What the scrapping of the Section 21 Notice might mean for you

November 19, 2019Categories: LandlordsTags: Landlords, legislation
Row of terraced red brick houses

Private tenants and various tenant groups have been lobbying for greater security of tenure in the Private Rented Sector (PRS) for a long time. At it stands currently, once the initial fixed term of a contract has expired, landlords and agents can use a Section 21 Notice to issue a tenant with two months’ notice to leave – and you don’t have to give a reason.

So, if a tenant signed an agreement for a 12-month initial term, with a 6-month break clause, you could issue a Section 21 at the beginning of month 4 and they’d have to leave at the end of month 6. You might have had the same tenant for 5 years, who’s happily settled in their home, but you could still issue a Section 21 at any moment and they’d have just two months to find somewhere else to live.

Realistically, this kind of ‘unfair eviction’ is very rare. When tenants are evicted, it’s generally because they’ve 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.

Leading eviction specialists, Landlord Action, reports that the vast majority of Section 21 notices are served due to rent arrears, breaches of tenancy, or tenants staying in the property because they’re waiting for 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.

Nevertheless, the Government’s own research found evidence that the ending of tenancies via the Section 21 process is one of the biggest causes of family homelessness. And, while the average tenant spends 3.9 years renting in the Private Rented Sector, over 80% of tenancies are granted for an initial fixed term of just 6 or 12 months. As such, they decided that the law needs to be changed to ensure that tenants can’t be evicted from their rented home without a valid reason.

Two government consultations

In April, following a consultation on overcoming the barriers to longer tenancies in the private rented sector, the government announced proposals to end ‘no-fault’ evictions by scrapping Section 21. In July 2019, it opened a consultation that asked for views on a number of things:

  • How Section 21 has been used in the past
     
  • The circumstances (if any) in which landlords should be able to regain 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 how new grounds should be added
     
  • How the processing of repossession orders through the courts could be improved
     
  • The implications of removing the ability to grant assured shorthold tenancies in the future
     
  • Whether reforms should be extended beyond the Private Rented Sector (PRS), for instance, to housing associations

Essentially, they’re proposing that the Assured Shorthold Tenancy (AST) would become an open-ended rental agreement. Section 21 would be scrapped, so landlords would no longer be able to evict a tenant without a reason. You would only be able to end a tenancy by issuing a Section 8 notice and selecting one or more of the stated grounds for repossessing the property.

Obviously, it’s a big worry for you as a landlord and property owner that you might not be able to get your property back when you need to. That’s something the government recognises and they’re keen to reassure landlords by making other part of the system perform better. Three key proposals are:

  • Giving landlords further grounds to repossess under Section 8, e.g. if you need to sell the property or want to move either yourself 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 if a tenant refuses to leave the property.

Many industry associations and companies, including ARLA Propertymark and Landlord Action, who are keen to protect landlords’ rights, have submitted detailed responses to the consultation. All responses will be reviewed and considered by the government and we’ll let you know as soon as any further proposals are announced.

Up and running in Scotland

If you do have any concerns, you should be reassured by looking at what’s happened in Scotland, as it’s more-or-less the same as what’s being proposed for England.

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. And so, on 1st December 2017, the Scottish equivalent of Section 21 – the Section 33 no-fault eviction – was scrapped, along with fixed-term tenancies. A new ‘private residential tenancy agreement’ came into effect, making tenancies open-ended by law, and a dedicated Housing Court was introduced.

John Blackwood, Chief Executive of the Scottish Association of Landlords, 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 at a much earlier stage.

A dedicated Housing Court

Before December 2017, all cases relating to housing went through the Sheriff Court, which required parties to have legal representation and could prove costly for landlords. The new system – the First-tier Tribunal’s Housing and Property Chamber - 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 on each other before signing any contracts. The only downside of the new system is, because it’s free and easier to navigate, there has been a huge increase in the number of cases put before the Tribunal. As a result, there’s been something of a delay in processing applications, but the Tribunal is currently working to address that.

In summary, what we’d say is that if you’re concerned, don’t be. First of all, nothing’s been decided, so the proposed scrapping of Section 21 might not happen at all. If it does, we don’t think there’s any particular cause for alarm, provided landlords are given the proposed additional rights for repossession and any change to the minimum tenancy length is scrutinised further before any decision is made.

Ultimately, it’s good for tenants to feel secure in their home and for landlords to know they can regain possession of their property as and when they need to. At Your Move, 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 relating to the above, why not book a FREE lettings review at your local Your Move branch