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By Scott Goldstein

Property Specialist Partner, Payne Hicks Beach

OTHER FEATURES

Goodbye to Section 21 - a short history

Housing has always been one of the most sensitive political issues, meaning that legislation in this area is unusually sensitive to changes in government and public priorities. Nowhere is this more evident than with residential security of tenure. 

Residential tenants’ rights reached their climax with the Labour government of the mid-1970s, but 10 years’ later, Mrs Thatcher’s Conservative government decided it was time to deregulate private sector tenancies. The Housing Act 1988 was enacted, including the first iteration of Section 21, allowing some residential landlords to evict tenants even when there was no breach of the lease.

This Section always applied to ASTs but for a number of years its impact was restricted by the fact that before the enactment of amendments in the late 1990s, it was necessary for a landlord and tenant to “opt in” to having an AST, rather than having one by default. However, from February 1997, a change in the law meant that most new tenancies became ASTs by default. Hence the Section 21 process immediately became available for use by far more landlords than previously.  

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However it was not long before the pendulum began to swing back in favour of tenants. The Housing Act 2004, Deregulation Act 2015 and Tenant Fees Act 2019 between them introduced a series of preconditions that the landlord had to satisfy before serving a Section 21 Notice.  Failure to do so would render the Notice invalid.  

The drive to streamline residential repossessions is assisted (in principle) by the accelerated possession procedure, which is the court process that a landlord can use to recover possession from tenants it has served with a Section 21 Notice. The procedure allows the Court to make a possession order without a hearing, the idea being that as long as the landlord has satisfied a checklist of preconditions set out in the Section 21 legislation, the Judge has no discretion and therefore no hearing is necessary.

However, the effect of the combined restrictions on Section 21 Notices meant that the process of recovering possession is often not as smooth as originally intended. 

Predictably, the meaning and scope of the preconditions themselves have become the subject of hard fought cases, but a number of grey areas remain. One such question is the status of a Section 21 Notice that has been served in circumstances where the landlord has supplied a Gas Safety Certificate which did not comply with Section 36 of the Gas Safety Regulations. In a recent first instance decision on the point in the county court, the judge dismissed the possession proceedings due to there being missing information on the Certificate, but that decision will not bind another County Court. There will need to be binding authority from a higher court to determine the issue conclusively.

By the 2019 election there was broad consensus at Westminster favouring the abolition of Section 21 Notices. Then the pandemic struck and the county courts became sclerotic, with enormous reductions on the number of possession claims they could consider. The median average time for a landlord to repossess a property increased from 20.1 weeks in 2019 to 68.4 weeks in 2021.   

Hence the Government’s announcement in the Queen’s Speech of the Renters’ Reform Bill to abolish Section 21 Notices, comes as no surprise, nor is it necessarily bad for landlords. 

The Government has yet to publish its draft Renters Reform Bill, but its press release earlier in the month indicated that it will try to keep disputes out of Court by creating a new Private Renters’ Ombudsman to settle residential landlord and tenant disputes quickly, and at low cost.

There is also an indication that the Government will create a new Property Portal to help landlords understand their obligations, provide the tenants with performance information, and hold landlords to account for the quality of the properties they supply. These measures must be supported by adequate investment. 

However by themselves, they will not be enough.  

In 2019, commentators suggested that on abolishing Section 21 Notices the Government would also strengthen the Section 8 regime, by introducing new grounds on which a landlord might retake possession. These might include, for example, circumstances where the landlord wishes to sell the property, or occupy it himself. However, there does not appear to be any mention of these proposals in the Government’s latest press release. This would seem to be a mistake. 

In order to preserve the correct balance of power between landlords and tenants, landlords must have a wide discretion to recover possession, albeit on proof of satisfactory evidence. Now that the Government has finally decided to bury Section 21, it must ensure that for all parties the new system works better than the old.

* Scott Goldstein is property specialist Partner in the Dispute Resolution team at law firm Payne Hicks Beach*

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

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    68 Weeks to get rid of a rogue non paying tenant is not acceptable, they need to be gone in a maximum of 8 weeks, but that's not going to happen, so to cover our backs it has to be very careful selection of working tenants only with a suitable guarantor, leave the work shy scroungers to the local council to house, their problem

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    Your really are a muppet

     
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    Is it worth getting rent guarantee and legal insurance? Some say they will pay out after missing one months rent. I have one 3 bed property and the insurance is £42.00 per month for their top cover.

