In April 2019, the Government announced that it planned to scrap Section 21 of the Housing Act 1988 and thereby end a landlord’s ability to obtain possession on the ‘no fault’ ground.

The ‘no fault’ ground had come under criticism as it left tenants feeling insecure and because it was unfair to long standing tenants who may have occupied a property for a number of years under an assured shorthold tenancy, only to have such a long period of tenure brought to an end on only two months’ notice.

Interestingly tenants had also indicated in a government consultation carried out before April 2019, that they would like to rent properties for longer periods of three years or more.  Landlords completing the same consultation had wanted to keep the rental period at six to 12 months.

The Government held a further consultation last year on the issue and announced, in the Queen’s speech of December 2019, its plan for the Renters Reform Bill.  The Bill was to deal with the abolition of Section 21, the strengthening of Section 8 and the introduction of a tenant’s lifetime deposit scheme.  Beyond that, the details were scant.

While we appreciate that many landlords are not contemplating giving notice during the current national Coronavirus crisis, we have looked at the last government consultation called ‘A New Deal for Renting’ (the ‘Consultation’) and set out below what we consider can be gleaned from it.

Goodbye Section 21

There can be no doubt from the Government’s announcement in April 2019 and from the contents of the Consultation that Section 21 will be abolished.  The remainder of the Consultation is therefore based on what may follow next.

Amended and new Section 8 grounds

The Consultation makes it clear that while Section 21 will be abolished, the Government plans to strengthen the landlord’s position under Section 8 of the Housing Act 1988.  You will recall that while Section 21 relates to ‘no fault’ grounds, Section 8 deals with the notice to be given in all other circumstances.  We do not plan to run through all of the grounds here, as the focus of this piece is amendments and changes.  We therefore only touch on those Section 8 grounds which are either proposed, or existing grounds which are being amended.

Ground 1

Currently ground 1 allows a landlord who has occupied the property as their principal residence before the tenancy began, to seek possession.  Alternatively, a landlord who requires the property to live in now as their principal residence can also give notice.  This is a very restrictive ground, as most landlords have either not occupied the premises as their sole residence before renting and often do not wish to occupy it to live in when they seek possession.  It is proposed that ground 1 be amended so that the landlord no longer needs to have lived in the property and to enable the landlord to obtain possession for their family members or partners.  However, the Consultation would appear to still require prior notice to be given to the tenant of the landlord’s potential reliance on this ground, prior to the assured shorthold tenancy being agreed.  Another proposal is that it can only be used after a set period of time.  Two years is proposed by the Consultation, all be it there is also discussion around giving the court permission to reduce this where there are extenuating circumstances e.g. the landlord has fallen on hard times and needs access to the property to live in.  It is proposed that the notice period remains two months and that the ground remain mandatory.

New ground: selling the property

The Consultation also proposes that there be a new ground which would allow the landlord to gain possession of their property in order to sell it.  It is proposed that this is a mandatory ground and again that it could only be used after a set period of time, with two years being proposed.  Like ground 1, it is proposed that prior notice be given by the landlord to the tenant of their intention to potentially rely on it prior to the tenancy being entered into.  However, again, it is proposed that in extenuating circumstances the court be given power to waive the need for prior notice.

It is proposed that the notice period here be two months.  The Consultation asked generally what evidence the landlord should need to show if they wish to rely on this ground.  Evidence will be an interesting topic, because landlords will not want to have to plead poverty and show copies of their personal bank accounts et cetera in order to convince a court that they should be allowed to sell, however, they are going to need to be able to demonstrate enough so as to protect the tenant from evictions where the landlord has no intention of actually selling.

Ground 8: rent arrears

The current ground 8 provisions are challenging.  The landlord must be able to demonstrate that specific sums of rent have been outstanding for specific periods of time, both at the time the notice is served and at the hearing.  If the sum is not outstanding at these points in time, then the ground cannot be relied upon.  The various amounts of rent that need to be outstanding and the periods of time for which they need to be outstanding change depending on whether rent is paid weekly, fortnightly, monthly, quarterly or yearly.

Often difficult tenants will take steps to ensure that the sum of outstanding rent is just below the relevant trigger amounts or periods in order to protect themselves from this ground being invoked.

