The law (of unintended consequences)

His Majesty’s Government introduced the Renters’ Rights Bill (Bill) to Parliament in September 2024, and that version of the Bill received a fair amount of press commentary. When introduced, the Bill only applied to leases up to seven years. However, the Government has subsequently introduced amendments to the original draft Bill, some of which could have far reaching consequences. The amendment I think is of particular interest is that all fixed term tenancies up to 21 years will now be caught by the new legislation.

1. To recap, leases over seven years were not caught by the Bill originally. However, because of amendments to the Bill introduced on 14 January 2025, new leases of less than 21 years will now be caught. This means in future, once the Bill is law, if a lease is granted for 20 years it will automatically be converted into a periodic tenancy.
2. I suggest therefore that those estates which historically have been willing to, and wanted to grant 20-year residential tenancies to tenants will no longer be able to do so. That is perhaps disappointing to tenants who wish to take a 20-year residential tenancy and disappointing also to landlords who wish to see tenants plan for a decent length of time. These are arrangements which have suited both parties. However, as the Bill stands, those tenants will now have to accept periodic tenancies but with landlords enjoying statutory rights to recover possession (eg in the event of a landlord wanting to sell or move into the property). Such rights would not normally be available to landlords if they had granted a 20-year tenancy, so it would seem this change could be to the detriment of some tenants seeking long term security of tenure.
3. Additionally, when granting leases of more than seven years, the repairing obligations can be seen as a matter of negotiation between the parties. Commonly it suits both landlord and tenant that tenants should be responsible for repairs where 20-year leases are in place. That of course is where section 11 of the Landlord and Tenant Act 1985 comes into play; this section directs that in leases under seven years landlords are obliged to be responsible for repair of the structure and equipment for space and water heating. But on the assumption that section 1 of the Bill precludes the creation of fixed term tenancies over seven years (the draft bill says fixed term tenancies are of no effect) it appears that it will be impossible to create a new tenancy for a market rent which does not enjoy the protection of section 11 of the Landlord and Tenant Act 1985.
4. There is, additionally, a miscellany of other pieces of legislation where tenancy length determines whether the legislation applies to a particular tenancy or not (the tipping point is normally seven years). These include statutory obligations concerning gas safety inspections, right to rent checks, electrical safety standards, carbon monoxide alarms and fitness for human habitation. A landlord does not have to comply with these obligations when granting a lease for more than seven years, however, as with section 11 of the Landlord and Tenant Act 1985, it appears that it will be impossible to create a new tenancy for a market rent which does not place these obligations on the landlord going forward.
5. As a final point, granting a lease of 21 years or more to circumvent the Bill is not remotely attractive for landlords. That is because tenants of such leases benefit from the ability to extend their lease or purchase the freehold under their statutory enfranchisement rights.
6. The reality is that while the proposed amendment is aimed at “unscrupulous landlords” (Matthew Pennycook’s words) it will preclude responsible landlords from granting tenancies of up to 20 years to tenants who wish to take tenancies of that length. It also precludes the creation of any residential tenancy under 21 years which sees anyone other than the landlord responsible for repairs. One wonders whether this is very much a case of the law (of unintended consequences).

P.S. There would plainly be a relatively simple answer to this problem. His Majesty’s Government could simply have the cut-off as seven years where there is no landlord break clause and, for leases that do contain a landlord break clause, the cut-off would only apply if at least seven years of the term were to pass before any landlord break clause would be triggered.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, February 2025