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What’s the hullabaloo about s.21 Notices and the end to “no fault” evictions of residential tenants?

Posted on 30 April 2019 by Sasha Loveridge

What’s the hullabaloo about s.21 Notices and the end to “no fault” evictions of residential tenants?

What’s the hullabaloo about s.21 Notices and the end to “no fault” evictions of residential tenants?

The Current Position

Under current legislation, landlords are able to evict their tenants through 1 of 2 ways, the Section 8 “fault based” procedure or the “no-fault” Section 21 procedure.

The Section 21 procedure enables landlords to evict a tenant without giving an underlying reason. The landlord must give a minimum of 2 months notice and the notice cannot be served within the first four months of the tenancy agreement. Although there are strict requirements that bar some landlords from using the Section 21 procedure, it is often the preferred method of regaining possession as it is more cost effective. Furthermore, the Court is obliged to make an Order for possession without the landlord having to establish any grounds and tenants can only claim “exceptional hardship” and not formally defend on grounds as are specified in the Section 8 Notice.

Gradual erosion of the Section 21 Notice

Pre-2015, the Section 21 procedure used to be fairly straightforward, with very few requirements that had to be fulfilled in order to Serve a valid Section 21 Notice other than a written Assured Shorthold Tenancy had to be in place, the notice had to be given in writing, any deposit taken from the tenant had to be protected and the necessary information regarding the deposit given to the tenant. However, in October 2015, the Government enacted the Deregulation Act 2015 (“the Act”) which introduced many changes to the Section 21 procedure including the introduction of a prescribed form which must be used.

Under the Act, a Section 21 Notice cannot be served unless the landlord has complied with certain legal obligations such as serving the tenant with a copy of the gas safety certificate and EPC. The landlord must also now provide the tenant with information relating to their rights in the form of the Government’s most recent How to Rent Guide. Furthermore, if the landlord takes a deposit from the tenant, it must be protected within a government backed scheme and the relevant information given to the tenant within 30 days. If these requirements are not complied with, the landlord will be barred from serving a valid Section 21 Notice.

Legislation due to come into force on 1 June 2019 (the Tenant Fees Act 2019) will create further barriers in being able to use the Section 21 procedure. Landlords will be barred from using the Section 21 procedure if they have unlawfully demanded a “prohibited payment” (ie administration fees, guarantor fees, credit check fees etc) under the Tenant Fees Act and unlawfully retained the same.

The Government’s proposals

The Government has announced three substantial changes to the current law on residential tenancies:-

1. To scrap Section 21 Notices.

This change, thought to be “the biggest change to the private rental sector” will have far reaching consequences meaning landlords will no longer be able to evict a tenant from their home at short notice and without good reason e.g. rent arrears, antisocial behaviour or breaking the terms of the tenancy agreement.

This change will protect tenants from unethical behaviour however, the National Landlords Association have criticised the abolition as the alternative Section 8 route is “ineffective and expensive”.

2. Amend the Section 8 procedure.

It has been proposed that two new grounds under the Section 8 procedure will be created to reflect this balancing exercise (regaining possession if the landlord wishes to occupy the property or sell the property).

3. Improve the Court process for possession.

Many landlords have found themselves forced to use the Section 21 procedure as opposed to Section 8 as they had little confidence in the Court to quickly and efficiently deal with a possession claim, regardless of the strength of the landlords case. If landlords are to have confidence and continue to invest in the buy to let market, streamlining the current Court process is crucial.

Potential impact of the proposals

No fault evictions can be terrifying for tenants and although tenant protection and reducing homelessness are important considerations, buy to let lenders will be less likely to lend to potential landlords if it is harder to evict unruly tenants which will affect the availability of rental properties in the private rental sector. Statistics show that more than 4 million households are in privately rented accommodation in England and so, greater security for tenants will mean nothing if there are fewer homes to let in the first place. Further consultation on the proposal to eradicate the Section 21 Notice has begun but we are still a long way off any “actual change”.
 

Posted in: Lettings/Landlord & Tenant, Landlord & Tenant/Housing