Property Disputes analysis: Mark Reading, managing associate and Ros Monk, professional support lawyer and managing associate, both at Mishcon de Reya, discuss the government’s recent announcement of plans to end no-fault evictions and what this means for landlords and tenants. This article was original published by LexisNexis here.
Original news
Plans to end no-fault evictions ‘biggest shake-up’ in a long time.
Under government plans, private landlords in England will no longer be able to quickly evict their tenants without a good reason for doing so. The government intends to consult on the scrapping of section 21, which allows landlords to evict tenants—with as little as eight weeks’ notice—when their fixed-term contract expires. This quick removal of a tenant is commonly known as a ‘no-fault’ eviction.
What has the government said in its announcement and what are the problems in the current law that this measure is seeking to address?
The government is proposing to change the way that landlords can end assured shorthold tenancies to stop them from being able to evict tenants on what it describes as ‘short notice’ and without good reason. At the moment, landlords can serve notice on tenants requiring possession of a property at the end of the fixed term of the tenancy in a minimum of eight weeks, which is often referred to as ‘the section 21 process’—under section 21 of the Housing Act 1988 (HA 1988). The landlord does not need to give a reason for the eviction and if the tenant does not vacate the property in accordance with the notice, the landlord can use a streamlined court process to obtain a possession order.
The government’s proposal would remove this process and instead make landlords use a more complicated and lengthy process, known as ‘the section 8 process’ (under HA 1988, s 8). This process requires the landlord to give a reason for eviction from a statutory list, including that the tenant is:
- in rent arrears
- guilty of anti-social behaviour, or
- in breach of the terms of the tenancy
If the tenant then refuses to vacate the property, the landlord will need to provide the court with evidence to support that reason. As part of the reforms, the government proposes to add two new grounds to the section 8 process, to cover situations where landlords want to sell the property or else move into it themselves. To use these grounds, landlords would need to give tenants eight weeks' notice in writing. However, the government is considering limiting the use of these two new grounds until the tenancy has been in place for two years. According to the government, many tenants currently do not feel secure in their homes because of the risk that their landlord may evict them quickly using the section 21 process. The government says that these changes will improve stability and security for tenants in the private rental market and ‘effectively create open ended tenancies’. It also says that the changes will create a more secure rental market for landlords to invest in.
If the change takes place, what will it mean for landlords and tenants?
These proposals mark a radical change in how landlords can end residential tenancies. The full details of this are yet to be decided and that will be key in understanding the impact of the changes. However, it appears likely that the proposed changes will make it harder and more costly for landlords to obtain possession of their property. It seems that if a tenant refuses to leave the property after receiving a section 8 notice, the landlord and tenant will then be involved in a substantive court action, with the landlord needing to prove their reason for wanting possession of the property.
Tenants will be able to challenge the reason given by the landlord and so may be able to stop and/or significantly delay their eviction if they go through the court process. While instructing a qualified lawyer is likely to be the best way of obtaining or challenging a possession order, given the scarcity of legal aid and the cost of bringing/ defending proceedings, it is likely that many landlords and tenants will have to represent themselves at court. Consequently, for all parties this is likely to be a costly, drawn out and challenging process and the busy county courts are likely to get even busier. We anticipate that those who can afford to do so will instruct lawyers and therefore lawyers should anticipate an increase in possession work.
What is likely to be the effect on the rental and housing markets?
There have been lots of changes to the private rented sector recently and there are now more obligations on landlords than ever before. These additional changes are likely to make owning a rental property an even less attractive proposition for an investor than is currently the case. Consequently, we may see fewer properties available to rent. We may also see an increase in rent, either to account for the lack of supply or landlords trying to factor in the expected extra cost of eviction or uncertainty into the return it will take from the property.
These changes could potentially have the negative effect of reducing the number of properties available to rent and increasing the rent for those remaining tenants.
What are the next steps and do you foresee this being effectively implemented andenforced? Are there any possible drawbacks?
The government has said that it will consult on these proposals, but to date no further details of this are available. The government has also said that it will expedite the court process, acknowledging the current delays in the system. The challenges to expediting the process will be:
- ensuring both landlords and tenants have a fair opportunity to present their cases
- the courts coping with the likely increase of litigants in person
- crucially, increasing the capacity of the courts which are already under enormous pressure
Unless the government increases funding for the court system, it is difficult to see how further delays in the court system can be avoided.
Are there other steps the government should have taken as well, or instead, and are there any changes on the horizon in relation to no-fault evictions?
We note the aim of the government is to improve stability and certainty for tenants in the private rented sector. However, it seems that the section 21 process is not the cause of that uncertainty—it is only a symptom of the current housing market. As such, amending the process for evictions is unlikely to significantly improve the situation for tenants but may instead have a knock on impact on the availability of properties to rent and the rent that properties are available for.
The government is also considering introducing a specialist housing court. If introduced, this may suit these claims much better than the current system. A consultation on this proposal closed at the end of January 2019 and the responses are being considered. We would expect all these proposals to be coordinated.