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‘A new deal for renting’ but a risky hand for landlords

Posted: 22/07/2019

The Government has recently released news that the majority of landlords hoped or assumed would never come; section 21 of the Housing Act 1988 will be repealed in the (apparently) near future. This marks a complete turnaround in strategy from the Government following the passing of the Housing Act in 1988, which was introduced with the intention of making renting easier for landlords in order to open up the private rented sector.

To recap, section 21 allows a landlord to serve a ‘no-fault’ contractual notice on a tenant giving them two months’ notice to vacate their property. By abolishing section 21, landlords will only be able to serve a section 8 notice to obtain possession of their property - this can only be served if certain grounds are proved, such as non-payment of rent or anti-social behaviour.

The news comes after a Government consultation found that those renting from private landlords have been left feeling “perpetually vulnerable” that their tenancy could be ended at short notice.

In practice, a section 21 notice can only be served if certain requirements are met at the start of the tenancy or during the duration of the tenancy; providing the tenant with a ‘How to Rent Guide’, a gas safety certificate, tenancy deposit prescribed information and, most recently, not demanding or accepting any fees prohibited under The Tenant Fees Act 2019.

One criticism of the intention to abolish section 21 is that removing the ability to serve such a notice also removes the incentive for landlords to comply with the above mentioned (ever increasing) list of requirements linked with serving the notice. There are other measures to ensure compliance, but these are often reliant on the local authority taking enforcement measures and they are currently understaffed and underfunded. There is also a concern that the proposals will lead to reluctance on the part of landlords to enter the private lettings market, with the result that less stock will be available for tenants, which in turn will drive up rents.

Along with the confirmation that section 21 will be repealed, the Government has also opened a consultation on how to reform the current possession procedure and the remaining section 8 route. It currently takes an average of five months for a landlord to regain possession under the section 8 route. For landlords where rental income forms part of their business or pension, or where the tenant is causing a nuisance to other tenants or neighbours, this delay is understandably unacceptable, particularly where the ability to enforce both recovery of arrears and/or costs against an outgoing tenant is either limited or uneconomical. Whilst it is encouraging that the Government is looking at ways to improve this, there is a long way to go before the section 8 route is fit for purpose.

Not only is the Government looking at ways it can speed up the section 8 route, it is also looking at expanding the grounds under which such a notice can be served. For instance, there are currently no grounds that deal with the landlord wishing to let the property to a family member, or wishing to sell the property with vacant possession. Both of these are suggestions put forward in the consultation, but there are still gaps in the proposals such as the lack of provision for possession for persistent rent arrears.

The worry is that by increasing the burden on landlords when it comes to evicting a tenant, more landlords will either stop renting altogether, increase rent to make up for the expense of letting out property, or be more selective about which tenants they choose to let to. With Scotland and Wales both requiring landlords to be licenced, there is also a fear that this further requirement and all it entails will be introduced for English tenancies.

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