Property & Real Estate Barristers
Goodbye section 21 – an end to “no-fault” evictions
29th April 2019
Nicola Muir considers the proposal to abolish the section 21 notice procedure and wonders whether it will really make that much difference.
The government has announced that it plans to abolish section 21 of the Housing Act 1988 (the 1988 Act). This is the provision which allows landlords to regain possession of properties let on an assured shorthold tenancy without having to prove any fault on the part of the tenant. The change will not happen straight away as first there needs to be a consultation on how to balance tenants’ needs for greater security while ensuring landlords are able to recover their property if needed. The proposal is being hailed as a victory for tenants’ rights, but what would the change actually mean? There are an estimated 4.5m households – 19.5% of all households – now living in privately rented accommodation in England and the government says that it is committed to ensuring a fairer and more affordable private rented sector that provides security and stability for both tenants and landlords. Changes in the size and make-up of the private rented sector have, it says, led to a growing need for longer, more secure tenancies. In July last year, the government launched a consultation seeking views on longer tenancies, in particular, a proposed new three-year tenancy model. The minimum three-year term was not met with any great enthusiasm but the Ministry of Housing Communities and Local Government has published its response to that consultation: Overcoming the Barriers to Longer Tenancies in the Private Rented Sector. It is this document that outlines the latest plan.
The current law
Since 28 February 1997, a tenancy of a dwelling-house will, with a few exceptions, be an assured shorthold tenancy (AST) if and so long as it is let to a tenant who occupies it as his only or principal home. Despite the name, there is no limit on how long that tenancy must be, but it can’t be brought to an end within the first six months. Most ASTs are granted for a term of a year, but there is no reason why they could not be longer. Once the fixed term has come to an end the tenancy continues automatically anyway unless either party takes steps to terminate it. There are two ways in which a landlord can bring an AST to an end. If the tenant is in breach of the terms of his tenancy or, if one of the other grounds set out in Schedule 2 of the 1988 Act is made out, the landlord can serve a notice seeking possession warning the tenant that possession will be sought if he does not remedy the breach. This notice is known as a “section 8 notice” and it can be served at any time. If the breach is not remedied, the landlord can bring proceedings for possession of the property. However, if the breach is remedied before the court hearing, the landlord will usually be unable to regain possession of the property. The alternative method is to serve a section 21 notice, which allows the landlord to give the tenant two months’ notice to bring the tenancy to an end. The notice cannot expire prior to the end of the fixed term, but there is no need for the landlord to give any reason for ending the tenancy. Contrary to recent reports in the popular press, section 21 does not allow the landlord to simply change the locks; he still needs to obtain a court order for an eviction if the tenant does not move out voluntarily. Failure to do so has serious consequences under
the Protection from Eviction Act 1977 and, in practice, the time between serving the notice and eviction is on average seven to eight months, according to Shelter.
The proposals
Although the consultation did not reveal much appetite for a minimum three-year term, it did find that some tenants are left feeling insecure by short fixed-term tenancies. The government believes that the solution to this insecurity is to end “no-fault” evictions. By removing the power of the landlord to serve a section 21 notice, housing campaigners hope that tenancies can continue for as long as the tenant wants to remain and unfair evictions will be a thing of the past. The removal of the section 21 procedure will not, however, take place in isolation. It is also proposed that the section 8 possession process should be strengthened so that property owners are able to regain their home should they wish to sell it or move into it. These grounds will be in addition to the existing grounds for a section 8 claim, which allow landlords to evict tenants who don’t pay the rent or commit antisocial behaviour. In fact, there are already a number of non-faultbased grounds on which a section 8 notice can be served. Similarly, there are also now some major hurdles to serving a section 21 notice.
Existing restrictions on section 21 notices
In recent years, policing compliance by landlords with their statutory obligations by curtailing their powers to serve section 21 notices has been a regular theme with the legislators. This has been an effective way of addressing many of the concerns which tenants have with rogue
landlords, but it has also made what was intended to be a simple procedure very complicated. These measures have made the section 21 process much less popular with landlords than it once was and there has been a significant reduction in the number of “no-fault” evictions since 2015, when most of the obstacles to serving a section 21 notice were introduced by the Deregulation Act 2015. A landlord is now prohibited from relying on a section 21 notice if he has failed to:
1) give the tenant prescribed information in the form of the “How to Rent” guidance note before he moves in;
2) provide the tenant with an energy performance certificate and gas safety record before the tenancy is granted;
3) license the property as an HMO if it fits the relevant criteria; and
4) place the tenant’s deposit in a tenancy deposit scheme and provide the tenant with prescribed information in respect of that scheme. The landlord is also prohibited from serving a section 21 notice if the local authority or the tenant has complained about the condition of the property, and, instead of seeking to carry out the necessary remedial works, the landlord seeks to evict the tenant: a “retaliatory eviction”.
The provisions of all these restrictions are convoluted and have numerous traps for the unwary landlord. As a result, it is now very difficult for a small private landlord to let a property without professional help and something of a minefield to rely on section 21 to regain possession. The consultation undertaken by the government (and indeed much of the press coverage on the proposal to abolish section 21) reveals that there is widespread ignorance of the protections which are already in place, with 47% of the tenants stating that they were not aware of the protections for tenants from retaliatory eviction.
Comment
Landlords are, by definition, in the business of making money by renting out their properties. Unlet properties or voids between tenancies do not make money. One therefore wonders why a landlord would want to evict its tenant unless that tenant is in breach of the terms of the tenancy or the landlord wishes to sell or move into the property himself. A continuation of the tenancy is after all no bar to increasing the rent and keeping the same tenant saves the cost of improving the premises for a new occupant. The “fault-based” grounds in Schedule 2 of the 1988 Act already go further than
non-payment of rent or antisocial behaviour. For example, they allow a landlord to regain possession in order to redevelop the building or to re-occupy the property if it was his former home – albeit only if the tenant has been given notice that possession may be required on this basis before he moves in. No doubt there are some landlords who evict their tenants at the end of their tenancy for no good reason and there will be others who unjustifiably believe their tenant is at fault. It seems likely that in most cases, however, a landlord will have a reason for wanting possession back, whether they need to state it or not. Most rational reasons are already covered by the grounds for a section 8 claim, so will the abolition of the section 21 procedure really make that much difference? It appears from the consultation responses that the reason landlords rely on the “no-fault” procedure is not necessarily that there is no fault. It is because it takes too long and is too expensive to use the “grounds-based” procedure. The section 8 procedure requires there to be a court hearing and, even if the landlord is successful, it will usually only recover a small proportion of its costs of bringing the claim and may well be left with irrecoverable rent arrears. The government recognises that if section 21 is abolished, the court process would need to be simplified to make it easier for landlords to obtain possession of their property when needed. Requiring landlords to state their reasons for requiring possession will provide transparency, but will it actually reduce the number of evictions? In those cases where the landlord has no reason for evicting the tenant, the answer is undoubtedly yes. In other cases, it may discourage landlords from pursuing possession for trivial breaches. One thing is certain: the abolition of section 21 will increase the amount of court time devoted to possession claims.
First published in the Estates Gazette on 27th April 2019