We know that Section 21 and so called ‘no fault’ evictions, are definitely going to be abolished as part of the radical re-shaping of the rental sector. The recent Queen’s Speech confirmed that the Renters’ Reform Bill legislation will be laid down over the next 12 months, and the abolition of Section 21 could happen over the next 18 months to 2 years.
I have always said that you cannot abolish Section 21 unless you have provisions in place for landlords to get their property back from tenants who are wilfully withholding rent or causing anti-social behaviour. Thankfully for letting agents and landlords, the Government has now confirmed that there will be additional reform of landlords' grounds for possession via Section 8. These include “strengthening repossession grounds for landlords under Section 8 when they have a valid cause.”
This is crucial for landlords, who need to have confidence in the possession process and the courts, and the reassurance that they will be able to regain possession of their property in a reasonable time, once Section 21 is abolished. Section 21 is banded about as a ‘no fault’ notice, but let’s be clear, there is always a reason why a landlord is serving a Section 21 notice.
We are now in post-Covid times, so there will be a return to 2019 levels of possessions, and this is likely to be further impacted by landlords looking to exit the market and wanting to use Section 21 while it’s still in play. At the moment we are seeing landlords are using Section 21 because they are looking to sell. A significant number of landlords I talk to are feeling disheartened with the industry and all the increases in regulation, legislation and taxes, and are wanting to get out before the impending EPC upgrade changes come into force, and while they have the chance to cash in on high property prices.
So, how should Section 8 change to ‘compensate’ for the abolition of Section 21? Unlike a Section 21 notice, commonly referred to as ‘no fault eviction’, a Section 8 notice can only be issued if certain criteria (or ‘grounds’), are breached by the tenant.
Currently, there are 17 grounds, of which only two are mandatory. I have been advising on the Section 8 changes that are needed, and one of these is that there need to be more mandatory grounds, where the tenant will definitely be ordered to leave if the landlord can prove breach of contract, as opposed to ‘discretionary’, where the court can decide one way or the other.
The Government is proposing some new mandatory grounds for possession which will apply where the tenancy has been in place for two or more years. These include extending the existing ground on moving into the property and selling the property. In my view grounds for possession should also include relationship breakdown or a landlord’s head lease expiring. I also believe there should be a ground for access, as landlords struggle to gain access into their properties.
One area that is a big bugbear for landlords worried about the abolition of Section 21, is anti-social behaviour by tenants. Historically, many landlords we have acted on behalf of have used Section 21 to evict tenants causing anti-social behaviour, because it was quicker than using the Section 8 route and they just wanted to get their property back as quickly as possible. Section 21 enabled them to regain possession, re-let their property and protect their neighbours, even if it meant that they never recouped any rental arrears. Once Section 21 is abolished, this will no longer be possible, so the changes to Section 8 must ensure that landlords dealing with this situation are able to evict quickly should they need to. Currently, if a landlord wants to gain a possession order for anti-social behaviour under Section 8, since this is a discretionary ground, they have to collect and submit evidence by way of witness statements from neighbours and other tenants in the property. This has always been difficult as they often feel threatened and intimidated by the nuisance tenants.
As I advised civil servants who came to my offices at Landlord Action back in 2019, the Government needs to be aware of the unintended consequences of abolishing Section 21. As I’ve said, many landlords who use Section 21 do so because they just want to get their property back quickly and often, they are prepared to write off any rent arrears. When Section 21 is abolished, landlords who are pursuing tenants for possession when there are rent arrears will have no option but to use Section 8.
Under Section 21, the tenant does not have an order granted against them if they are evicted for non-payment of rent – the landlord is asking the tenant to leave so the tenant is not considered to be at fault and is therefore not ‘intentionally making themselves homeless’, which works in the tenant’s favour when it comes to getting local authority housing. With Section 8, if there are rent arrears and an order is granted asking the tenant to leave, the tenant is considered to be at fault and there will be a money order against the tenant for the unpaid rent, which will indicate to the local authority that they have made themselves intentionally homeless because they’ve not paid the rent. This will jeopardise their chances of getting local authority housing. Despite the imminent changes, councils are still advising tenants to stay put and wait for the bailiffs to evict them so that they can get rehoused by the council.
Currently, the main reason under Section 8 for gaining possession is obviously non-payment of rent, and the Government is considering making changes to this ground, but it remains to be seen when these changes will be made and what they will include. You can read more about their recommendations at GOV.UK.
Not only do we need considerable changes to Section 8, but we also need to recruit more bailiffs. I’m pleased that the Government has given an undertaking to invest more than £300m in the court service to help with resourcing, but leave needs to be applied more regularly so that landlords hit with larger rent arrears have the ability to instruct a high court enforcement officer to carry out an eviction. Recently on one of our cases at Landlord Action, we had to wait five months for an eviction date. Some courts have caught up, but many still have backlogs post-Covid.
Another provision that needs to be put in place, which we believe will happen in the future, is that mediation should form part of the possession process. If a possession matter can be resolved by mediation with a tenant, for example with an instalment plan, this avoids courts and prevents more homelessness as more tenancies are sustained. But the tenant has to communicate with you to be able to mediate.
Finally, I can tell you that in 22 years of running Landlord Action, we are busier than we’ve ever been. And I predict that, with the cost of living crisis and soaring energy bills and rents, there will be many more possession cases in Q3 and Q4 this year. The abolition of Section 21 will present some challenges going forward, but the Government now has an opportunity to strengthen Section 8 and, provided they follow the advice of numerous industry leaders, including ourselves at Landlord Action, then landlords should have the protections they need. In the meantime, it is important for landlords to be more methodical with referencing than ever before, introducing guarantors and taking out rental guarantee insurance.
* Paul Shamplina is founder of Landlord Action, Chief Commercial Officer at Hamilton Fraser, and is on Channel 5's "Nightmare Tenants, Slum Landlords” *
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