Section 21 & section 8; a new deal for renting
The abolition of no-fault evictions; what you need to know
The government is currently consulting on big changes to landlords’ rights. They plan to stop landlords evicting tenants under section 21, usually known as no-fault evictions. They also want to stop the creation of new assured shorthold tenancies (ASTs).This is big news. Both section 21 and ASTs have been key to the functioning of our current lettings market. If they go, how will the lettings market look in years to come? Will the changes affect the viability of landlords’ businesses, or will they simply (as the government believes) strengthen the lettings market for everyone?
The consultation on the abolition of section 21 began on 21st July and will continue until the 12th October. If the plans come into force, this is likely to happen in late 2020 or early 2021. Now is the time to have your say.
How it works now
At the moment, landlords have two options when they need to evict someone: they can use section 21 of the Housing Act, or section 8.
Section 21 evictions allow landlords to end an assured shorthold tenancy (the most common kind of tenancy), without giving a reason, provided they give enough notice. Though landlords don’t need to give reason for a section 21 eviction, there often is one. According to a survey on LandlordZone, 58% of section 21 evictions are due to rent arrears.
These evictions could be made under section 8, but the section 21 process is easier and quicker. In an assured shorthold tenancy, a section 21 eviction can only happen after any initial fixed term is up.
Section 8 evictions can happen at any time during a tenancy, including during a fixed term. They can only be made if there are rent arrears, criminal or antisocial behaviour, or damage to the property.
In a recent report carried out by Goodlord, 87% of letting agents said they had served a section 21 notice in the past 12 months. 51% of agents said they’d served a section 8 notice in the same period of time.
What the government says
The government wants to repeal section 21 and end ASTs because they believe that tenants will have more security as a result. They say that “This will provide tenants with more stability, protecting them from having to make frequent moves at short notice, and enabling them to put down roots and plan for the future.”
While they’re getting rid of section 21, they’re also planning to make section 8 evictions simpler and more landlord-friendly. They plan to allow landlords to use a section 8 eviction when they want to sell or move in to their property. They want to make it easier and quicker for landlords to evict for rent arrears, refusing repairs and safety checks, and antisocial or criminal behaviour.
The proposed removal of ASTs means that new tenancies will generally be assured tenancies which cannot be ended by a landlord without giving a reason under section 8. The government consulted last year on the possibility of introducing three-year minimum fixed terms instead, but there was little appetite for this among either tenants or landlords. The current proposals are an alternative means of providing more security for tenants.
What it means for landlords
Landlords are understandably nervous. The current system gives landlords a good degree of flexibility and allows them to remove tenants who don’t pay rent relatively easily.
The concern is that section 8 will not be strengthened enough to compensate for the loss of section 21.
Chris Norris, Director of Policy and Practice at the National Landlords’ Association, said
“The court system has been in dire need of reform for a long time, so we’re happy to see action on this. Any improvements to this system need to be in place, properly funded and fully functional before the government even contemplates changes to section 21. Landlords have been relying on section 21 to compensate for the many failings of the section 8 fault-based process, which has become too costly and time-consuming.”
What it means for tenants
The proposed changes are likely to give tenants more security as they will restrict evictions. Tenants are sometimes worried that asking for repairs to be made will lead to eviction, and these changes will remove that fear.
It’s not likely to be all good news for tenants, though. There is evidence that landlords will be more choosy about who they let to, with a Residential Landlords Association (RLA) survey of 6400 landlords suggesting that 84% would look to rent only to those on higher incomes if the changes come in.
It may also mean that some landlords, especially in big cities or tourist centres, will move to short-term holiday lets as these types of lettings fall outside the new proposals. At the same time, longer-term, more secure lettings may become more common.
What we think
Regulatory change is always worrying, especially in a climate where landlords have been subject to significant tax changes are are suffering from uncertainty in the housing market.
But landlords could find that they don’t lose out as much as they fear. They may even gain if the lettings culture changes, as tenants may be more likely to see a rental property as a long-term home rather than a short-term stop-gap.
For that to happen, it’s vital that landlords have their say. The government consultation can be filled out here.