Article kindly contributed by Gabrielle Roberts, a senior associate in the property litigation team and Sophie Kemp, a solicitor in the commercial and private client team, at Clarke Willmott in Taunton.
On 10th May Prince Charles delivered the Queen’s Speech, which included confirmation that the Government will deliver the biggest change in renters’ law in a generation.
It is the intention that the Renters’ Reform Bill will abolish Section 21 notices, while strengthening landlords’ legitimate grounds for taking back their property. The proposed change is to aim to strike a balance between the rights of tenants and the rights of landlords.
What is a Section 21 notice?
Assured shorthold tenancies are the most common form of tenancy in England. After the fixed term of the tenancy, if a landlord wishes to seek possession of their privately rented property, they can do so without needing to show any fault on the part of the tenant, by way of a Section 21 notice, also known as ‘no fault evictions’.
A section 21 notice is a form which must be delivered to the tenant and, provided the landlord has complied with the specified requirements, they are only required to provide their tenant with two months’ notice. After the notice has expired, the landlord can apply to the court to start the eviction process if the tenant has not already left.
What are the reasons for abolishing a Section 21 notice?
Strengthening tenants’ rights and security is the intention of the latest proposals. All too often, tenants are evicted by landlords looking to sell when house prices rise. The no fault eviction process also gives scope to unscrupulous landlords to remove tenants who have legitimately complained about the poor standard of their accommodation.
There is soaring demand in the rental market with tenants arguing their rights to a secure home without the worry and expense that comes from an unexpected move or potential homelessness through no fault of their own.
The proposed abolition of Section 21 is intended to provide greater protection for private tenants who do not wish to move from their rented property when they have adhered to all their tenancy conditions.
When will Section 21 notices be abolished?
A date has not yet been announced, but it is expected that the Government will produce its White Paper setting out more detail on the proposals and the Renters’ Reform Bill by the end of the year.
What will the loss of a Section 21 notice mean for landlords?
Although the plan to abolish Section 21 notices has been on the cards for many years, this is still likely to cause some uncertainty for landlords as the balance will shift with tenant’s rights being strengthened.
Without a Section 21 notice, the landlord will have to fall back on the Section 8 notice procedure. However, to be able to serve a Section 8 notice the landlord must rely on a form of wrongdoing by their tenant and state a legitimate ground for repossessing their property, for example, breach of contract, neighbour complaints, rent arrears, property damage etc.
At present, using a Section 8 notice can take almost a year for a landlord to repossess a property through the courts where they have a legitimate reason to do so. Under the Renters Reform Bill, it is proposed that landlords will be given further and swifter grounds for repossession, although specific details are yet to be confirmed. Without such measures, landlords face the prospect of being unable to gain possession of their property unless their tenant breaches the terms of their tenancy agreement.
Although it appears the main aim of the Renters Reform Bill is to provide greater protection and security for tenants, there is a real risk of landlords being driven away from the sector which would undoubtedly reduce the amount of housing available for people wanting to rent or who cannot afford to buy or access social rented housing.
However, some countries with the highest rates of private tenants, such as Austria and Germany, also have the highest levels of protection from eviction. Therefore, some are of the opinion that having a high level of protection will encourage tenants to adhere to the tenancy agreement to avoid the prospect of eviction, which would likely be welcomed by landlords for a mutually beneficial relationship.
It is clear that opinion on the potential effect to the private rental market differs and only time will tell how the proposed reforms will affect both the landlord and tenant.