The future for ‘no-fault’ evictions

Greg Simms and Beth Weeks consider what happens now following the shelving of the Renters Reform Bill, and the potential consequences of Labour’s proposals if elected. Section 21 of the Housing Act 1988 allows for so-called “no-fault” evictions, so residential landlords can evict tenants without any reason (albeit they require a court order, which, as we explore below, now takes on average 24 weeks to obtain). The future of section 21 has been uncertain for some time, but now more so than ever. Both the Conservatives and Labour have pledged to abolish section 21, the difference between their approaches being timing. With the general election looming, the Conservatives shelved the Renters Reform Bill that sought to legislate for its abolition. Labour has criticised the Conservatives for failure to implement the change despite promising to do so in their 2019 manifesto. Labour to date has maintained commitment to the abolition of section 21 – Angela Rayner confirmed in May that Labour will “reform where they have not”, stating that “Labour will ban no-fault evictions – no ifs, no buts”. Labour has consistently pledged, if elected, to immediately ban section 21 on their first day in power. At the time of writing, it is yet to be seen whether the party’s manifesto ahead of the election will maintain this commitment. What will a ban mean for current process? Landlords will not be able to evict residential tenants without satisfying one of the proposed statutory grounds, and will then need to pursue standard possession proceedings to a court hearing (currently, the accelerated possession procedure following a section 21 notice does not require a court hearing). Labour has not confirmed how pending section 21 possession claims will be treated. Where landlords have incurred the cost of serving a section 21 notice and issuing a claim, will those pending claims be dealt with before the abolition takes effect? Landlords cannot cease service of section 21 notices in the run-up to the election on the basis that Labour may or may not be elected and may or may not implement the abolition with immediate effect, inclusive of pending claims. The Conservatives are also committed to abolishing section 21, albeit any such change would be on hold pending court reforms. The average time for a court to deal with a possession claim has increased to 24.1 weeks. Our experience has been that of massive regional disparity. By way of example, recent possession claims in Manchester County Court took three months from submission of the claim to obtaining a possession order. In comparison, possession claims in Central London County Court have been taking eight months. This is often (a) in the accelerated procedure and (b) not including enforcement of the possession order. We have experienced a delay of at least three to four months to obtain a warrant to arrange a bailiff appointment out of Central London. So currently, using the accelerated procedure, it can take more than a year to obtain possession in central London. Our questions in respect of an apparently immediate abolition of section 21 would be: When the courts are clearly already struggling to cope with an enormous backlog of possession claims, how will those same courts cope with implementing the change when every possession claim will require a hearing? This will also have a knock-on effect on all claims going through the county court system, not just possession claims. And how will those courts deal with the section 21 possession claims already sitting in their backlog (some of which may have been submitted several months ago)? Will the change create greater location disparity depending on which courts have the capacity to implement change? Landlords have no choice in relation to the court in which they bring a possession claim, it being dictated by proximity to the subject property. Is this a cyclical process? In our experience, tenants want to leave but await local authority housing. The local authorities are under pressure owing to a shortage of affordable housing, so are telling tenants to remain in situ until such time as they have an eviction appointment (thereby forcing landlords to undergo the entire court process, adding to the pressure on the court system and leaving tenants in limbo pending the eviction appointment). What will this mean for the market? The parties’ intentions are to give greater rights and protections to tenants. While the abolition of section 21 will certainly make it more difficult for landlords to evict tenants, we think there will be other consequences of the proposals: The increased difficulty in evicting private tenants may result in a reduction in “buy to renovate” models. While this might have the intended consequence of suppressing rents in these buildings, it could also have the unintended consequence of private rented properties sitting in disrepair, with regeneration slowing and less incentive for landlords to renovate properties. It is likely to disincentivise private renting, particularly those who are highly leveraged and with small portfolios. This will predominantly leave the sector accessible only to larger institutional investors with access to alternative finance, economies of scale and good, customer-focused property management. As explored above, the immediate abolition of section 21 (which Labour is proposing) could result in chaos unfolding in the court system. It is important to remember also that the abolition of “no-fault” evictions is only one part of the proposed Renters Reform Bill that is likely to be brought forward by either party. We await the parties’ manifestos and their detailed pledges with interest. Greg Simms is a partner and Beth Weeks is an associate in the Real Estate Disputes team at Addleshaw Goddard LLP Photo © Artem Podrez/Pexels