The reforms, under the Renters’ Rights Act taking effect in England from May 1, are set to impact landlords across the south coast, particularly those who own mixed-use properties, such as shops or offices with residential flats above.
The majority of focus around the Act has centred on traditional residential landlords, but legal experts warn its implications for high street and town centre properties have gone largely unrecognised.
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Kerry Houston-Kypta, commercial property partner at Paris Smith, said: “For anyone acquiring a building with a residential tenant in place, it is no longer safe to assume that vacant possession can be achieved easily or within a predictable timeframe.
“That can affect pricing, funding and the viability of redevelopment or restructuring plans.”
The new rules will replace assured shorthold tenancies, ending the Section 21 “no-fault” eviction process.
Existing and new residential tenancies will become periodic assured tenancies, meaning landlords will only be able to regain possession through specific legal grounds under Section 8 of the Housing Act 1988, such as the intention to sell the property or in cases of serious rent arrears.
This change introduces longer and less predictable timelines for regaining possession, particularly where the tenant has not breached the terms of the agreement.
Ms Houston-Kypta said: “Missing paperwork or uncertainty over whether statutory information has been correctly provided to tenants can delay a transaction or make a property less attractive to buyers.”
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The Act also introduces new obligations around rent increases, prescribed tenant information, repairs and discrimination protections.
Sellers may find buyers and their solicitors paying greater attention to residential tenancy agreements, especially where full access to the property is critical.
For those leasing commercial parts of mixed-use buildings, accurately documenting the status of any residential element has become more important than ever.
Ms Houston-Kypta said: “These changes do not make mixed-use properties un-investable.
“However, they do make early legal advice and thorough due diligence essential.
“Understanding exactly what residential arrangements are in place, and what they mean under the new law, is critical before committing to a transaction.”