The end of Section 21?

18th Apr 2019

On 15th April 2019 the government announced plans to put an end to "no-fault" evictions of tenants under assured shorthold tenancies by repealing section 21 of the Housing Act 1988 (HA 1988). At the same time, it intends to extend section 8 of the HA 1988 to allow a landlord to terminate where it intends to move into the property, or sell it.

Background

Section 21 of the HA 1988 currently enables landlords of residential properties let under Assured Shorthold Tenancies (ASTs) to terminate the tenancy on or after the end of the initial fixed term on two months’ notice without a reason. Provided that landlords have followed the correct procedure and complied with the various pre-requisites before serving the notice, they are entitled to a possession order if the tenants do not leave after the notice has expired.

Landlords can also recover possession by using the procedure set out in section 8 of the HA 1988, but to do so they are required to rely upon and evidence one or more specific “grounds” (such as non-payment of rent or breach by the tenant of any other terms of the tenancy agreement) to entitle them to a possession order. Some of those grounds only give the Court a discretion to grant a possession order. Therefore, the section 21 procedure is the preferred method of many landlords to recover possession of their properties as there is no requirement for them to give any reason.

The section 21 procedure has been criticised by many, including housing charities, for the lack of security that it causes tenants. The purpose of the government’s proposals is to protect tenants from having to make frequent and short notice moves, enabling them to better plan for the future.

Proposal

The government proposes to repeal section 21 of the HA 1988. At the same time, the government proposes to:

• Extend the grounds for termination under section 8 of the HA 1988, to allow a landlord to terminate an AST to move into the property itself, or to sell it with vacant possession.
• Simplify the court processes to make it easier for landlords to gain possession through the courts, where they can make out one of the section 8 grounds.

The effect of these proposals will be that a landlord will always have to provide a reason for terminating an AST.

Once implemented, these proposals will create a major change in the legislative framework governing private residential tenancies. The government intends to carry out a consultation on the details of the new system and to work with the Ministry of Justice and the Courts and Tribunal Service to reform the courts processes for possession.

The effect that the proposals, if implemented, will have on the housing market remains to be seen. Concern has been expressed that the repeal of section 21 will discourage many landlords from entering or remaining in the buy to let market due to fear of being tied into ASTs indefinitely. Furthermore, many tenants do not wish to be tied into long-term tenancies. A possible solution may therefore be a form of “intermediate” tenancy with a term longer than the usual 6 or 12 month term founds in the majority of ASTs. The proposed changes may also mean that landlords might need to review their tenancy agreements, particularly in terms of the parties’ respective obligations, if the tenants are potentially going to be in the property long term.

It is unclear how it is proposed to simplify the court process. Under the current section 21 regime landlords have the option of using what is known as the accelerated procedure where they simply wish to regain possession of the property and do not require a County Court Judgment to be made against the tenant for rent arrears or any other monies owing. This means that, provided that the Judge is satisfied that the correct procedure has been followed and that the notice has been validly served, and the tenant does not defend the proceedings, the possession order is granted on paper without the need for the parties to attend court, which can often involve a wait of several weeks or even months for a hearing date to become available. The accelerated procedure is not available where the landlord wishes to rely upon the section 8 regime.

The government’s latest announcement is the start of a process of engaging with landlords and tenants to amend the grounds for repossessing a property in order to make the process work better for everyone. It will be interesting to see what comes out of those discussions.