In our earlier post about the Government’s proposals for overhauling the private rented sector, we highlighted several key changes expected for the private domestic rental sector. The White Paper controversially proposed the abolition of s21 no fault evictions and fixed term residential tenancies, and some weeks ago, Michael Gove announced with a fanfare that the Bill has done just that!
The Bill as currently drafted brings an end to all types of fixed-term tenancies with rolling weekly or monthly periodic tenancies going forward. Tenants will have to provide at least two months’ notice if they wish to quit a property, but there is nothing stopping them from doing so at the start of the tenancy. This will potentially leave landlords with the prospect of more regular void periods and more uncertainty of income levels. Furthermore, there is no exemption for student lets in the Bill despite concerns being raised and recommendations put forward by the Levelling Up, Housing, and Communities Committee to allow students fixed terms, subject to conditions. Student and landlord groups continue to campaign MPs as this is likely to have a negative impact on the availability of student accommodation, which is already in short supply, as well as push up rents on student properties. It is expected to be an area of focus during future parliamentary debate.
With the removal of s21 no fault evictions from a landlord’s toolbox, landlords will need to rely on Section 8 of the Housing Act 1988 and provide a reason or reasons for bringing a tenancy to an end. The Bill does include expanded grounds for s8 evictions:
- Amended mandatory ground 1, which currently allows a landlord or his or her spouse or civil partner to move into the property on two months’ notice now includes a much wider group of family members. It includes parents, grandparents, children, grandchildren, siblings, and children or grandchildren of any of those family members. This is a mandatory ground and, consequently, offers rogue landlords a potentially straightforward way to recover possession with no requirement for a tenant to be at fault. There are controls within the Bill as the landlord will be unable to market the property for let after expiry of the s8 notice, but this is limited to a three-month period only, after which the property can be freely let on the open market. There doesn’t appear to be any evidential requirement to establish the ground, potentially meaning a court will be unable to refuse an order where there is only the flimsiest of evidence. Policing will also be difficult as it is only the outgoing tenant who is likely to know if a property is re-let straight after they leave and there is little incentive for them to do so. Tenants themselves will not receive any compensation against a rogue landlord found to be in breach, even though a landlord can be fined or prosecuted.
- New mandatory ground 1A takes into account that s21 no fault notices are often served by landlords when they intend to sell a property. Like Ground 1 above, this new provision fundamentally provides the landlord with a “no fault” route after six months albeit subject to conditions. Controls within the Bill mean that landlords will not be able to let or market a property for let for 3 months after the expiry of the s8 notice, else they can be fined, but tenant groups have concerns that this can too easily be abused in the same way in which the amended Ground 1 may be.
- New mandatory ground 8A effectively introduces a “three strikes and out” rent arrears ground. It will mean that a landlord can recover possession where a tenant is persistently late paying rent, for example, where a tenant falls into at least 2 months’ arrears on at least three separate occasions (even if only in arrears for a day) over a three-year period. This stops the problem often encountered by landlords where a tenant avoids eviction by paying off some of the arrears (even an amount as small as £1) so they fall below two months’ worth under the existing s8 ground.
- Amended discretionary ground 14 is the much-publicised ground purporting to grant more powers to landlords to immediately evict tenants for anti-social behaviour. At first sight, the type of behaviours which will be deemed to be anti-social behaviour has expanded to include any action “capable of causing” a nuisance or annoyance to the landlord or others and means that a landlord will no longer have to show that the tenant’s conduct is “likely” to cause a nuisance or annoyance. Commentators believe it’s unlikely to make much difference in practice unless ground 14 becomes a mandatory ground. As things stand, the court will have to use its discretion to make a possession order as it does now, and only if it is reasonable to do so, taking all the circumstances into account, will it grant an eviction order.
So, should landlords and tenants be positive? How effective will these changes be?
Protests from tenant groups highlight that some of the new grounds are open to abuse. Grounds 1 and 1A do not require a tenant to be at fault (similar to s21) and effectively provide a loophole for rogue landlords to kick out tenants who have complied with their tenancy obligations. The Bill as currently drafted means that Landlords will need to provide little evidence of their intention to occupy or sell, and the courts will have no discretion as to whether an eviction order is granted. From a landlord’s perspective, the expansion of the s8 grounds is positive (albeit more costly), but only if the changes go hand in hand with a more efficient court system. The higher number of s8 applications are only going to increase the burden on an already struggling system, where Landlords find that they are waiting months before their case comes before a judge. Unhelpfully, none of the detail about how this will all work in practice or how it will be funded is provided in the Bill itself, and is reportedly being worked on separately.
When Will the Changes Come into Effect?
Michael Gove wants the Act to be in place before the next general election, but the Bill is still only a draft. It will need to go through the three-stage parliamentary process in both the House of Commons and the House of Lords before it becomes law. That is never fast. The “Second Reading”, where MPs will debate and raise any concerns they have with the Bill as currently drafted still hasn’t been scheduled. As the potential student let issues show, we can anticipate many issues being raised and that the current version will not be the same as the final Bill. Implementation could be a while off yet!
For more background and a discussion of the Government’s White Paper “A Fairer Private Rented Sector”, take a look at our recent post: Proposed reforms for the private rented sector - An update on the Levelling Up, Housing and Communities Committee’s Report.
For details of the Bill, see Renters (Reform) Bill - Parliamentary Bills - UK Parliament.