On 15 April, the Government has announced a radical change to the private rental sector. As part of its proposed reforms to improve security and stability for tenants, the Government has announced it will stop landlords from being able to evict tenants on what it describes as "short notice" and without reason. Currently, landlords are able to serve notice on tenants at the end of the fixed term of the tenancy requiring possession of the property in a minimum of eight weeks, which is often referred to as "the Section 21 process". 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 under Section 8 of the Housing Act 1988. This process requires the landlords to give a reason for eviction from a list of statutory reasons 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. This court process is protracted and involves at least one court hearing, in contrast to the Section 21 process which can be decided without a hearing. Therefore landlords incur much greater legal fees under the Section 8 process. In practice, landlords use the Section 8 process as a last resort now opting to use the easier, quicker and cheaper no fault Section 21 process whenever possible.
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 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 grounds until the tenancy has been in place for two years.
In response to feedback from landlords about the slow court process for recovery of possession, the government says it will improve this. As part of its reforms the Government is also considering creating a Housing Court and has just closed a Call for Evidence asking for user experience of the courts and particularly from landlords. We await the detail of these improvements.
The proposed changes, however they are implemented practically, are likely to make it harder and more costly for landlords to obtain possession of its property and, as a result, it may be that landlords are discouraged from renting their properties out in future. As such, improving security for tenants may actually have the negative effect of reducing the properties available to rent.
Commenting on this, Mishcon de Reya Managing Associate Mark Reading said:
"Ensuring tenants have certainty in their homes is obviously of great importance. However there are practical issues with the proposals that need fuller consideration. This includes the strain on court time given the inevitable rise in claims by tenants that will be seen and the increased costs for landlords who will face greater delays in recovering possession. If these issues are not addressed the knock on effect could be that – at a time when housing needs are greater than ever – landlords are discouraged from renting properties out in the first place."