Potential Changes to Section 21

On 15th April 2019, the Government announced plans to start the consultation process on new legislation which would abolish Section 21 evictions in England.

A section 21 eviction, often called a “no-fault” eviction, is currently the only notice which a landlord can serve if the tenant is not in any breach of their tenancy agreement. A section 21 notice can currently be served any time after a fixed term ends (or if a tenancy has rolled over to become a periodic tenancy), giving your tenants a minimum of 8 weeks’ notice.

Under the proposals, landlords will now have to provide a concrete, evidenced reason which is covered in law for bringing a tenancy to an end – effectively creating tenancies for an indefinite period.

As part of the consultation, there are also plans to make changes to Section 8 evictions. Currently, section 8 allows for the landlord to seek possession during either the fixed term of the periodic period of a tenancy under either pre-advised grounds or due to a breach of the tenancy.

Evidently, an overhaul of the grounds would be required in order to protect landlords and enable them to gain possession of their property in the case where for example, the landlord may wish to sell, or move back into a let property.

What are the reasons behind the proposals?
The then Prime Minister Theresa May said that the move will protect responsible tenants with the “long-term certainty and the peace of mind they deserve”. The move to end ‘no fault’ evictions comes out of a response to the government’s own consultation, Overcoming the Barriers to Longer Tenancies in the Private Rented Sector and is designed to offer tenants freedom from so-called “revenge evictions” and offer more stability.

The government has already bought in a raft of changes to section 21 to ensure that vulnerable tenants have protection from unfair or retaliatory evictions. As of 1st October 2018, landlords are not allowed to serve a section 21 notice unless an EPC, gas safety and How to Rent Guide had been provided.

Additionally, rules had been tightened up to prevent landlords serving notice where a tenant may have failed to follow the time-limited repairs process.

How could this affect landlords?
Without further clarity around the changes which will be made to section 8, it’s difficult to be entirely clear on how the proposals could affect their ability to seek possession of a property where the tenant is paying the rent and adhering to the tenancy agreement. However, there are some concerns.

Liquidity in the buy to let market may well be reduced. By creating effective “indefinite” tenancies, many investors may feel that the risk is just too great. Additionally, we are yet to see how BTL lenders may view what may be an additional risk when taking on a new tenant and it’s likely that interest rates on buy to let mortgage may rise (where landlords are already squeezed by the removal of tax relief).

Matt Lavin of Benoit Lettings says “While we believe that all tenants should have a right to enjoy their tenancy free from uncertainty, landlords do require a way in which to evict tenants from a property where there is no fault in certain instances. Additionally, by effectively creating tenancies with no fixed term, the most vulnerable tenants, such as those who need guarantors, may no longer be accepted by landlords (or their lenders). We have yet to hear about proposed changes to section 8, so will reserve judgement, however, we will monitor these changes closely over the coming months”.

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