Rental Reform and ‘Outlawing’ No-Fault Evictions
March 22, 2024 10:14 am - Categorised in: EFN-News, Property, Residential Property
The Renters (Reform) Bill: A welcome correction of the imbalance of power in the private rental market, or an ill-considered appeal to the renting electorate ultimately doomed to backfire?
All that can be said with any certainty about the Bill is that it divides opinion, not only amongst our politicians, but amongst campaigners, landlords and tenants up and down the country.
You might be reading this and wondering, ‘what is the Renters (Reform) Bill?
Put simply, the Renters (Reform) Bill – ‘R(R)B’ – is a piece of legislation that is designed to fulfil the Conservative party’s 2019 election manifesto promise to bring an end to ‘no-fault’ residential evictions in England.
The R(R)B was finally published by the Government on 17 May 2023 and since then it has been gradually meandering its way through Parliament, before it becomes law and takes effect.
The bill has been in the news in recent weeks following an announcement in February by Michael Gove (Secretary of State for Levelling Up, Housing and Communities) that no-fault evictions will be “outlawed” in England before the next general election.
Much of the media coverage since then has unsurprisingly stuck to the old pattern of amplifying outrage and uproar, whilst focusing on the possibility that back-bench Conservative MPs will ‘hold the bill hostage’, unless it is watered-down in favour of landlords.
Amidst this backdrop of hysteria and uncertainty, what landlords and tenants really need to consider is this:
How will the Renters (Reform) Bill affect residential tenancies and what does this mean for me?
At the time of writing (subject to the bill being revised and amended) here are some key points of clarity and reassurance regarding the R(R)B.
- How will no-fault evictions be “outlawed”?
Currently, landlords are able to take possession of their properties from tenants by following a simple procedure set out by section 21 of the Housing Act 1988. This is known as a ‘s.21 possession claim’. This procedure enables landlords to get a court order for possession of their rental property without the need for any specific reason or justification. A landlord may evict a tenant with a s.21 claim, even if there is no obvious fault or breach of tenancy by the tenant and no clear reason as to why the landlord needs to evict the tenant.
Under the new bill, s.21 of the Housing Act 1988 will be repealed and landlords will no longer be able to serve a s.21 notice and bring a s.21 possession claim to court. Instead, landlords will only be able to evict tenants under certain circumstances.
- What does this mean?
Unless the tenant terminates the tenancy, or the tenancy is surrendered by agreement, a landlord wishing to evict a tenant must serve a ‘section 8’ notice on the tenant and must rely on at least one of the grounds for possession specified by the Housing Act 1988. The landlord must prove at court that the ground(s) for possession in question applies to the tenancy in order for the court to make an order for possession.
- What grounds for possession will be available to landlords?
A landlord will be able to rely on the existing grounds for possession, including (but not limited to):
- Rent arrears exceeding 2 months;
- Death of the tenant;
- Antisocial behaviour; and
- The landlord requiring the property to live in themselves.
The new bill will also introduce some new grounds for possession and will broaden some of the existing grounds.
A couple of proposed changes to help landlords stand out:
- It will be easier for landlords to evict tenants due to antisocial behaviour.
- Landlords can obtain possession if:
- A close family member wants to move into the property.
- The landlord is selling the property.
- Is this really that much of a change?
Looking at the options for eviction that will be open to landlords, the R(R)B does not equate to a blanket ban on ‘no-fault’ evictions. For example, the Government’s proposals will allow a landlord to evict a tenant if the landlord is selling the property. Such an eviction would not require any fault on the tenant’s part.
Despite this, there is no doubt that if the R(R)B is passed by Parliament, it will make it more difficult, complicated and expensive for landlords to remove tenants from a property. Landlords will find themselves at the mercy of the court’s discretion and they will face challenges in trying to prove that there is a relevant ground for possession. (Who knows what evidence a court will require to show that a Landlord plans to sell a property, if the presence of the tenant is stopping a sale from progressing?)
This means that there will be more situations where a landlord is unable to remove a tenant from a property unless they can bring about the clear existence of a ground for possession.
Even when a landlord can successfully obtain possession through the s.8 court procedure, the courts do not deal with these claims quickly and efficiently. Therefore, it will take landlords much longer to take possession, meaning that they may well be increasingly haemorrhaging unpaid rent in cases where tenants are not paying.
- Are any other changes proposed beyond the restrictions on ‘no-fault’ evictions?
Yes, under the new legislation the following further measures are planned:
- Landlords will have to meet formal notice requirements in order to increase the rent.
- Landlords will not be able to ‘unreasonably’ refuse consent to tenants keeping a pet at the property.
- The abolition of fixed-term tenancies. All tenancies will instead have no fixed end date and will continue as rolling contracts.
How might this impact the rental market?
There are over 11 million private renters in England and the proposed bill would provide them with protection and certainty. The current lack of certainty and protection for tenants prevents them from making long-term plans or ensuring that their children will be able to continue to go to the same school. Creating a fairer rental market where there is more security and stability for tenants is a noble aim, however the Renters (Reform) Bill is set against the backdrop of a multi-faceted housing crisis.
There is a demand for privately rented properties and this will not disappear by virtue of the R(R)B being introduced. Although, a feared unintended consequence is that landlords will just sell-up and there will be no private rental properties available.
If private landlords across the country were to respond to the changes by selling their properties en-masse, this would plainly exacerbate the lack of supply of rental properties on the market in the UK.
The shortage of affordable housing and of social housing in this country drives up high demand in the private rental sector. If landlords do respond to the new protections for tenants by taking their properties off the private rental market, then this could lead to rents rising even further and tenants, even though more secure, being squeezed financially.
The Renters (Reform) Bill will not be a silver-bullet solution to achieving protection and stability for Tenants, and whilst it does not mean that landlords will suddenly be unable to make a good return on their investments, it does mean that they will be more restricted in renting and evicting.
As this huge shake-up of the rental market looms on the horizon, it is more important than ever for landlords to make sure that they receive reliable legal advice and assistance to avoid being caught out by a change in the law. It is wise to seek legal advice early on if you anticipate an issue with a rental property. It really is better to fix the roof while the sun is still shining.
A edited version of this article will feature in the May issue of Derbyshire Life.
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