For some time now, landlords have been aware of the government’s intention to abolish the Section 21 Notice, a statutory notice under the Housing Act 1988 that enables them to repossess their properties without giving a reason. Despite the government first announcing its intention to scrap the controversial notice in 2019, 230,000 Section 21 Notices have since been issued to tenants, according to homelessness charity Shelter.
But on 10 May 2022, in his delivery of the Queen’s Speech, Prince Charles announced the government’s commitment to move forward with its plans to abolish Section 21 Notices through the Renters Reform Bill. In June 2022, the government published a white paper entitled A Fairer Private Rented Sector, outlining its “blueprint for renters reform”. In this publication, the government confirmed its intention to introduce the Renters Reform Bill in this parliamentary session.
The Renters Reform Bill
The Bill is set to abolish Section 21 Notices while simultaneously reforming the legitimate grounds on which a landlord is able to repossess their property via a Section 8 Notice. Under the current system, a Section 8 Notice can only be served in certain circumstances, whereas a landlord serving a Section 21 Notice doesn’t need a reason for eviction. Current Section 8 grounds include (but are not limited to):
- The landlord wants to live in the property as their main residence
- The tenant has failed to pay rent for a specified period
- The landlord wants to redevelop some or all of the property, and the tenant has refused to live there while the works are carried out
- The tenant has neglected or damaged the property
- The tenant has received complaints from other neighbours or tenants for disorderly conduct
- The property was let to the tenant on the basis of false information.
Some of these grounds are mandatory – i.e., if cited the court must grant possession to the landlord – while some are discretionary – i.e. the court will only grant possession if it feels it is reasonable to do so. That is why it is important to take legal advice to ensure you are as prepared as possible for your case.
Reforming Section 8 Notices
The government also intends to extend the grounds upon which a landlord can serve a Section 8 Notice, so that they are “comprehensive, fair and efficient, striking a balance between protecting tenants’ security and landlords’ right to manage their property.”
Under the reforms, the following new grounds are set to be introduced:
- The landlord and/or close family members want to move into the property
- The landlord wants to sell the property
- The tenant has been in at least two months’ rent arrears three times in the past three years (this new ground will attempt to prevent tenants from exploiting the current law by limiting their arrears to just under the current threshold to avoid appearing in court).
Some current grounds are also set to be amended, including:
- Notice periods for the existing rent arrears ground will increase to four weeks
- Notice periods for antisocial behaviour grounds will decrease
A new tenancy structure
The Bill will also simplify tenancy structures, moving tenants on Assured Tenancies or Assured Shorthold Tenancies to single system of ‘periodic tenancies’. Currently, a landlord can evict a tenant on an Assured Shorthold Tenancy – the most common tenancy type for private renters – after six months by way of a Section 21 Notice. Assured shorthold tenancies may be fixed for a certain amount of time (such as six months or a year), meaning that tenants cannot currently leave a rental property without remaining liable for the rent for that period.
On the other hand, a periodic tenancy runs on a rolling basis, meaning that renters can leave at any time (subject to two months’ notice). This will give them more freedom to move if they need to (for example, for a new job) and the power to leave an unsatisfactory rental (for example, if the landlord is not adhering to their responsibilities or the property is unsafe). Tenants will have to give two months’ notice in order to leave.
Likewise, landlords will be able to repossess their properties at any time using any of the existing or new Section 8 grounds (as in the examples set out above).
Further reform is imminent
In addition to the legislative changes outlined above, the government is preparing to introduce a suite of other changes set to transform the private rented sector. These include:
- Measures to reduce the number of ‘non-decent’ rental properties
- The limitation of rent increases to once per year
- The introduction of a Property Ombudsman to strengthen tenants’ ability to hold problem and criminal landlords to account
- Legislation to outlaw blanket bans on renting to families or benefit recipients
- Legislation to give tenants the right to request pets in their property, which landlords must consider and cannot unreasonably refuse. In return, landlords will also be given the right to request that tenants purchase pet insurance.
Getting ready for a new rental market
According to the government, the Renters Reform Bill is set to become law by the end of 2022. At Woodfines, our lawyers are on hand to keep landlords up to date with the ever shifting legislation governing the private rented sector. We can help you review your current situation and explain the grounds to which you will have recourse under the new system.
If you have any concerns about upcoming legislative changes, please get in touch with our specialist lawyers on 0344 9672505.