What you need to know about the proposed abolition of Section 21
Back in April this year, following a consultation on overcoming the barriers to longer tenancies in the Private Rented Sector (PRS), the government announced its proposals to end ‘no-fault’ evictions by abolishing the Section 21 notice that currently allows landlords to end a tenancy without a specific reason.
At that time, it was branded ‘the biggest change to the private rental sector for a generation’. While nothing had actually been decided – and still hasn’t – various tenant groups claimed victory after years of campaigning for longer tenancies.
Since then, there has been another consultation, this time more specifically on whether and how Section 21 should be changed. It ran from 21st July to 12th October and invited views on:
- How Section 21 has been used in the past
- The circumstances (if any) in which landlords should be able to regain possession with the fault of the tenant if Section 21 was abolished
- What changes may be necessary to the existing grounds for possession without the fault of the tenant if Section 21 was abolished
- What changes may be necessary to the existing grounds for possession under Section 8 and new grounds to be added
- How the processing of repossession orders through the courts could be improved
It also asked for opinions on the implications of removing the ability to grant Assured Shorthold Tenancies in the future and whether reforms should be extended beyond the Private Rented Sector, for instance, to housing associations.
Why the Government thinks the law needs changing
Private tenants and tenant lobbying groups have long said that what they want most is to have greater security and stability in their home. As it stands, landlords and agents can give a tenant two months’ notice to leave a property after any initial fixed term has expired, by issuing a Section 21 Notice. You don’t need to give a reason for asking the tenant to leave and the tenant can’t do anything about it, they simply have to find somewhere else to live.
The Government’s own research found that while the average tenant spends 3.9 years renting in the PRS, over 80% of tenancies are granted for an initial fixed term of just 6 or 12 months. They also found evidence that the ending of tenancies via the Section 21 process is currently one of the biggest causes of family homelessness.
What the proposed changes would mean for landlords
Essentially, the Assured Shorthold Tenancy would become an open-ended rental agreement. Rather than being able to end a tenancy without a reason via a Section 21 notice, landlords and agents would have to use Section 8, which requires a valid reason to be given, by selecting one or more of the stated grounds for repossessing the property.
Keen to reassure landlords that they can still get their property back when they need to, the government has pledged to make other part of the system perform better. Three key proposals are:
- Giving landlords further grounds to repossess under Section 8, such as if they need to sell the property or want to move either themselves or a family member into it
- Looking at whether some of the existing grounds for repossession should be updated so that landlords have the powers they need
- Introducing a dedicated Housing Court to make it quicker and easier for landlords to regain possession of their properties if a tenant refuses to leave
Many industry associations and companies, including ARLA Propertymark and leading UK eviction specialists, Landlord Action, who are keen to protect the rights of landlords, have submitted detailed responses to the consultation. All responses will now be reviewed and considered by the government.
Do you need to worry?
First of all, nothing has been decided, so the proposed scrapping of Section 21 may not happen at all. If it does, we don’t think there’s any particular cause for alarm, provided landlords are given additional rights for repossession, as proposed, and any change to the minimum tenancy length is scrutinised further before any decision is made.
Meanwhile, we can be greatly reassured by looking at how a similar change to security of tenure for tenants has been successfully adopted in Scotland, where a new private residential tenancy agreement has been in effect since December 2017.
The new Scottish tenancy agreement
On 1st December 2017, the Scottish equivalent of Section 21 – the Section 33 no-fault eviction – was scrapped, along with fixed-term tenancies, making tenancies open-ended, by law. Although the Scottish Association of Landlords (SAL) had opposed the plans, the Scottish Government made it clear that they intended to press ahead with giving tenants greater security of tenure.
John Blackwood, Chief Executive of the SAL, said: “We argued that we have no problem with long tenancies – but we also wanted reassurances we would be able to repossess our properties if it went wrong i.e. the tenant was engaging in anti-social behaviour or failing to pay their rent. While the fear factor among landlords was huge and the reaction to the changes very negative, since the change in the law, landlords’ rights have, in fact, been strengthened. The rent arrears ground for repossession is now much better than it was under the previous system and, under the new tenancy, you can issue a Notice to Leave.
A dedicated Housing Court in Scotland
Scotland also changed the way court matters relating to housing were handled in 2017, with the introduction of the First-tier Tribunal’s Housing and Property Chamber. Prior to that, all cases went through the Sheriff Court, which required parties to have representation and could prove costly for landlords.
The new system has the same powers as the Sheriff Court, but it’s free and neither party needs representation. What’s very helpful is that all the Tribunal’s findings are searchable, meaning tenants, agents and landlords can make checks before signing any contracts. This greater level of transparency was something that the Scottish Association of Landlords had been campaigning for, so it has been widely welcomed. However, because of the sheer volume of cases put before the Tribunal – it dealt with more in the first three months than were expected in the whole of the first year – there has been a delay in processing applications, something that’s currently being addressed.
When tenants are evicted – which is in itself a relatively rare occurrence – it is generally because they have violated the terms of their tenancy. According to the English Housing Survey 2017/18 only 12% of tenancies were ended solely by the landlord and most of these were because of rent arrears.
When it comes to Section 21 notices, Landlord Action reports that the vast majority are served as a result of rent arrears, breaches of tenancy, or tenants staying in the property because they are awaiting a court order to be re-housed. In all these cases, even if Section 21 was scrapped, landlords would still be able to evict the tenant under Section 8.
Ultimately, it’s good for tenants to feel secure in their home and for landlords to be able to regain possession of their property if it becomes necessary. As such, we welcome the government’s commitment to delivering, as it says, “a fair and balanced relationship between landlord and tenant.”
If you have any questions, simply call into your local Reeds Rains branch and one of the lettings team will be happy to discuss your options.