Background
The King’s Speech on 17 July 2024 promised a number of changes to the current state of leasehold and rental law – some of which we have covered in previous articles. Here we will discuss the proposed changes to No-Fault Evictions under section 21 of the Housing Act 1988.
Currently, once the contractual term of an assured shorthold tenancy ends, landlords can evict tenants without providing any reason. They just need to serve a “Section 21” notice on their tenants, providing a minimum of 2 months’ notice and satisfy certain pre-conditions. If the tenant does not leave during the notice period, they can issue court proceedings to obtain possession. Proceedings for possession cannot be commenced less than six months after the s.21 notice is given (with exceptions).
The King’s Speech confirmed that the government will ban no fault evictions as part of the Renter’s Rights Bill. This is part of a plan to give greater rights and protection to people renting their homes.
The Bill is currently at the report stage in the House of Commons, having had its first and second readings and has now passed through the committee stage with some amendments.
What does the Bill contain?
The supplemental guidance advises that s.21 evictions will be replaced with a more simple tenancy structure in which all assured tenancies will become periodic, rather than for a fixed term.
The plan is for the system to be implemented in one stage, meaning that once implemented, all existing tenancies will become periodic, and any new tenancies will also fall under this system. Therefore, landlords will be unable to serve any s.21 or s.8 notices to evict tenants from that date onwards.
Tenants will be pleased to potentially avoid situations in which they are obliged to pay rent regardless of whether a property is in a state of disrepair due to a fear of being evicted, and to be allowed more flexibility where they need to move in response to changing circumstances. Under the new system, tenants can stay in their home until they decide to end the tenancy by giving two months’ notice.
The Bill also gives tenants a right to request a pet in the property which the landlord cannot unreasonably refuse. Landlords will be entitled to require pet insurance to cover any damage to their property.
Landlords will be able to seek to increase the rent annually on at least two months’ notice. The new rent would then take effect at the beginning of the next period of the tenancy unless, beforehand, the tenant applies to the tribunal, or the landlord and tenant agree to a different rent or that the rent should not be varied.
Landlords and their agents will be prohibited from discriminating against prospective tenants on benefits or who have children. So how will ending a tenancy work?
- End of no-fault evictions: The Renters’ Rights Bill will abolish no fault evictions, meaning landlords must prove that a ground for possession applies – these are specific circumstances in which a landlord can regain possession (section 8).
- Grounds: For mandatory grounds, the court must award possession if the ground is proven, but for discretionary grounds the court can consider whether eviction is reasonable, even when the ground has been proven. Some of the grounds more relevant to investors are set out in the table below.
- Landlords will benefit from new non-discretionary rights to possession. There will be strengthened rights for landlords to reclaim properties where necessary, such as where the landlord needs to sell or move in. However, they will not be able to reclaim the property to sell it or move in during the 12-month protected period at the beginning of the tenancy. Landlords will need to provide four months’ notice when using these grounds.
- Where a tenant is at fault, landlords can give notice using the relevant grounds at any point in the tenancy. This includes where the tenant commits an act of antisocial behaviour, they are damaging the property, or they fall into significant arrears.
- New protections will be introduced where a tenant temporarily falls into rent arrears. The mandatory threshold for eviction will be increased from 2 months to 3 months’ arrears, and the landlord’s notice period will be increased from 2 weeks to 4 weeks.
- Landlords can still use the discretionary rent arrears grounds, for example if the rent is repeatedly late.
- There will be a limited number of possession grounds to ensure an adequate supply of properties in sectors such as temporary and supported accommodation, and for critical housing schemes such as ‘stepping stone’ accommodation.
- Landlords will not be able to gain possession if they have not properly protected a tenant’s deposit or registered their property.
- New process for possession: To regain possession, landlords will serve notice in the prescribed form, giving at least the required notice period to the tenant. As in the current system, landlords will need to go to court if a tenant does not leave and provide evidence that the ground applies.
- Tenant rights to terminate: A tenant will be able to end a tenancy by giving 2 months’ notice. The end date of the tenancy will need to align with the end of a rent period.
The government advises that there will be sufficient notice ahead of implementation. They plan to avoid any unnecessary ‘cliff edges’, e.g. maintaining the validity of rent increases, as well as notices served prior to implementation.
Overall, the measures strengthen the hand of tenants; however, they may make life harder for tenants in practice if stock reduces and rent rises as a result (absent rent controls); renting out investment properties may become a less attractive prospect due to investors perceiving that it will be more of a burden for them to manage a letting and they may have a tougher time regaining possession and suffer longer periods without receiving rent - so more may sell their properties.
Mark Vinall, Partner, Ashley Wilson Solicitors
