Renters Reform Bill - new legal problem identified ...

A law firm partner who advises rural estates and landowners has identified a new problem created by the Renters Reform Bill.

James Maxwell, a partner at Farrer & Co, writes on the firm’s website that for the past 25 years estates have been able to let accommodation to employees on Assured Shorthold Tenancies knowing they could get the property back rapidly - via a Section 21 notice - when the occupant’s employment ceased.

However, as has been well reported, the government’s Renters Reform Bill proposes that section 21 notices will be abolished while in parallel there will be a revised ground for possession.

Maxwell writes: “The upshot is it will be more difficult for estates to evict ex-employees housed under ASTs, when there may be very pressing reasons for wishing them to leave the estate quickly. Estates may wish to consider whether they can accommodate staff under a different arrangement known as a service occupancy.”

He explains that this requires an an express term in the employment contract that an employee must live in the property for better performance of their duties, and that this must genuinely be the case - not merely a cover.

But the downside for an employer with tied accommodation is that to validate the status of an employee genuinely having to live on site, a lower rent may be chargeable; in addition, some agricultural workers with tied accommodation may have an element of security of tenure because of existing legislation surrounding farm-working.

Maxwell concludes: “Many estates will wish to check that existing service occupancy arrangements are fit for purpose and / or consider the use of service occupancies for other staff in future.

"This may involve a trade-off: a service occupancy makes regaining possession easier, but may involve a loss of revenue from rent and the employee having to pay income tax on the benefit of their accommodation through PAYE (unless HMRC’s better performance test is met).”

You can see the full piece on the Farrer & Co site here.

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