The Death of Section 21: A Review of the Renters Reform Bill

The 2019 Conservative Manifesto made a commitment to end “no fault evictions”. This has now been set out in the proposed Renters (Reform) Bill. The Bill was introduced to Parliament on 17^th May 2023 and is currently at the Committee Stage.

In this article we look at the impact that the proposed Bill will have on a private landlord’s ability to obtain possession of their property from a tenant.

Removal of Section 21 Notices

Under the current legislation most tenancy agreements granted within the private sector are “Assured Shorthold Tenancies”. Tenants are granted an initial fixed term (minimum 6 months) after which their tenancies become “monthly periodic tenancies ”, meaning their tenancy rolls on month to month until it is ended by the tenant or the landlord serving notice.

Where a tenant occupies a property under an Assured Shorthold Tenancy, and the fixed term has ended, the landlord is entitled to serve the tenant with a Section 21 Notice providing them with 2 months in which to vacate the property, failing which the landlord is entitled to issue possession proceedings. The landlord does not need to prove any fault on the part of the tenant to obtain possession under a Section 21 Notice (or any reason at all), which is why these have often been referred to as “no fault evictions”.

The Bill abolishes Assured Shorthold Tenancies and Section 21 Notices. It will no longer be possible for a landlord to agree a fixed term with a tenant and all tenancies will be assured monthly periodic tenancies. The effect of the Bill is that a tenant will have “security of tenure” insofar as a landlord will not be able to evict them unless they can persuade a court as to why they need their property back, details of which we look at below.

Section 8 Notices

A landlord is entitled to evict its tenant provided one of the grounds set out in Schedule 2 Housing Act 1988 is satisfied. The landlord serves the tenant with a “section 8 notice” setting out the ground it relies on and if the tenant does not vacate, the landlord is entitled to issue possession proceedings. Some grounds are mandatory (if the ground is satisfied, a Court has to order possession) and some are discretionary (the Court has discretion as to whether to order possession regardless of whether the ground is satisfied).

Under the current legislation this process has largely been used in relation to rent arrears. Ground 8 for example makes it mandatory for a Court to grant a landlord possession if the tenant is more than 2 months in arrears.

To compensate landlords for the abolishment of Section 21 Notices the Bill introduces several new grounds into Schedule 2 Housing Act 1988 under which a landlord would be entitled to its property back. It also amends several existing grounds. We look below at the most relevant of these new (or amended) grounds.

Ground 1 – Occupation by landlord or a family member of the landlord – Mandatory Ground – 2 Months’ Notice

If a landlord (or a family member) wishes to occupy a property let to a tenant, the landlord is entitled to serve the tenant with 2 months’ notice stating its intention to reside in the Property. If the tenant refuses to vacate the landlord would be required to issue possession proceedings and, provided the Court is satisfied that the landlord (or its family member) has an intention to reside in the property, the Court must grant possession.

Ground 1A – Sale of the Property – Mandatory Ground – 2 Months’ Notice

If the landlord intends to sell the property it will be entitled to serve a tenant with 2 months’ notice stating its intention to sell the property. If the tenant refuses to leave the landlord would be required to issue court proceedings and, provided the Court is satisfied that the landlord intends to sell the property, the Court must grant possession.

Ground 8 (Amended) – Repeated Rent Arrears – Mandatory Ground – 4 Weeks Notice

Where, over a 3-year period, at least 2 months rent was unpaid for at least a day on three separate occasions and rent is payable monthly, the Court must grant possession.

Ground 14 (Amended) – Anti-Social Behaviour – Discretionary – No Notice Period

The definition of anti-social behaviour is to be widened to include behaviours capable of causing nuisance of annoyance. The notice period is also shortened to allow a landlord to issue proceedings for anti-social behaviour immediately on serving notice on the tenant. This ground is discretionary and thus it will be up to the judge as to whether the level of anti-social behaviour justifies a possession order.

Conclusion

Whilst the goals of the legalisation may be laudable insofar as it attempts to provide additional security of tenure for tenants the proposed Bill may cause more issues than it solves.

In respect of the new and amended grounds 1 and 1A seem open to abuse. It is not yet clear what level of evidence landlords will need to provide to a Court to satisfy it that it intends to move into the property or sell it, and experience from Scotland (which has previously introduced similar legislation) suggests that the bar for landlords to clear will be low. Whilst there are penalties for landlords who obtain possession under these grounds, and do not subsequently move in or sell (and re-let it instead), the enforcement of these penalties depends entirely on the previous tenant knowing that the property has been re-let and informing the local authority. It would seem inevitable therefore that some landlords will abuse these grounds. The grounds have been described by Generation Rent as simply another “no fault ground” and would seem to be a back-door Section 21 Notice.

In addition, the removal of Section 21 Notices means that all tenancies where the tenant does not vacate voluntarily will require the landlord to take court proceedings to recover their property. Cuts to the Court systems budget over the last 14 years combined with the pandemic have created huge backlogs in the Courts, which has led to huge delays in landlords obtaining possession orders. There is great concern that should the Bill be brought in this would create an avalanche of court claims which the system would be unable to handle, leading to even longer delays in obtaining possession for issues such as extreme rent arrears.

This issue has been broadly accepted by the Government, which has stated that the abolishment of Section 21 Notices will not be brought in until substantial reforms have been made to the court system. Given that such reforms would require massive cash injections into HMCTS and the hiring of substantially more Court staff, it is unclear when, if ever, such reforms will be carried out. The uncertainty as to when (if ever) this legislation will be brought in creates further uncertainty for landlords seeking to enter or remain in the rental market.

Osbornes Law have experienced Property Litigation Solicitors who are able to handle all aspects of possession claims. If you have an issue with a tenant, please contact us on 0207 485 8811.