The Consultation would appear to propose that the ground be simplified, so the landlord need only give two weeks’ notice where there are two months of outstanding arrears.  It is proposed that where there is a minimum of one month’s rent outstanding at the hearing, that the ground is mandatory and the judge must make an order.  Where there is less than one month’s rent outstanding the ground will become discretionary to enable the judge to still make a possession order where it is clear that there has been gamesmanship by the tenant in paying rent arrears down.  Where there has been gamesmanship, it is proposed that the ground becomes mandatory again.

This should give certainty to both landlords and tenants and make this a stronger ground to rely on.  In the past, it has been quite difficult to enforce and has led to landlords seeking to use the Section 21 ‘no fault’ ground rather than have to worry about relevant periods and sums of rent outstanding.

Anti-social behaviour

Currently grounds 7a, 12 and 14 all deal with instances of anti-social behaviour.  Some are mandatory and some are discretionary.  The Consultation accepts that there are issues surrounding these grounds and seeks information on how they can be improved.  It is therefore likely that there will be some change and improvement here.

Domestic abuse

Ground 14a deals with scenarios of domestic abuse.  Based on the Consultation it is planned to make changes to this ground giving it a ‘victim focussed’ approach.  The feeling would appear to be that the general trend here is that it is the abused victim that leaves with the abuser remaining in the property.  Alternatively, the abuser gives notice leaving the abused victim without any occupation rights.  It is unclear precisely what is planned, but it would appear that a victim is able to gain more protection with the plan being that the abuser must leave, even where the tenancy is a joint one.

Property standards

Ground 13 currently deals with a scenario where the condition of the property has deteriorated due to the tenant’s conduct.  The Consultation would appear to propose that this ground is amended to include a scenario where the tenant obstructs the landlord in carrying out their duties in relation to safety requirements.  So, for example, if a tenant refused access to the property to enable a faulty boiler to be replaced, it is likely that this would give the landlord grounds to seek possession.

Accelerated possession

Currently the accelerated possession procedure may only be used by landlords who have adopted the Section 21 ‘no fault’ ground.  It is suggested in the Consultation that the accelerated possession be extended to all Section 8 mandatory grounds.  Given that Section 8 grounds usually require further evidence and are not ‘no fault’ grounds, it will be interesting to see what is proposed here.  However, with the abolition of Section 21, this move is a welcome one for landlords.

Separate to the various landlord and tenant consultations, the court had been undertaking a project called the Courts and Tribunal Reforms Project.  Under this project it is proposed that a new online possession claims system be introduced which is similar to the current Money Claims Online system for simple claims matters.  We will have to watch this space for developments.

In another project called ‘Call for Evidence’, the court has been looking to improve the court evidence experience.  Again, hopefully, this will bear fruit in relation to both the accelerated possession extension and the possession claims online proposal by simplifying the evidence needed.

Special provisions

This article concentrates on residential letting in the private sector.  It is worth making the point that the Consultation raised questions in relation to specific areas of interest being:

• student accommodation, which was seen as a very specific area;
• short-term lets e.g. Airbnb and holiday lets;
• religious workers;
• agricultural tenancies;
• build to rent.

The Consultation also looked at whether there should be further new grounds.  One proposal was in relation to serving members of the armed forces.  It was envisaged that there would be an additional ground which enabled them to gain access to their rented properties sooner if they came back from a posting.

Conclusion

Whilst the contents of this article deal with what can be gleaned as the Government’s plans for reforming the Section 21 abolition process based on the Consultation, things are far from certain.  The Renters Reform Bill has confirmed the abolition of Section 21 and the strengthening of Section 8 subject to it obtaining royal assent and being debated by the two houses.  One further point which was mentioned in the Renters Reform Bill was the creation of a tenant’s lifetime deposit scheme.  Commentary around this would appear to suggest that rather than have a tenant enter into a new rent deposit scheme every time they change property, and go through the rigmarole of recovering this every time they left a property, it would be better for them to have one scheme which was portable and could be applied to all of the properties that they rent through their lifetime.  Again, we are uncertain as to how this would be applied and its terms and we must watch this space for details.

Should you have any questions in relation to landlord and tenant issues or the contents of this article, please do not hesitate to contact its writer, Graham Mead, a partner in the firm’s Commercial Dispute Resolution team on 01473 298234 (gmead@prettys.co.uk).