Renters Rights Bill may need to tackle the ECHR
The European Convention on Human Rights could provide a sting in the tail to pushing through the Renters’ Rights Bill, explains lawyer Neli Borisova
Most large landlords are relatively positive about the Renters’ Rights Bill. A more professional and higher-quality rental sector is generally a good thing for landlords. Therefore, corporate landlords are keen to see the Bill brought into force in an effective manner. That also means that they want it to be lawful and not face the legal challenges that have led to problems elsewhere. Sadly, there is concern that the Bill is at risk of breaking the ECHR.
Specifically, the government has been at pains to suggest that it is not seeking to introduce rent controls and that landlords will be able to raise rents annually in line with the market, but it is creating a structure which is doomed to fail.
Landlords will have to increase rents with a statutory notice. The tenant can refer that increase to a Tribunal at no cost. The rent increase does not take effect until after the Tribunal has ruled. The Tribunal may not increase the rent above the level on the original notice. So, tenants are incentivised to refer a notice as, at worst, the rent will be increased to the level on the notice but that increase will be delayed.
The government suggests that referrals take about four weeks to be processed but there is evidence that it takes far longer. Few referrals are made currently because few landlords use such notices. However, if every rent increase is done this way then the number of referrals will increase. If the Tribunal is not provided with resources to cope, there will be further delays.
This structure is potentially unlawful and a silk’s opinion has been obtained which states that there is a more than 50 per cent chance of the structure being found to be unlawful under the ECHR. This is in part because it is unjustified. It is of course open to the government to have a mechanism of rent review and even to apply it to existing tenancies, as the government is seeking to do here.
But where market rent setting is being interfered with then it must be objectively justified in a reasonable fashion. The government has asserted that the rent increase changes are on the basis of “affordability”. However, these measures do not impact on affordability as the rent is being increased to the market level. The Tribunal cannot set a lower level on the basis that it is unaffordable. The only effect is to delay the increase and keep the landlord out of rent which they are entitled to.
The government must urgently consider the measures in the Bill to ensure that they are lawful and, if it has further justification for them, they should be made public.
Neli Borisova is a senior associate at JMW Solicitors in London