On February 9th, 2023 the Levelling Up, Housing and Communities Committee published their report on the current Governments proposals to overhaul the Private Rental Sector in England. In this blog we put the spotlight on their possession process proposals.
Both the Government’s ‘fairer private rented sector’ white paper and the Committee’s report used the Department for Levelling Up, Housing & Communities (DLUHC) analysis from the 2020 to 2021 English Housing Survey. In that period the sector accounted for 4.4 million (19%) households, a figure that has remained pretty stable since 2013/2014. A key objective of the Committee’s report was to strike a reasonable balance between security for tenants and a degree of certainty for landlords.
Section 21 Notices – The most common type of tenancy in this sector is an assured shorthold tenancy (AST) usually starting with a fixed term, then rolling month to month (periodic tenancy) unless a further fixed term is mutually agreed. Typically, there are two main routes available to landlords to gain possession i.e., Section 21 notices and Section 8 notices. A Section 21 notice gives tenants 2 months’ notice for possession at the end of a fixed term, during the periodic tenancy or when the landlord is exercising a mutual break clause. This notice needs no reasons or grounds hence the term no fault evictions. The Committee’s report says, “landlords like Section 21 as it as a relatively quick, cheap and convenient way of regaining possession, whereas Section 8, which relies on a court hearing, can be time consuming, cumbersome and expensive, and where the ground is discretionary the outcome is uncertain.”
The Government proposes to replace ASTs (and assured tenancies which are different) with a single system of open-ended (periodic) tenancies. Tenants would need to give 2 months’ notice to end their tenancy rather than the current 1 month and landlords could only serve Section 8 notices abolishing Section 21 notices altogether. The Committee welcomed this proposal except in the student Private Rental Sector which follows the academic year and benefits from 12-month fixed tenancies. The Committee felt it would “push rents up and reduce the availability of student rental properties, at a time when the market in many university towns and cities is already very tight.”
The Committee’s report acknowledges that most private landlords are “responsible and have no desire or financial incentive to evict tenants without good reason, and that for these landlords Section 21 feels like an indispensable means of evicting bad tenants, but we also believe that the blight of unfair eviction and insecurity of tenure experienced by too many tenants can only be remedied by its repeal”.
Section 8 Notices – Currently under the Housing Act 1988 there are 17 grounds for possession, reasons including mortgage company re possession, death of the tenant, major refurbishment plans, rent arrears, tenants using false statements to secure the tenancy and anti-social behaviour. 8 grounds are mandatory (the judge must grant a possession order) and the rest are discretionary (whatever the Judge decides on the hearing day). One or more grounds can be used, and the notice periods range from 2 weeks to 4 months.
Residency & Selling Grounds – At the moment under Ground 1 if the landlord or one of several joint landlords (e.g., spouse) wants to live in the rental property as their main permanent home providing that they (or one of them) previously lived in the property as their only or main home, they can serve 2 months’ notice. In addition to Ground 1, the Government wants to introduce a new ground allowing notice to be served if the landlord choses to sell. However, notices citing either of these grounds could only be served after the initial 6 months of the tenancy which the Committee recommended be increased to 12 months, guaranteeing the tenant a minimum 12 month let.
If the landlord uses either of these possession grounds, they would be prevented from marketing or reletting the property for 3 months which the Committee recommended be increased to 6 months. The Committee also recommended that the notice period be increased from 2 months to 4 months.
Rent Arrears Grounds – Currently a Section 8, Ground 8 notice can be served if certain criteria are met i.e., the tenant is at least 2 months’ in arrears both on the day the notice is served, and if they have failed to leave the property on the date given in the notice, then at least 2 months’ in arrears on the day of the possession court hearing. Discretionary Grounds 10 and 11 can be used if a lower threshold for rent arrears is met. The Government wants to introduce a new ground for repeated serious arrears. Eviction will be mandatory where a tenant has been in at least 2 months’ rent arrears three times within the previous 3 years, regardless of the arrears balance at the hearing. For the existing ground they would increase the notice period to 4 weeks and retain the mandatory threshold at 2 months’ arrears at time of serving notice and the hearing.
The Committee’s recommendations centre on establishing a special housing court and fast-tracking rent arrears possession cases because the current system is overloaded and slow. It is worth noting that its only if the tenant fails to leave by the date stated in the notice that possession orders are needed. Most tenants want to avoid the process since a County Court Judgement (CCJ) for rent arrears can also be issued which affects credit ratings for several years.
Anti-Social Behaviour – Currently the mandatory Ground 7A and discretionary Ground 14 cover anti-social behaviour. Strict criteria apply for both grounds, and the burden of proof can be time consuming and problematic. In cases of criminal behaviour or serious antisocial behaviour, the Government would lower the notice period for the existing Ground 7a and explore whether further guidance would help landlords and tenants to resolve issues at an earlier stage. The Committee recommends making the existing Ground 14 also mandatory since this covers a wider range of behaviour and does not require a criminal conviction like 7A.
Court system – When tenants fail to vacate on the date stated in the Section 8 notice landlords must apply for a possession order via the courts. According to the Committee’s report this court system is already overstretched, and they have recommended (again) establishing a special housing court which the Government previously rejected. The Committee concludes: –
“It is not clear whether the Government fully appreciates the extent to which an unreformed courts system could undermine its tenancy reforms. For this reason, we again recommend that the Government introduce a specialist housing court. Whatever it does, however, the Government must significantly increase the courts’ ability to process possession claims quickly and efficiently and in a way that is fair to both landlords and tenants; ensure the courts prioritize and fast-track all possession claims in respect of rent arrears and antisocial behaviour; and in consultation with landlords, agree how quickly the courts need to be processing such claims before landlords can have confidence in the system, and then commit to meeting this target before it repeals section 21.”
The Government has 2 months to consider the Committee’s report, but there is no timeframe for releasing the actual Renters’ Reform Bill. Like any Bill it needs to go through Parliament, the Houses of Commons and Lords, and will depend on when Royal Assent is secured before becoming an Act. The Government says it will give at least 6 months’ notice of the first implementation date, after which all new tenancies would be periodic and governed by the new rules. It would stagger bringing existing tenancies in line with the new rules allowing at least 12 months between the two dates.
You can read the Committee’s full report here and the summary report here, and further details on the Government’s new tenancy system here which was published alongside their White Paper.
As with all Alexandre Boyes blogs, these are intended to be a general overview of topical issues and should not be relied upon for formal purposes. Posted 4/4/2023
