26 55 Other exemptions: Crown tenancies 3.27 55 Licensees 3.28 55 Protection from Eviction Act 1977 3.29 55 Total exclusion from statutory regulation 3.33 57 Security of tenure and grounds for possession 3.38 58 Secure tenancies 3.39 58 Assured tenancies 3.42 61 Rent Act protected tenancies 3.44 62 Occupiers outside the principal schemes 3.47 64 The assured tenancy, secure tenancy and rent act tenancy schemes compared 3.48 64 Use of mandatory grounds 3.48 64 Notices seeking possession 3.52 65 Drafting differences 3.65 66 Differences not relating to security of tenure 3.73 67 The project goal 3.74 68 PART IV: THE APPROACH IN OTHER JURISDICTIONS 71 Housing (Scotland) Act 2001 4.4 71 Creating one form of social tenancy 4.10 73 Simplification and modernisation 4.13 73 Anti social behaviour 4.24 75 Tenants’ Rights 4.34 77 Short Scottish secure tenancies 4.44 78 v Paragraph Page Commonwealth legislation 4.44 78 Consumer perspective 4.47 79 Administrative support 4.50 79 Comprehensive Provision 4.52 80 Exclusions 4.55 80 Issues addressed 4.57 80 Procedures 4.59 81 Requirements for writing 4.61 81 Dispute resolution 4.65 82 Alternative dispute resolution 4.68 83 Deposits 4.70 83 Anti social behaviour 4.74 84 Minors and tenancies 4.84 86 Conclusion 4.85 86 PART V: THE IMPACT OF HUMAN RIGHTS LAW 87 Introduction 5.1 87 The relevant convention articles 5.4 87 Article 8 5.5 87 Article 8(1) 5.11 89 Justification under Article 8(2) 5.14 89 Article 6 5.17 91 Article 1 of the first protocol 5.36 95 The impact of the Convention in domestic law 5.42 97 The nature of registered social landlords 5.42 97 The approach to Article 8(1) 5.54 100 The assured shorthold regime 5.56 100 Alconbury and the requirements of Article 6 5.58 101 Human rights and housing law: some conclusions 5.70 105 PART VI: THE CONSUMER APPROACH: FOCUSSING ON THE AGREEMENT 107 Introduction 6.1 107 The need for a contract 6.5 108 The application of the law on unfair contract terms to housing agreements 6.11 109 The purpose of applying a consumer law approach to housing 6.11 109 Unfair contract terms law: the legislative background 6.21 111 Relationship with our proposed default terms 6.25 112 Requirements of transparency and fairness 6.27 113 Consequences of unfairness 6.36 114 Limitations 6.40 116 vi Paragraph Page Other factors making terms invalid 6.56 119 Principles of contract law 6.56 119 Shams 6.57 119 Discrimination law 6.58 119 Human Rights Law 6.59 119 The need for a written agreement 6.60 119 Requirements for validity 6.63 120 Requirements for provision of information about the terms of the agreement 6.72 122 Requirements for provision of information about the landlord 6.79 123 Recording rent payments 6.83 125 The terms of the agreement 6.89 126 Part A – the core terms 6.101 127 Part B – compulsory terms 6.106 128 Part C – negotiable/default terms 6.112 129 Sanctions 6.122 130 Failure to provide an agreement 6.125 131 Failure to provide information about the landlord 6.136 133 Variation of agreements 6.140 133 Rent variations 6.145 134 Non-rent variations 6.149 134 Effect of a variation 6.156 135 Ensuring respect for the contract 6.159 136 The potential problem 6.159 136 Possible approaches 6.164 136 Problems 6.171 137 Alternative dispute resolution 6.176 138 PART VII: THE TYPE I AGREEMENT: THE SECURITY REGIME 141 Introduction 7.1 141 The type I agreement 7.5 142 A single social tenancy 7.6 142 A single long-term agreement 7.7 142 Use of the type I agreement 7.11 143 Fixed term type I agreements? 7.12 143 Court orders for possession: discretionary or mandatory? 7.18 143 Serious rent arrears 7.27 145 Mortgage default 7.45 148 Other mandatory grounds 7.54 150 Security of tenure: the terms in the agreement 7.58 151 Occupier default 7.60 151 vii Paragraph Page Social policy 7.67 152 Estate management. 7.77 154 The powers of the court 7.84 154 The “ghost” grounds for possession 7.87 155 Mapping existing agreements onto the new scheme 7.96 157 Summary 7.97 157 PART VIII: THE TYPE II AGREEMENT: THE SECURITY REGIME 158 Introduction 8.1 158 The type II agreement 8.2 158 Periodic and fixed term agreements 8.6 159 Use of the type II agreement 8.9 159 The court’s powers to order possession 8.11 160 Accelerated possession proceedings 8.13 160 The six months’ moratorium 8.15 160 Security of tenure: the terms in the agreement 8.30 164 Circumstances justifying a mandatory possession order 8.32 164 Circumstances justifying a possession order on a discretionary basis 8.47 166 Break clauses 8.60 168 Expiry of fixed term tenancies 8.69 169 Summary 8.79 170 PART IX: THE SCOPE OF THE SCHEME 172 Introduction 9.1 172 The relationship with other statutory schemes 9.5 173 Business tenancies 9.5 173 Licensed premises 9.12 174 Agricultural tenancies 9.14 174 Long leases 9.18 175 Should the lease-licence distinction be retained as a test for determining the scope of the scheme? 9.21 175 Background 9.24 176 The continuing significance of the lease-licence distinction 9.29 177 Should the lease-licence distinction be used to determine the scope of our proposed scheme? 9.39 179 Exclusions 9.43 180 Making agreements with those under the age of 18.
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