For landlords in the UK, it is fair to say that “it never rains but it pours.” In mid-April this year the government announced further plans to make life more difficult for landlords, this time by stating that it will scrap “no-fault evictions”, which it described as the biggest overhaul for renters in a generation.
The government will consult on abolishing Section 21 evictions in England, meaning private landlords would no longer be able to evict tenants from their homes without good reason. The government said that Section 21, which is notoriously hard to challenge, had become one of the leading causes of family homelessness.
At the moment, if a tenancy agreement started before 1st October 2015, it is legal to serve a Section 21 at any time during the tenancy. For any tenancy agreements that were signed after 1st October 2015, four months must pass before a Section 21 is served. However, landlords are unable to sanction an eviction notice if the tenant has formally complained in writing about the condition of the property and the issue has not been dealt with efficiently.
Once a new system is put in place, which is expected to take at least two years to implement, landlords that wish to terminate the tenancy agreement during the fixed term will most likely need to follow the Section 8 notice procedure; obtaining a court order and evidencing one of the statutory grounds – for example – where rent has not been paid. The primary concern at the moment is that the proposals could create indefinite tenancies.
Rent reviews will continue to be allowed annually, restricted only by the tenants’ right to challenge where they do not agree that the review reflects market value. In other words, landlords can continue to ensure that they receive the market rate for their properties. This is the case in Scotland, where similar proposals were implemented in 2017. Scottish landlords have continued to exercise their right to review rent annually, thereby ensuring that they receive the market rate. However, the new Scottish system is far from perfect, especially if you have a terrible tenant that is refusing to pay any rent (more on that later).
The current Section 8 procedure for evicting a tenant requires landlords to endure a slow and expensive court process simply to end the tenancy legitimately. As such, landlords often rely on Section 21 notices, not because they are without good reason, but because the end result is delivered far more cost-effectively. To combat this, the government has pledged to expedite the court process, allowing repossession where rent is unpaid or the property has been damaged. Also, before we go any further, it is worth remembering that these proposals follow on from the government’s previous consultation, for a minimum three year AST term, which failed to garner a mandate from either tenants or landlords, so Section 21 is not dead and buried just yet. But what has been the reaction from the residential property sector?