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    Have you tried claiming on that insurance though ? personally I wouldn't trust them to pay out

     
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    Tenants had no Security of Tenure before the 1988 Housing Act, because there were no places to rent, you can’t have Security of Tenure when you have no where to plank your bumb. We Campaigned long & hard for years prior to 1988 Act to have a secure viable letting system, hence the 1988 Act that made you all Landlords and Housed millions of Tenants. Contributing billions to the Revenue & the wider economy that otherwise would not have happened and at no cost to the Public Purse, now you see fit to destroy it and and collapse the Housing Market and the real likelihood of a Recession directly because of this. There’s a lot more to this I can’t be bothered with your rubbish nonsense.

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    This is possibly the most ignorant comment I've ever seen. Just because old school landlords aren't willing to carry on in the current climate doesn't mean there aren't many that are. Sell up, see what happens. There will be plenty of takers. The population has grown by 11 million since '88 and will continue to do so. The market is there, and the investors willing to service it are there, no matter what conditions the Government puts on them. The economy has never been more well capitalised and banks have billions to lend. If you seriously think that a housing crash or recession are around the corner then you need to pick up an economics book.

     
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    Yes Mr Foley. And the immigration floodgates are wide open. Deporting invaders has stopped before it started !

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    May Boyne
    Unfortunately the Chinese are moving in ! They dont seem to be very good Lenders in africa and other areas they are colonising. I am afraid that the big money is going into pump and dump. Sub Prime type crisis coming up.

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    Max, my friend fair enough if that’s the most ignorant comment you have ever heard you must lived a very sheltered life.
    Looks like we have acquired 11 million free loads you are very welcome to keep they all.
    Of Course the Bank’s have billions they have robbed everyone paying Zero to deposit savers but have no qualms about charging big interest rates and charges for people in trouble.
    Everyone is well Capitalised with huge debts.
    I am sorry for my ignorance its taken many years to acquire, Best Wishes.

  • David Saunders

    Never mind old school landlords Max, any property owner with more than 2 brain cells would shy away from letting after outlawing of section 21 which will no doubt be followed by rent controls and effectively take away any rights to their own property other than the right/obligation to maintain it to ever higher standards.

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    There’s no doubt we have taken some hammering its non stop endless attack we are the kicking boys. I am not going to criticise Max either he’ll see things the way he does which is fine. They couldn’t even leave the remnant of S.21 which was all that was left following Shelters 2015 DeRegulation Act when they failed with Sarah Tethers Private Members Bill just one aspect of what they done to us. Taking away our Deposits in 2007 & replacing it with a ponzu scheme now protect the Deposit itself and nothing protecting the property. How to Rent by Shelter none of their business forced into our Tenancy Agreement’s against our wishes and changed about 14 times since obviously didn’t know what they were doing, causing us to print & throw away multiple times adding to our costs. Right to Rent nightmare of Course. Taking away our 10% Wear & Tear, Section 24 tax Debacle. ICO Registration, Courses for Brownie Points/ Accreditation Schemes. Changing Civil Matters to Criminal and give us a Penalty up to £30k like a parking ticket but it’s not a parking ticket it’s a massive fine. Doubling Stamp Duty on Landlords that they now want to help out and take people off their hands. I leave all this stuff to one side for now.
    The main issue issues worrying LL right now are EPC’s and the high cost of Compliance.
    The Licensing Schemes costing thousands, Application fees
    alone in some parts £1300. + £50 per habitable room + compliance work £3/4k extra no exaggeration where’s the money coming from? what pays the lenders just add Rent Cap for good measure that should do the trick.
    The Removal of remnants Section 21 the straw that broke the Camel’s back, we don’t know the full details yet but we know the damage is done so much injustice.

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    Max Boyne, if that's your real name, you think that you are entitled to something for nothing, as do lots of tenants. With the banking system it's basically an illusion. Hedge funds are after resl assets, someone takes the hit, often banks.

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    Max unfortunately Michael is spot-on. The government do not want private landlords anymore. We are going to be legalised out of existence if the present trend continues. Social landlords are moving in on the type of tenants I housed and are being paid a lot lot more, in some cases as much is 20 times as much as I received to house the same. Yet when they cannot cope with the tenant they drop them on the private sector. And this is a Conservative government more like a socialist government.
    Jim Haliburton
    The HMODaddy

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    Michael is normally right, he like many of us have had 30-40 yrs first hand experience, seen it all, heard it all and got that tee shirt

     
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