The Government has confirmed that it will not abolish Section 21 ‘no-fault’ repossessions until it improves the court system for handling legitimate possession cases by landlords and student landlords will be pleased to hear that there will be a new ground to repossess properties annually to protect the student housing market.
The Renters (Reform) Bill, which was debated by MPs on 23 Oct, proposes to scrap section 21 and replace it with a strengthened section 8, which requires landlords to provide a valid ground for eviction, such as rent arrears or anti-social behaviour.
However, the National Residential Landlords Association (NRLA), which represents more than 90,000 landlords in England and Wales, has warned that without faster and more reliable court processes, scrapping section 21 would deter responsible landlords from renting out their properties, exacerbating the housing supply crisis that renters already face.
Landlords have good cause to evict tenants
According to the NRLA, it takes an average of over six months for the courts to process possession claims where landlords have good cause to evict tenants.
The organisation has been campaigning for a dedicated housing court or tribunal to deal with such cases more quickly and fairly.
In response to a report from the House of Commons Housing Select Committee, which supported the NRLA’s concerns, the Government has agreed that it will not implement the new system for repossessing properties ‘until we judge sufficient progress has been made to improve the courts’.
It added “that means we will not proceed with the abolition of section 21, until reforms to the justice system are in place.”
Annual cycle of short-term student tenancies.
The Government has also accepted the NRLA’s suggestion for a new ground for possession that would protect the annual cycle of short-term student tenancies.
The NRLA had argued that by scrapping fixed-term tenancies, neither landlords nor students would have any certainty that properties would be available to rent at the start of each academic year.
The Government said it would "introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies’ which ‘will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year."
‘Will only work if it has the confidence of responsible landlords’
The NRLA’s chief executive, Ben Beadle, said “reform of the rental market will only work if it has the confidence of responsible landlords every bit as much as tenants. This is especially important given the rental housing supply crisis renters now face. Following extensive campaigning by the NRLA, we welcome the approach taken by ministers to ensure court improvements are made before section 21 ends. The Government is also right to protect the student housing market. However, more is needed to ensure student landlords are treated the same as providers of purpose-built student accommodation. We will continue to engage positively with all parties as the Bill progresses through Parliament.”
Renters Reform Bill - government concession on Section 21
Now we know what the government suggests those improvements will consist of - and they appear to be substantial improvements which may take some time to introduce.
They begin with digitising more of the court process to make it simpler and easier for landlords to use; exploring the prioritisation of certain cases including antisocial behaviour; Improving bailiff recruitment and retention and reducing administrative tasks so bailiffs can prioritise possession enforcement; and Providing early legal advice and better signposting for tenants including to help them find a housing solution that meets their needs.
Responding to a report from the House of Commons Housing Select Committee ahead of MPs debating the Renters Reform Bill, the government has confirmed that implementation of the new system for repossessing properties “will not take place until we judge sufficient progress has been made to improve the courts. That means we will not proceed with the abolition of section 21, until reforms to the justice system are in place.”
Alongside this, the government has agreed to establishr a new ground to repossess properties to protect the yearly nature of the student housing market.
The government has said it will “introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies” which “will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year.”
This news - reported by the landlord body the NRLA - appears to be a major concession at the end of the final working day before the Second Reading of the Renters Reform Bill. The government has pledged that section 21 repossessions will not be scrapped until improvements have been made to the way courts handle legitimate possession cases.
At present it takes an average of over half a year for the courts to process possession claims where landlords have good cause, such as tenant rent arrears or anti-social behaviour.
Responding to a report from the House of Commons Housing Select Committee ahead of MPs debating the Renters Reform Bill on Monday, the government has confirmed that implementation of the new system for repossessing properties “will not take place until we judge sufficient progress has been made to improve the courts. That means we will not proceed with the abolition of section 21, until reforms to the justice system are in place.”
Alongside this, the government has agreed to establishr a new ground to repossess properties to protect the yearly nature of the student housing market. The government has said it will “introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies” which “will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year.”
This news - reported by the landlord body the NRLA - appears to be a major concession at the end of the final working day before the Second Reading of the Renters Reform Bill.
Landlord organisation’s bold bid for Section 21 reform
One landlord organisation is calling for amending Section 21 rather than abolishing it. Ahead of its presentation next month, iHowz has penned a letter to MPs and Lords laying out their plans to revamp Section 21.
iHowz says they are very concerned about the potential unintended consequences of the removal of Section 21.
Landlords use S21 as a backstop mechanism
iHowz argues many landlords use Section 21 as a vital mechanism within their toolkit.
It warns “sensible, professional landlords use the S21 as a ’backstop’ mechanism, allowing them to manage the risk of housing a vulnerable person, who, on paper, could be an acceptable risk. These vulnerable tenants include the homeless, offenders, as well as the economically disadvantaged. Many of these landlords offer with the caveat that the vulnerable person will be given a chance, as long as they pay the rent in a timely manner and don’t cause Anti-Social Behaviour (ASB). iHowz say Section 21 gives a chance for landlords to reclaim their property. Many tenants accept a second chance because the S21 allows landlords recovery of the property, particularly in the event of ASB.”
