New plans affecting renting as a private landlord are due to come into force next year, which includes the long-proposed abolition of Section 21. What does this mean for landlords and tenants? Hayley Gaffney from Coodes explains.
The Renters Reform Bill is set to be the ‘biggest shake-up’ of the private rental sector in three decades when the plans are due to be introduced by the Government in 2023.
Under proposed changes, Section 21 could be abolished, as well as several other benefits and restrictions brought in if the Bill is passed. However, there are several stages it needs to reach before the proposals are enshrined into law
With more than 4.4 million UK residents living in privately rented properties, what can landlords and tenants expect from this new Bill?
Section 21 notice
Both landlords and their tenants should be aware of a Section 21 notice and what it means. It’s the right of a private landlord to possess a property even if their tenant hasn’t breached their tenancy. This is provided they have given two months’ notice, have complied with various duties, and legal requirements and the fixed-term contract has ended.
A landlord can then start an accelerated possession claim. This is a ‘fast track’ through the court system, so that the possession order can be processed more quickly. Section 21 has proven to be a great benefit to private landlords who needed to take possession of a property efficiently without significant costs and court time. While Section 8 is proposed to remain, some amendments will be made, seemingly to take account of the abolition of Section 21.
What this means for those privately renting
Ending the ability to serve a Section 21 notice means an end to no-fault evictions. A tenancy will only end if the tenant stops it themselves or if the private landlord has valid grounds for possession, such as breach of the tenancy agreement or other grounds as set out in the (to be amended) Section 8 of the Housing Act 1988.
The idea behind this is it allows tenants to ‘challenge poor practice’ without being evicted. In addition, this protects them from having to go through a costly move at relatively short notice. However, it means that landlords who simply want to sell their property or not incur significant costs to remove problem tenants, will suffer without the ability to end the tenancy using a Section 21 Notice.
The Decent Homes Standard will also now be a requirement for all privately rented homes. This will ensure all rental properties are fit and safe to live in. They should not pose any health or safety risks to the tenants. The facilities should also be in good working order.
The definitions of the Standard were last published 16 years ago, so are currently undergoing review. However, in 2006, the definitions said that a house must:
- Meet the current statutory minimum standard for housing.
- Be in a reasonable state of repair.
- Have reasonably modern facilities and services.
- Provide a reasonable degree of thermal comfort.
More than a third of people renting in the UK live with children. If this Bill passes it will mean that blanket bans on renting to families with children will be illegal. Private landlords can also not refuse a tenant’s request for a pet without reason. With 62% of the UK owning a pet, only 7% of private landlords advertised pet-friendly properties in 2021. Amendments to the Tenant Fees Act 2019 will allow private landlords to request tenants buy pet insurance to cover damages.
What this means for private landlords
If the Section 21 notice ends no-fault evictions, what assurances do landlords have if they need to evict a tenant?
A reform of grounds for possession will take place if this Bill passes by strengthening Section 8 powers and grounds for possession in the Schedules to the Housing Act. If tenants are anti-social, breaching their tenancy agreement or are in rent arrears, then this is ground to serve a notice under Section 8. Without Section 21, legitimate private landlords who look after their tenants must be able to regain possession of their property. The balance aims to protect tenants’ peace of mind as well as a landlord’s right to their property. The lack of Section 21 will be a substantial blow for many landlords.
Private Renters’ Ombudsman
This Bill also proposes a Private Renters’ Ombudsman. This Ombudsman gives tenants the power to challenge their landlord. If they are dissatisfied or unhappy, it will be easier to put things right whether that be an official apology or compensation of up to £25,000. This will not be a problem for private landlords who are responsible and care for their tenants and comply with the legal requirements imposed on them.
However, that doesn’t completely rule out the possibility of having a tricky tenant. Without Section 21, resolving the dispute or serving a Section 8 Notice will be landlords’ only two options.
Fortunately, this Ombudsman will help to secure a more impartial resolution between the two parties. Disputes can be settled out of court in a quick and less costly manner for everyone involved.
A landlord’s ability to grant Assured Shorthold Tenancies (AST) will also be eradicated under the new Bill. Instead, all existing tenancies and new tenancies will become a Periodic Tenancy. Tenants will be able to leave poor-quality properties without being liable for rent. They will, however, need to give at least two months’ notice. This gives private landlords a chance to recoup costs and find a new tenant.
This flexibility will prove attractive to many looking at renting their property. However, this doesn’t provide a very stable or predictable income which many private landlords prefer. They’ll also have to regularly pay out to find, vet and clean up after tenants too which is a substantial cost and will make renting properties particularly unappealing
How can you be ready?
As this Bill has been ongoing since 2019, studies have been undertaken to gather responses from private landlords and tenants. A pattern has been noted among buy-to-let property owners in that they are considering selling their property assets and leaving the private rental sector if this Bill passes. In abolishing Section 21, the Government hopes that two things will happen:
- Renters can feel secure and empowered when renting privately.
- Landlords will be incentivised to resolve problems with tenants while still being able to evict the most problematic.
In reality, it is more likely that landlords will have further legislative requirements imposed on them at further cost and with less ability to recover possession of their properties from problems tenants. The Bill has not yet been passed, but that is not to say time is not running out. If you’re considering obtaining possession of your property in the future, you should do so sooner rather than later. At Coodes, we have the expertise and experience to help.
We have a fixed fee service for landlords who are looking to regain possession of their property under the accelerated possession procedure and for service of notices. If you’d like to find out more about this service, please get in touch.