Evaluation of the Government’s proposal to repeal Section 21 of the Housing Act 1998
Earlier this year, the Ministry of Housing announced a ‘generational change’ to private renting in their report titled Overcoming the Barriers to Longer Tenancies in the Private Rented Sector. By repealing section 21 Housing Act 1998, this government would end so-called ‘no-fault’ evictions. This is a ‘significant step’ considering that the majority of landlords were against removing this type of eviction. Many landlords rely on the section 21 ‘no-fault’ eviction as this usually provides a swifter outcome in the court than other avenues.
For a period of 8 weeks in 2018 the government consulted on a new, three-year tenancy model. Of the 8,500 responses received, a ‘significant proportion’ were from landlords. Those who responded were divided into 4 categories: tenants (498 people), landlords (1,641 people), letting or property agents (129 people), and “other” (400 people). It is worth noting that the respondents were made up of three times the number of tenants.
The findings of the consultation were that only a quarter of landlords are offering tenancies of longer than one year. The reasons behind this can be identified as follows: (1) Both landlords and tenant prefer the flexibility that a short tenancy provides, (2) tenants have not asked for a longer tenancy, (3) landlords want to be to regain possession of the property more easily, and (4) landlords do not want to be tied into a tenant that turns out to be unsuitable. There was also a mutual sentiment that landlords want to avoid using the courts to resolve issues describing that the process was too slow, taking on average 21-25 weeks and costing the landlord £1,000-£5,000 on top of any loss of rental income and legal fees. Were there more efficient processes of recovering their property then around 40% of the landlords would be happy to offer longer tenancies. Of those that already offer longer tenancies, the reasons tend to be one of two: (1) the tenant has asked for one, or (2) the landlord desires greater stability or a guaranteed income.
The consultation concluded that 80% of tenants would accept a longer tenancy but a quarter of these tenants would need to feel confident in the landlord and have the ability of ending the tenancy through a break clause. Many tenants were not even aware that they could request a longer term. Longer tenancies would give the tenants more security and around 20% of tenants thought that longer tenancies would make the rental market more affordable. Tenants expressed that they understood the reason for landlords only offering shorter tenancies was due to the current legal framework and difficulties in recovering their property.
Having taken into account the above, the government summarised that its intention was to: (1) Remove section 21 ‘no-fault’ evictions, (2) strengthen the grounds for eviction under section 8 Housing Act 1988, and (3) simplify the court processes making it easier for a landlord to regain possession through the courts. The result of which would be greater flexibility in tenancies and a more robust system that works for both landlords and tenants which will, in turn, build greater trust between landlords and the courts, and between landlords and tenants.
In practice, this means that the landlord will always have to provide a reason for ending the tenancy (e.g. tenant is in breach of contract or the landlord wants to sell the property). The tenant will be able to end the tenancy with sufficient notice to ensure flexibility for both parties. By not having to make frequent moves at short notice, tenants have more stability and are able to integrate better into their community.
The main barrier for landlords to offering longer tenancies is that the court process is too slow. There is, however, no real detail or expansion on how the process for a landlord to regain possession will be sped up or simplified. Enabling landlords to get a possession order swiftly may encourage landlords to offer longer tenancies but, removing section 21 evictions does not in itself simplify or speed up the process. It is also not clear that by doing so, landlords will have more confidence in the court system. A system that leans too heavily towards the rights of the tenant would have the opposite effect.
The Communities Secretary equated longer tenancies and removal of ‘no-fault’ evictions with feeling secure in your home without the fear of an unexpected eviction. However, responses to the consultation have indicated that just as important a factor is strong communication between the landlord and tenant which creates a relationship of trust. It is possible that an awareness campaign into the rights and responsibilities of landlords and tenants and promoting effective, honest communication between all parties may be more effective than banning ‘no-fault’ evictions.
Impact of proposed changes
The majority of participants did not consider that those with protected characteristics under the Equality Act 2010 would be negatively impacted by the proposed changes. However, there is the concern that landlords might discriminate against those with lower earning potential. This, therefore, could create uncertainty for those most in need of security of tenure.
Some landlords stated that they would leave the market as they were not willing to offer longer tenancies. They fear that the government’s proposal would lead to larger rent arrears, a system weighted in favour of the tenant and a loss of control over their own property.
The government concludes that the private rented sector needs to be fit for purpose. This indicates that substantial change is likely. One such suggestion has been to remove section 21 ‘no-fault’ evictions. Whatever the method, the objective remains clear: ‘a fairer and more affordable private rented sector that provides security and stability for both landlords and tenants’.