Amid the chaos of Brexit, the Government has found time to unveil its plans to hold a consultation on their proposal to abolish “no-fault evictions” under Section 21 of the Housing Act 1988, describing it as “the biggest change to the private rental sector for a generation”.
Currently, landlords can evict tenants on 2 months’ written notice without explanation once the term of their assured shorthold tenancy agreement has expired. If a landlord wishes to end a tenancy agreement during the fixed term, they must follow the Section 8 notice procedure, which requires them to evidence to the Court that the tenant has breached one or more of the statutory grounds for obtaining possession, such as failing to pay rent.
The Section 21 notice has been a useful weapon in the landlord’s armoury as the Section 8 process can be “slow, costly and inefficient” according to the National Landlords Association (NLA).
The Government has identified a housing crisis; the new proposals are intended to increase tenant security and balance the relationship between tenants and landlords, and follows reforms banning letting fees and capping rent deposits that take effect from 1 June 2019.
The new proposals also include amendments to the Section 8 statutory grounds, enabling landlords to regain their property in the event that they wish to sell it or move into it during the fixed term. This is supported by a proposal to expedite court processes to allow repossession of property in the event that the tenant is in rent arrears or has damaged the property.
The proposals ignore the fact that most landlords are running a business and would remove the mechanism by which the landlord can terminate the tenancy where they wish to rent to another tenant for an increased sum. Rent reviews will continue to be allowed annually, subject to tenants being able to challenge the new rent if they do not believe it reflects the market value.
In previous consultations the Government has argued that improved terms for tenants will provide increased financial security for landlords, as tenants will stay longer in a property.
The NLA has criticised the proposals as effectively creating indefinite tenancies with a risk that landlords will seek ways to avoid this. In Scotland, where the same proposals were implemented in 2017, more landlords now ensure they exercise their right to review rent annually, forcing tenants who cannot afford rent increases to end their tenancies. Landlord are also less likely to take on tenants they perceive as “risky”, which leaves the most vulnerable tenants (who the Government are seeking to help) in a position where landlords are unwilling to let to them.
This proposal is not new; Labour announced a similar plan at their conference in September 2018. And whilst the Government has lauded these proposals as a way of tackling “unethical” landlords, more cynical commentators see it as a strategy for winning over Labour voters and an ever-increasing number of voters who rent, as a general election looms on the horizon. Whether this consultation bears any fruit is anyone’s guess, as is the impact it may have on the relationship between landlords and tenants.
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