Abolition of Section 21 no fault eviction procedure
Posted on 28th October 2019 at 15:21
The Government has published the consultation of abolishing Section 21, so called ‘no fault’ repossessions in the private rented sector.
The consultation ran for twelve weeks, closing on 12th October 2019. The consultation included proposals to improve the court system and alternative process for regaining possession of a property.
Landlords’ concerns over replacing the Section 21 procedure remains that they require a new system in place that provides the confidence and certainty needed that they can regain possession of their property in legitimate circumstances.
In research carried out by some of the country’s leading landlord association it found that of those who had used the Section 21 no fault process, 84 per cent had used it because of tenant rent arrears, 56 per cent because of damage to a property and 51 per cent because of anti-social behaviour.
The English Housing Survey also found that only 12 per cent of private tenancies were ended by the landlord. It is mostly used as the Section 8 process and court system are not fit for purpose.
In fact, rather than landlords seeking to evict tenants by this route 26% said that they had served a Section 21 notice at the tenant’s request – to enable them to seek social housing to avoid them being classed as intentionally homeless.
At present, landlords can repossess properties using two routes:
1. Section 21 which enables a landlord to regain possession at the end of a tenancy and requires two months’ notice to be given but without providing a reason, but this route can only be used if certain legal obligations have also been satisfied such the deposit and prescribed information has to have been dealt with correctly; the relevant How to Rent guide has to have been given; the EPC has to have been given and, where applicable, the gas safety record has to have been given before the tenant occupied the property and renewal certificates given.
A failure to comply with these requirements can invalidate the notice.
2. Under Section 8, landlord can repossess a property under a number of set grounds including rent arrears and anti-social behaviour BUT unless a Landlord is applying for possession under one of the mandatory grounds, a County Court Judge has discretion about whether to grant possession or not, so the Landlord can never apply for possession with any certainty.
How drastic will the changes to section 21 be and how are the Government planning to implement this overhaul?
The Government appear to be working on two new ‘no-fault’ policies at present.
The first one introduces a ‘no-fault’ reason for ending a relationship between married couples but surprisingly at the same time, removing a ‘no fault’ reason for ending a relationship between a landlord and tenant.
Why would you use a section 21 anyway?
A section 21 possession is presently the only route for a landlord to obtain possession where the tenant is either not in breach of the tenancy or one of the grounds 8 grounds do not apply. In order for a section 21 notice to be employed correctly the deposit and prescribed information has to have been dealt with correctly; the relevant How to Rent guide has to have been given; the EPC has to have been given and, where applicable, the gas safety record has to have been given before the tenant occupied the property and renewal certificates given.
The vast majority of tenancies end because the tenant serves notice and many landlords never serve a section 21 notice. There is no reason to as, for the most part, tenants pay the rent on time and look after the property.
For long-term landlords, this is the perfect scenario and a sustainable business model. Evidence suggests that section 21 notices are not used as frequently as some would think and tend to be used only where, through no fault of the tenant, the landlord requires the property back.
So what would replace section 21?
Well to be frank nothing will. If section 21 changes and is repealed then tenancies would effectively become indefinite and the route for landlords to seek possession would be under Section 8 route which allows a Landlord to seek possession during either the fixed term or the periodic element of a tenancy under either pre-advised grounds or breach of tenancy grounds.
There would need to be a complete overhaul of the Section 8 grounds to ensure that landlords could get possession of their property, in situations for example where the landlord wanted to sell. At present in such a case, the landlord would either have to sell the property with the tenant in occupation or serves a section 21 notice. A new ground in the Section 8 procedure would be required to enable the landlord to claim possession under section 8 on the basis that they want to sell.
Understandably the Government would need to address this specifically otherwise the buy to let sector could be affected immensely as landlords may not be willing to buy into a market that they could not exit from easily and importantly lenders would be reluctant to lend to potential landlords. On top of this, we could see existing landlords seeking to exit the market before the law changes.
How might section 21 changes be implemented?
Possession proceedings after the expiry of a section 21 notice are in most cases done under an accelerated possession proceeding which is ordinarily a paper process and only requires a court hearing where either more information is required or the tenant raises a defence that the judge needs to understand more fully. A section 8 possession proceeding currently always requires a court hearing.
It is hard to imagine that the courts could cope with existing section 8 proceedings and then those proceedings that would have been dealt with under section 21 proceedings as well. Depending on where in the country the court is will influence the amount of time between the court application and the hearing. Typically it could be a month or more and clearly, the additional workload is only going to increase this time.
The Government could choose to examine the experience of Scotland which went through a not dissimilar process eventually scrapping their equivalent of Section 21 in 2017 and replacing it with a list of reasons why a landlord could bring a tenancy to an end.
The press and tenant pressure groups have made a huge point that tenants are fearful of complaining of disrepair in case their complaint is met with a section 21 notice. Landlord groups are keen to point out that there is already legislation in place to deal with this in section 33 and 34 of the Deregulation Act 2015 and indeed we have the recently introduced Homes (Fitness for Human Habitation) Act 2018.
The issue, as ever, is the lack of enforcement. One has to ask if one of the reasons that the Government proposed the repealing of section 21 is an admission that enforcement is not working and they have no idea as to how to solve the problem.
We will have to wait for the consultation to know the specific details of the proposals but I doubt whether this problem will be solved as quickly as some would like it to.
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