The organisation added “iHowz is advised by many members that, in the event of losing the S21, they will substantially increase their due diligence before offering a new tenancy. This due diligence is likely to extend beyond financial and previous landlord references, with landlords requiring tenants to provide a guarantor.”
Two months rent free
iHowz suggests a two part amendment to Section 21. “We would like to see a sliding scale of notice required, based on the time a tenant has been in situ, in association with a recompense scheme. The sliding scale would recognise loyal tenants, by providing them more time to find a new home and plan their move to accommodate other factors, such as schooling."
The landlord organisation believe that in most cases a tenant who has been in situ for a number of years is most likely to be served a S21 notice by a landlord who needs the property back, to sell, refurbish or improve it.
iHowz said “many tenants have limited or no savings, so making the last two months of the tenancy rent free provides them funding to use for moving costs and any deposit or rent in advance for their new home.”
iHowz believe these actions will be a significant improvement for tenants and landlords by making the process fairer whist retaining the only proven mechanism for removing antisocial tenants, who’s actions blight the lives of tenants and their neighbours.
The landlord organisation said “we strongly believe that all these measures taken together would give tenants substantial security of tenure, whilst allowing landlords to offer to a potentially bad-risk person, with the aspiration that they will eventually integrate into the mainstream community.”
Landlord Considerations
When asked about how landlords would view the proposals to give up two months rent and the need for longer notice to regain possession, iHowz highlighted that their proposal would allow landlords to continue to have access to S21.
The landlord organisation said landlords would then not have to rely on the government’s proposed new Section 8 grounds and improvements to the court process. iHowz said “the certainty of the current S21 process is worth the cost of these concessions, given that waiting for the courts will take many months, during which time tenants often stop paying their rent. This provides them an incentive to move on while recognising that we are asking them to leave.
Renters (Reform) Bill could bankrupt landlords, warns expert
A housing law expert has warned that the Renters (Reform) Bill, which aims to improve the private rented sector, will have dire consequences for landlords AND tenants.
Des Taylor, a director of Landlord Licensing & Defence, said that "the Bill will introduce new enforcement measures against landlords, which will result in massive fines and even bankruptcy for some. The Bill will not only end the use of ‘no-fault’ evictions, but also introduce new requirements for landlords to register on a national register and with an ombudsman scheme, to provide meticulously correct paperwork and notice forms to tenants, and to comply with even more standards and regulations. Failure to do any of these things exactly, will expose landlords to the risk of hefty fines from local housing authorities (LHAs), who will have a statutory duty to enforce them under the Bill when it is enacted.”
Expand the scope of rent repayment orders
The Bill will also expand the scope of rent repayment orders (RROs), which allow tenants or LHAs to claim back up to 12 months of rent from landlords who have committed certain offences. Mr Taylor said “this could be devastating for portfolio landlords who make a small mistake in registering or serving notice. They could face multiple RROs and fines, which could wipe out their income and assets. The consequences for their tenants’ security of tenure would also be dire.”
Overshadowed by the focus on ending ‘no fault’ evictions
Mr Taylor criticised the lack of awareness and consultation on the Bill, which he said has been overshadowed by the focus on ending ‘no fault’ evictions. He also warned that many landlords and letting agents are unaware of the new enforcement measures and their implications, and that there are no plans for a national advertising campaign or guidance to inform them.
He called for a national authority to set the level of fines and RROs, rather than leaving it to the discretion of LHAs.
LHAs have abused their powers
Mr Taylor said “we have seen how many LHAs have abused their powers under the Housing and Planning Act 2016, which introduced civil penalties for rogue landlords. LHAs have instead targeted the low-hanging fruit of reasonable landlords, not rogues, and imposed exorbitant fines that are massively disproportionate to the offences, often without proper evidence or due process. We fear that this will continue under the new Bill, unless there is a national framework to ensure consistency and fairness.”
He is now urging landlords and agents to familiarise themselves with the Bill and its requirements, and to seek professional advice if they are unsure or need help.
Advice and defence representation to landlords and agents
Mr Taylor says that "Landlord Licensing & Defence offers advice and defence representation to landlords and agents who are facing enforcement action from LHAs. The Renters (Reform) Bill might be a great idea in principle, but it has not been thought through in practice. It will create a lot of confusion and complexity for landlords and agents, who will have to navigate an enlarged minefield of new rules and regulations. It will also give LHAs a licence to print money from fines and RROs, which will ultimately harm both landlords and tenants as landlords exit and rents increase even more.We hope that the government will reconsider some of the proposals and listen to the concerns of the industry before it is too late.”