Section 21: a resetting of rights

On 12 October 2019, the government’s consultation on the proposed repeal of section 21 closed. The consultation sets out a new framework in which a tenant cannot be evicted without good reason. Hand in hand, it seeks to widen the current “fault-based” procedure to enable landlords to regain possession if they want to sell or move family into their tenanted property. The Property Litigation Association (PLA) responded to this consultation on behalf of its 1,300 members comprising solicitors from throughout England and Wales (and elsewhere in the UK) and specialising in all aspects of property litigation. The current regime Currently, a landlord can use section 21 to terminate an assured shorthold tenancy (AST) after the fixed term has expired. It does not need to rely on any default by the tenant. The procedure also allows the landlord to regain possession without a court hearing – via the accelerated possession procedure – if certain criteria apply. The new framework The government is proposing the abolition of ASTs altogether on the basis that, once section 21 is scrapped, there is no longer any significant legal distinction between an AST and an assured tenancy. Under this new regime, landlords will need to rely on the grounds to seek possession under section 8 of the 1988 Act, subject to certain enhancements. Abolishing section 21 will also make redundant the accelerated possession procedure. The removal of this route to possession is of particular concern to landlords given the inordinate delays in many county courts in dealing with standard possession claims. The government says it recognises this and will review how to accelerate possession under the new framework. However, this brings into play the wider issue of our under-resourced county court system. The PLA’s response While fully supporting the overarching aim of creating fairness between landlords and tenants, the effect of these proposals could put both at a disadvantage. For example, tenants evicted under the current section 21 procedure are not deemed intentionally homeless – their tenancy having been terminated on a no-fault basis. With the new framework there will be fault attached to most evictions, which may affect a tenant’s ability to find new accommodation in both the private and state sector. There is also the risk of landlords becoming more “picky” about who they will accept as a tenant in the first place if they no longer have the section 21 route to repossession. Tenants will lose out if current buy-to-let landlords are dissuaded from continuing, and the stock available for private rental is substantially reduced. While there is clear momentum to get rid of section 21, there is good rationale to keep it. The answer may be to say that section 21 cannot be used for the first 12 or 18 months of a tenancy. What is good news for landlords is that the government does not support the introduction of any rent control. It is also looking to widen the grounds of possession to include where a member of the landlord’s family wishes to use the property as their own home, or the landlord wishes to sell. However, it appears these new grounds may be restricted, requiring a landlord to serve a notice before the tenancy starts and/or limiting them to after the first two years of a tenancy, which we believe is not appropriate. Landlords may not know when granting a tenancy if they will need the property back for their family or to sell. For instance, an unexpected change in the landlord’s circumstances, such as serious injury to a family member, death of the landlord or loss of job should be considered reasonable grounds to require possession for either sale or occupation by a family member after, say, six months. Two years can be a long time, and the court should have discretion. Talking of restrictions, we are now familiar with the protections afforded to AST tenants by the Deregulation Act 2015. The government intends to carry over those measures into the new tenancy regime. It also proposes extending these protections to all landlords, not just those in the private rented sector. Currently, registered providers of social housing, for example, are exempt. This will prove a significant added burden on such providers. However, these protections, and the other checks and balances provided by the section 21 procedure, should certainly not fall away. What is welcome is the proposal to allow a landlord to gain possession where a tenant prevents them from maintaining legal safety standards (although the consultation is very short on detail). There is also the government’s desire to ensure the ability to repossess swiftly for antisocial behaviour. The current provisions are far from swift. Instead, they are rather complex, coupled with very high evidential thresholds and subject to vast case law and legal principles. This takes time and cost. To be equally applauded is the government’s commitment to tackling domestic abuse in the arena of security of tenure for victims of such abuse. This is evident in proposals such as enabling a victim to enter a new tenancy without the consent of an abuser. Again, however, the detail needs to be considered very carefully, otherwise landlords could find themselves in expensive cross-fire between such parties. Where the need for any change is less evident is in terms of rent arrears. For example, the government’s proposal to allow a landlord possession if it can prove a pattern of behaviour that shows the tenant has built up arrears and paid these down on three previous occasions risks tenants with short-term financial problems facing mandatory possession orders. The current regime works. Why change it? If it is going to be changed, the drafting needs careful consideration. If, despite all these concerns, ASTs are to be abolished, then there should be few exceptions to ensure consistency and to avoid complexity. For example, limited carve-outs might include special provisions for certain types of landlord or lettings – and likely to include landlords who let to students – and in the build-to-rent sector, where the government does recognise a need to enable recovery of affordable private rented homes from ineligible tenants. Added to these should perhaps be other temporary accommodation, such as those provided by charities to allow, for example, rehabilitation or recovery. It seems inevitable that we will, sooner or later, have what the government intends as a new, more tenant-friendly tenancy framework. If the changes go ahead as envisaged then, to afford balance, landlords should be able to swiftly repossess where they have the requisite grounds. And with that comes the biggest hurdle of all: the court process. In an age of continuing court closures and lack of resources within the court service, can landlords rely on the court service improving? Our experience suggests otherwise. Click here to read more Emily Wood is a partner at DMH Stallard and Nyree Applegarth is a partner at Higgs & Sons