How drastic will the changes to section 21 be and how are the Government planning to implement this overhaul?
Interestingly the Government appear to be working on two ‘no-fault’ policies concurrently.
Firstly, introducing a ‘no-fault’ reason for ending a relationship between married couples but, at the same time, removing a ‘no fault’ reason for ending a relationship between a landlord and tenant. It is outside the scope of our expertise to consider the merits and demerits of the former.
The Government have announced that, like the Labour party, they intend to put an end to ‘no-fault’ evictions. This comes out of the response to the Government’s own 2018 consultation entitled ‘Overcoming the Barriers to Longer Tenancies in the Private Rented Sector’.
The consultation identified that there was no tenant consensus around ‘mandating a certain tenancy length’. It additionally noted that the response from landlords was for no change to the current position. The alternative to giving the tenant the security of a longer term tenancy is to remove the ability of the landlord to end a tenancy without a genuine and evidenced reason.
Why would you use a section 21 anyway?
Section 21 is currently the only way for a landlord to seek possession where the tenant is either not in breach of the tenancy or one several pre-advised grounds are not available. In order for a section 21 notice to be employed correctly the deposit and prescribed information has to have been dealt with correctly; the relevant How to Rent guide has to have been given; the EPC has to have been given and, where applicable, the gas safety record has to have been given before the tenant occupied the property and renewal certificates given.
A failure to comply with these requirements can invalidate the notice. This does not even take into account ensuring it is not served too early or acted upon too late. Evicting a tenant can be a legal minefield.
The vast majority of tenancies end because the tenant serves notice and many landlords never serve a section 21 notice. There is no reason to as, for the most part, tenants pay the rent on time and look after the property.
For long-term landlords, this is the perfect scenario and a sustainable business model. Anecdotal evidence suggests that section 21 notices are not as used frequently as some would imply and tend to be employed only where, through no fault of the tenant, the landlord requires the property back.
You automatically get top legal cover, help and advice with our best selling Rent On Time package.
So what would replace section 21?
Well to be honest nothing. If section 21 changes and is repealed then tenancies would effectively become indefinite and the route for landlords to seek possession would be under section 8 of the Housing Act 1988. Section 8 allows for the landlord to seek possession during either the fixed term or the periodic element of a tenancy under either pre-advised grounds or breach of tenancy grounds.
Of course, an overhaul of section 8 and the Schedule 2 grounds would be required to ensure that landlords can get possession of their property, if, for instance, the landlord wanted to sell. At the moment, in this scenario, the landlord either sells with the tenant in situ or serves a section 21 notice. A new ground in schedule 2 would be required to enable the landlord to claim possession under section 8 on the basis that they want to sell.
Understandably the Government would need to address this specifically otherwise the buy to let sector could falter with landlords not willing to buy into a market that they could not exit from easily and importantly lenders would be reluctant to lend to potential landlords. On top of this, we could see existing landlords seeking to exit the market before the law changes and then where would we be?
The Government will seek the views of interested parties in a consultation due to be launched before the summer. This will be the opportunity for landlords, agents and other interested parties to help shape sensible legislation by putting forward their views not only on what new grounds will be needed but also on the process.
How might section 21 changes be implemented?
Possession proceedings after the expiry of a section 21 notice are in most cases done under an accelerated possession proceeding which is ordinarily a paper process and only requires a court hearing where either more information is required or the tenant raises a defence that the judge needs to understand more fully. A section 8 possession proceeding currently always requires a court hearing.
It is hard to imagine that the courts could cope with existing section 8 proceedings and then those proceedings that would have been dealt with under section 21 proceedings as well. Depending on where in the country the court is will influence the amount of time between the court application and the hearing. Typically it could be a month or more and clearly, the additional workload is only going to increase this time.
An increase in resources is one option, however, we are awaiting the response to housing related call for evidence which ended in January 2019 entitled ‘Considering the case for a Housing Court’. The call for evidence sought to gain an insight into the experience of those who had used the courts for possession processes in relation to the time it took first to get a hearing and then to have the judgement enforced and then also in relation to the complexity of the processes.
The response may provide the Government with the data to decide whether dedicated housing courts could solve delays experienced and help allay the fears that some landlords will have around the loss of section 21. It is not inconceivable that some grounds could be decided without the need for a hearing, for instance, those that are readily demonstrable such as grounds related to non-payment or late payment of rent (as used to be the case with the old N5A form).
We have already identified that the grounds available in Schedule 2 will have to be reviewed. Schedule 2 grounds have been added to in the past and so this is nothing new.
The Government could choose to examine the experience of Scotland which went through a not dissimilar process eventually scrapping their equivalent of section 21 in 2017 and replacing it with a list of reasons why a landlord could bring a tenancy to an end.
The press and tenant pressure groups have made a huge point this week that tenants are fearful of complaining of disrepair in case their complaint is met with a section 21 notice. Landlord groups are right to point out that there is already legislation in place to deal with this in section 33 and 34 of the Deregulation Act 2015 and indeed we have the recently introduced Homes (Fitness for Human Habitation) Act 2018.
The issue, as ever, is the lack of enforcement. One has to ask if one of the reasons that the Government proposed the repealing of section 21 is an admission that enforcement is not working and they have no idea as to how to solve the problem.
We will have to wait for the consultation to know the specific details of the proposals.
Sign-up to our weekly newsletter in the box below and you’ll be first to hear about updates to this story as it develops.
What’s your opinion on this proposed change to section 21? I’d love to hear your thoughts on the proposal – leave a comment and let me know.