Confirmed – no-fault evictions to be abolished

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Section 21:

After nearly 30
years of landlords’ protection under the assured shorthold tenancy
(AST), landlords’ assurance – that a property can be easily
repossessed if things go wrong – is to be lost.

The Queen’s Speech
yesterday, at the state opening of Parliament, set out Boris
Johnson’s government’s plans under a “Renters’ Reform Bill”
that is now slated to abolish the ‘no fault’ Section 21 evictions
process so favoured by residential landlords. Details of the
proposals are contained in a 151-page government briefing document
and referred to as a Renters’ Reform Bill:

“Abolishing the
use of ‘no fault’ evictions by removing section 21 of the Housing
Act 1988 and reforming the grounds for possession…[and]…Giving
landlords more rights to gain possession of their property through
the courts where there is a legitimate need for them to do so by
reforming current legislation. In addition to this we will also work
to improve the court process for landlords to make it quicker and
easier for them to get their property back sooner.”

The National
Landlords Association has described Johnson’s plans as “ruinous”
and likely to lead to an exodus of responsible landlords from the
private rented sector.

The NLA thinks the
plans will “dramatically increase the risk faced by private
landlords and lead to the loss of thousands of homes in the private
rented sector.”

The NLA, which
represents 42,000 members, is urging the Government to re-think its
strategy on residential evictions to “avoid creating an unnecessary
crisis in the private rented sector by ensuring that reform of the
court process is implemented alongside any change to tenancy
legislation.”

The NLA cites
research by Capital Economics, an independent consultancy, showing
that if Section 21 is abolished without any accompanying reform of
the law courts, the supply of private rented houses in England could
fall by 20 percent (960,000 dwellings) when landlord decide to
sell-up.

The research also
argues there would be a 59 percent reduction in the number of private
rented dwellings available to households in receipt of local housing
allowance or universal credit (770,000 fewer dwellings) when
landlords become more choosy about who they rent to.

Richard Lambert,
Chief Executive Officer of the NLA, said:

“Landlords need
certainty of their ability to end failing tenancies. If this cannot
be provided by Section 21 then the Government must reform the courts.
Strengthening landlords’ rights will make no difference if the
court process is seen as simply delaying or obstructing possession.

“The NLA is deeply
concerned that the Government will precipitate a housing emergency,
deepening the crisis of supply and affordability faced by many
households. Landlords will stop letting to tenants who are perceived
as higher risk and ultimately sell properties which would otherwise
provide much needed homes for those who cannot afford to buy.

“If ministers do
not address the problems of capacity within the Courts Service before
removing landlords’ ability to use the no-fault procedure, the
dramatic increase in cases that will be brought before it will bring
the system to its knees.”

The Residential
Landlords’ Association (RLA) warns that any change needs to have
the support of landlords who provide the much needed and necessary
housing, otherwise there could be a mass sell-off of properties.

The association is
advising the government that given that demand for rental housing is
currently outstripping supply, any re-possession process that removes
Section 21 needs to be replaced with “a system that ensures
landlords have the confidence that they can swiftly and effectively
re-possess properties in legitimate circumstances.” Without such
reassurance, the supply crisis in the market will only get worse says
the RLA.

David Smith, Policy
Director for the RLA, has said:

“We accept the
need to protect tenants from abuse but it is crucial that plans to
reform the way re-possessions can take place are got right if the
Government is to avoid a rental housing crisis. Unless the new system
is fair to good landlords as well as tenants, those same landlords
who we need to support simply will not have the confidence to provide
the rented homes that are needed to meet the demand.”

David Cox, Chief
Executive of ARLA Propertymark, the letting agents association has
said:

“In the absence of
any meaningful plan to boost the level of social housing in this
country, the announcement confirming the abolition of Section 21 in
today’s Queen’s speech is another attack against the landlords who
actually house the nation.

“If Section 21 is
scrapped, Section 8 must be reformed, and a new specialist housing
tribunal created. Without this, supply will almost certainly fall
which will have the consequential effect of raising rents and will
further discourage new landlords from investing in the sector.

“ARLA Propertymark
will be engaging with the Government to ensure they fully understand
the consequences of any changes, and we will be scrutinising the
legislation, to ensure landlords have the ability to regain their
properties if needed.’

Mark Steggles,
Partner at law firm Thomson Snell & Passmore LLP, says:

“The abolition of
section 21 notices is likely to be greeted with dismay by landlords
as it will make the task of recovering possession from tenants
tougher, longer and even more expensive. By removing the “no
fault” option to evict, it follows that the eviction process has
the potential to become acrimonious when currently it need not be
that way. The planned and overdue reforms to the court process may
lessen the impact on landlords, but possibly not to a material
degree. From a tenant’s viewpoint though, this change will be
embraced because of the additional layer of security of tenure that
it provides for tenants and their families who want to stay in a
property long term.”

Natasha Rees,
Partner and Head of Property Litigation, Forsters LLP, comments:

“Whilst greater
security for tenants is welcomed there are fears that the abolition
of Section 21 or ‘no fault evictions’ will have a significant
impact on the private rented sector. This is because landlords will
no longer be able to control the term date which in turn gives them
an ability to set a new rent. It is essential that the enhanced
system which the Government plans to put in its place reassures
landlords and allows them to retain the control they need to
repossess properties swiftly for legitimate reasons so that rent
levels remain market driven. Likewise, the lifetime deposit is a
promising concept but will require careful planning.”

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