The Government has been interested in abolishing Section 21 for a long time now. With it renewing its commitment to the process in its Renters’ Reform white paper, published earlier this summer, the vision moves closer to reality. And while some industry experts welcome getting rid of the Section 21 notice as part of plans to improve protections for renters, others suggest that landlords will be locked into unprofitable tenancies or stuck with nightmare occupiers.
These rumours, backed up by headlines suggesting a mass exodus from the market reducing housing stock and forcing rental prices up, leave us asking the question: should agents be worried?
What are the Government's plans?
As early as 2019, the Government was consulting on the possibility of abolishing Section 21, which controversially allows landlords to evict occupiers without having to find fault on behalf of the occupier, as long as they provide the correct amount of notice. It billed the move as part of efforts to tackle the 2.8 million people living in homes not fit for human habitation, who might be too scared to challenge landlords on rent hikes or repairs for fear of eviction. Despite being committed to abolishing Section 21 as part of the Renters Reform Bill, which was mentioned in the Queen’s Speech of 2019, details of the package were not unveiled until June 2022.
As part of the Renters Reform Bill, Section 21 ‘no fault’ eviction notices will be replaced with a system of periodic tenancies and more robust Section 8 grounds for eviction. This will be backed by a new Ombudsman intended to allow disputes between occupiers and landlords to be settled efficiently, reducing costs and the need to go to court.
When will Section 21 be abolished?
The question on everybody’s lips is, when will Section 21 actually be abolished? The candid answer is nobody knows for sure, although the resignation of Boris Johnson and the change in Conservative party leadership has definitely thrown the timeline into question. Despite the changes in Government ahead, it is unlikely that the plans to get rid of Section 21 will be shelved, as they form such a cornerstone of the Renters Reform Bill. However, it is possible that the exact details will be changed as a result of industry response.
How are Section 8 grounds changing?
In order to balance the removal of Section 21 as a means of ending a tenancy, the Government has pledged to strengthen the Section 8 eviction process, giving landlords more legitimate grounds through which to gain possession through the courts. Legitimate reasons for a landlord to repossess a home will now include the need to sell it or for them to move in themselves. It will also introduce a new mandatory ground for repeated serious rent arrears. This makes eviction mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years prior to the court hearing.
The Government will also amend the list of existing grounds under which landlords can serve a Section 8 notice by extending the provisions of Schedule 2 of the Housing Act 1988. Currently, there are 17 grounds for eviction to use when serving a Section 8 notice, only two of which are mandatory. Changes the Government plans to make include lowering the notice required for eviction due to serious criminal or antisocial behaviour, as well as expediting the process, though it has not detailed how exactly it plans to do this.
How will the industry be affected?
As suggested above, one of the main impacts on the industry will be speed. A major appeal of Section 21 was how quick it made the eviction process and the speed with which the notice (provided all the terms had been adhered to correctly) could be served.
With the loss of Section 21, landlords’ only option will be to serve a Section 8 notice. The procedures involved in Section 8, such as the gathering of evidence and the need for court involvement, will slow the eviction process. Sim Sekhon, Managing Director of LegalforLandlords, an insurance and referencing firm, claims that cases are already taking months to be heard due to clogged courts and a shortage of bailiffs.
In London, some landlords are waiting 8 months for their claims to be heard, a duration which he believes will only be made worse by the abolition of Section 21.
There are further concerns that, with some landlords already considering leaving the market due to the increase in legislation and the impact it will have on their profits, a mass exodus of landlords seeking to evict occupiers and leave the market could put pressure on an already over-stretched system.
But the move to abolish Section 21 has been welcomed in many quarters, with the UK Association of Letting Agents (UKALA), among others, pointing out that the process will not be quite as catastrophic as the headlines suggest.
The move has been championed by pressure groups such as Generation Rent and Shelter. It has also been met with a warm reception from the Royal Institute of Chartered Surveyors (RICS), who noted that the abolition of Section 21 would be welcomed by occupiers as part of a drive to ensure that more rental properties that met the Decent Homes Standard. They did caution, however, that the policy’s implementation must be carefully handled so as to ensure it doesn’t lead to a shortage in supply with landlords leaving the market.
What’s next for the abolition of Section 21?
While the process to remove Section 21 is moving forward, and is unlikely to be diverted regardless of changes in Government, the white paper still has to be scrutinised by the Levelling Up, Housing and Communities Committee. Already, some of the more controversial parts of the policy have dropped out of the proposals, and there could be all sorts of amendments as it travels through Parliament.
What we do know is that the landlords who prepare themselves for such changes by using repairs and maintenance software to create an audit trail, logging all communications with occupiers and ensuring that repairs are attended to swiftly will put themselves in the best position when Section 21 is abolished to be able to swiftly repossess their properties if the need to do so arises.
For more information and expert industry reaction on Section 21, plus other changes proposed in the Government’s white paper, watch our on-demand webinar ‘Is the private rented sector really going to be fairer?’ with David Smith, Partner at JMW Solicitors. Alternatively, read our summary guide to what was discussed.
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