There has been a lot of talk about the Government abolishing Section 21 – the process by which landlords can reclaim their properties from existing tenants whilst in a tenancy agreement without having to state a reason.
This now seems to be a reality as reported in ‘Property Industry Eye’ on 22 July…
The Government has published a consultation on its plans to abolish Section 21 – the process by which landlords or their agents can reclaim properties without having to state a reason.
There is no question that the abolition will not go ahead – it will be achieved by getting rid of Assured Shorthold Tenancies.
Landlords will in future need to give a “valid reason for taking back possession of the property and would need to be able to satisfy a judge of the validity of their claim”.
The consultation, slipped out shortly after midnight yesterday as the Theresa May premiership draws to an end but also when many people go on holiday, largely focuses on issues such as improving the court system and Section 8.
Called “A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants”, the consultation relates to England only and is open until October 12.
The abolition of Section 21 will be achieved by removing Assured Shorthold Tenancies from the Housing Act 1988: “Once we abolish Section 21, there is no longer any significant legal distinction between an assured shorthold tenancy and an assured tenancy,” says the consultation.
ARLA said yesterday that the impact on the private rented sector cannot be under-estimated.
The consultation states that tenancies would not have to be open-ended, with a choice between a fixed-term agreement and a period contract that rolls over. However, one of the questions asked in the consultation is whether fixed terms should have a minimum length.
The consultation says that the Government does not support rent controls, but raises concerns that landlords may try to force tenants to leave a property by increasing the rent at the end of the fixed-term period to an unaffordable level. Legislation would prevent this by banning clauses allowing changes to the contract after the fixed term.
A number of questions are asked as to valid grounds to reclaim a property.
Among them are:
– If the landlord or a family member wants to use the property as their own home – if so, should this be allowed within the first two years of a tenancy?
– If the landlord wants to sell the property.
– Rent arrears – the Government is considering allowing a landlord to serve a two-week notice seeking possession once there are two months of rent arrears. This would be a mandatory ground. If the arrears are under one month, then the ground would be discretionary. Critics say the consultation does not address the question of persistent rent arrears.
– Anti-social behaviour – could tenancy agreements be strengthened to make it easier to provide evidence in court?
– Domestic abuse could be a new ground, and could allow the landlord to evict the tenant who has perpetrated the abuse, not the whole household. The consultation also asks about protecting the victim should the abusive partner threaten to terminate a tenancy.
– Unsafe properties: if a tenant has allowed the property to deteriorate below legal standards, should this be a ground for possession?
The consultation also asks questions about student accommodation and short lets, and whether and how these sectors should be included in the new framework.
The changes proposed would not be retrospective – Section 21 could still be used to end existing ASTs after the legislation comes into force. The new law would probably be implemented six months after Royal Assent.
ARLA Propertymark yesterday said: “This is big news for the sector and we cannot under-estimate the impact.
“We cannot accept amendments to the Section 8 eviction process unless all grounds are mandatory and include persistent rent arrears and anti-social behaviour.
“Only after a full impact assessment and conclusions from a pilot should the Government abolish Section 21.”
Chris Norris, director of policy and practice at the National Landlords Association, said: “The court system has been in dire need of reform for a long time, so we’re happy to see action on this.
“If the Government want to deliver a fairer, better quality and more affordable private rental market, as they claim, they should try listening to the concerns of landlords, not just court the voting renters.”
David Smith, policy director of the Residential Landlords Association, said: “Landlords’ concerns over scrapping Section 21 remain unchanged unless and until a new system is in place that provides the confidence and certainty needed that they can regain possession of their property in legitimate circumstances.”
Simon Joyce of Professional Properties commented “I would say that the changes to the system need to be fully in place, properly, 100% functional before the powers that can contemplate making the changes to Section 21.”
Susan Cope also stated “I know that this actually isn’t in the consultation, but one of the things that I understood that was being looked at, was actually having a separate housing court system, which I understand they’ve got in Scotland, so that there are judges that are constantly making decisions just on property. As I’ve said before, we’ve got judges who are seeing all sorts of different people from different backgrounds for different reasons, and you’ve got a ten minute court hearing to prove why a tenant should be made homeless, because effectively that’s what you’re asking a judge to do, is to agree a date for that tenant to have moved out of the property. If they’re not up to speed with the legislation, and let’s face it, there’s been that many changes to it over the last five, six, seven, ten years, that in our experience, there’s a big gap in people’s knowledge of what actually is up to date legislation.”