The Government has announced plans to repeal section 21 Housing Act 1988 (“HA 1988”), thereby ending “no fault evictions”.
What does the proposal entail?
Section 21 of HA 1988 allows Landlords to terminate an assured shorthold tenancy (“AST”) on or after the end of the term on 2 months’ notice without specifying any grounds for doing so. This differs from a Section 8 notice, whereby a landlord is required to satisfy one of the grounds for termination as set out under Schedule 2 to HA 1988. Due to this fact, the Section 21 process for acquiring possession is often referred to as the “no-fault eviction” procedure.
The government’s proposal published on 15th April 2019 includes repealing section 21 as well as providing for a package of reforms to include the following;
1. Extending the grounds for termination under section 9 HA 1988 which related to the discretion of the court in possession claims, allowing the Landlord to terminate an AST in order to enable them to move into the property or to sell it with vacant possession; and
2. Simplifying the court processes in order to make it easier for Landlords to gain possession under section 8 HA 1988 through the courts, where the Landlord can satisfy grounds to which the possession procedure applies.
Why has the government made this proposal?
The proposal is contained within a response published following the Government consultation ‘Overcoming the Barriers to Longer Tenancies in the Private Rented Sector’. The report suggests that the Government have concerns surrounding the vulnerability of tenants who risk eviction on short notice under section 21 and, according to the report, particular concerns regarding the risk to children’s education and the cost of regular moves undermining the tenant’s ability to save money for a deposit.
When will this come into effect?
As it currently stands, it is only a proposal; to effect change an Act of Parliament will be required. The government has already indicated that prior to this, further consultations on the proposals are needed and opposition from certain MPs is likely. Some estimates therefore suggest that a repeal of section 21 is unlikely to occur before late 2020.
What does this mean for existing tenancies?
The position as to whether any changes to legislation would apply to existing tenancies is unclear. Retrospective legislation is usually perceived as inappropriate as it undermines the principles of contract law. However, it is within Parliament’s remit to introduce retrospective legislation. If this were to be the case, it may trigger an increase in section 21 notices (terminating a tenancy without relying upon any grounds for possession) being served by Landlord terminating to pre-empt the changes.
What might be the longer term effect of these changes?
If put into effect, the proposed changes will remove Section 21 notices as a means for landlord’s to regain possession of their property. There are speculations that landlords will consequently increase rents in order to protect themselves against the risk of being unable to re-gain possession. Other commentators warn of landlords leaving the sector as a result of the changes. As mentioned above, these concerns will be discussed in the consultation process of the proposal between MPs.