With twice as many people now renting from private landlords the Government propose to scrap the Section 21 Notice procedure leaving landlords with only the Section 8 Notice procedure available.
Rewind 20 years ago to 1999. “New Labour” had formed a new Government with new ideas and fresh spending, Manchester United were dominating the Premier League and about to win the treble and possibly their best season ever and private landlords were enjoying the benefits of the Housing Act 1996 having removed the need for service of a Section 20 Notice prior to creating an Assured Shorthold Tenancy, thereby making it the default tenancy and in turn their lives very easy (certainly now in retrospect).
End of Section 21 Housing Act 1988
In 2019, Brexit uncertainty looms, Manchester United are now the butt of jokes for rival fans and the Government has now announced the proposed end of Section 21 Housing Act 1988, arguably the very reason why landlords’ management life has been practicable.
It is well known that the Section 21 “no fault” notice ensures a great deal of flexibility for landlords but it is not necessarily a new concept. Prior to the introduction of the Housing Act 1988, it was possible to create Protected Shortholds under the Housing Act 1980 by serving the correct Notices which also gave a great degree of flexibility to landlords. However, as with all things, the values and demands of society change. More people rent now than ever before. Indeed, it is estimated that over twice as many people rent from private landlords now as compared to when the Housing Act 1988 was introduced and over a third of those being families supporting children. As many as one in four families privately rent their houses.
Talk of the swing in the pendulum can easily be seen when you consider that, since 1999, there has been the introduction of protection of tenancy deposits, the introduction of the right to rent, the introduction of the requirement to provide EPCs, gas safety certificates and general guidance for the tenants and most recently with the Homes (Fitness for Human Habitation) Act 2018. This has all been designed to improve the quality of housing and ensure that tenants are properly protected and that landlords act appropriately.
What options are available for a landlord?
Section 21 Notice
This is the procedure where the landlord serves 2 month’s notice to obtain possession at or after the end of the fixed term. Provided the legal formalities are complied with, there is no defence and there need be no reason given to the tenant(s). Back in 1999, you simply needed to serve a Notice. However, since then there were ways in which the s21 Notice could be invalidated e.g. non-compliance with the Tenancy Deposit Scheme Rules, making it all the more important for landlords to comply with these requirements.
The Section 21 Notice, accompanied by the accelerated possession procedure in the County Court, has provided a cheap, relatively quick, effective and reliable service for landlords who wanted to get the property back without having to go to the expense of proving that the tenant had acted inappropriately or in breach of tenancy by the Section 8 Notice procedure.
Section 8 Notices
These are of course available to private landlords in any event and are often used. This is particularly so where there are rent arrears and have historically been but even then this is normally a fall‑back position for landlords on the basis that for some reason they can’t use the Section 21 procedure. These are notices, sometimes as short as 2 weeks, but can only be used in the standard possession procedure, require attendance at court (1 attendance as a bare minimum) and are therefore more costly as it is often the case that the landlord need provide sufficient evidence to prove the ground upon which the notice has been served i.e. filing evidence and statements.
The proposal Assured Tenancies
The current proposal is to remove the Section 21 Notice procedure leaving landlords with only the Section 8 Notice procedure available. This effectively would convert Assured Shorthold Tenancies into Assured Tenancies – the type of tenancies often granted by Registered Providers of Social Housing. Section 8 is available for both Assured and Assured Shorthold Tenancies, the main difference being the Section 21 procedure.
The Government is not proposing going back to the old Rent Act style tenancies with control over the rent, but the proposal will make a landlord’s job all the more tricky if they wish to get the property back for whatever reason.
The Government proposes extra resources and a possible new Housing Court, but it is unlikely that this will see the result of making the process easier, just hopefully more quick and efficient.
What happens next?
If this proposal comes in, it will be all the more important to ensure that any landlord properly considers both the tenant they propose to take on and their plans for the property in the future. Sometimes, service of Notices before the tenancy is granted can help maximise the options of recovery, depending upon the grounds in Schedule 2 of the Housing Act 1988. These grounds allow the landlord to recover possession in the future for various reasons, e.g. for holiday accommodation or on the basis that there is a mortgage or for the landlord’s own occupation. Whether these grounds are relaxed and/ or augmented is not clear.
It is not clear if this change will be retrospective but generally such changes are not. However, when one considers what has happened with tenancy deposits and the retrospective changes there, this simply cannot be ruled out.
How can landlords protect themselves as this will create an unequal situation that a tenant can usually serve 1 month’s notice? A landlord may therefore insist upon a lengthy term, a higher rent to cover potential costs of litigation as well as guarantors and/ or deposits.
Assured Shorthold Tenancies proposal – love it or hate it?
Naturally the proposals have been welcomed by those who represent tenants whereas landlords’ associations have met it in some cases seemingly with a degree of horror. What is important is that it is a consultation at this stage and therefore now is the time to put forward any comments and concerns, but what is clear is that this is a big issue for the younger generations, some of whom may never be able to afford to own their own property. Reforms of this ilk have already been made by the devolved government in Scotland and therefore it is perhaps inevitable that there will be change. Whether this proposal has been, and will be, properly thought through (which unfortunately it is often not the case when it comes to Assured Shorthold Tenancies and the laws which affect them) remains to be seen.