Even at the eleventh hour, doubt still remains about the banning of section 21.
Michael Gove has said he will continue with the Government’s progress on the Bill to abolish the so-called “no-fault” Section 21 evictions procedure, a process which goes to the heart of the concept of the assured shorthold tenancy (AST) introduced by the Thatcher Conservative Government in the Housing Act 1988. But there has been serious delay in the progression of the Renters (Reform) Bill 2022/23
We should find out more in the King’s speech today...
Mr Gove has said the Bill will be carried over to the next Parliamentary session after the King’s speech today, after the levelling up secretary stated he is determined to implement the ban before January 2025, that’s despite the Government stating earlier that it would be delayed pending reform of the courts system. However, the Bill is likely to face something of a back-lash from Conservative back-benchers, many of whom vehemently oppose the change.
The AST is currently the default residential tenancy in England and Wales gives limited security of tenure – the shorthold - under the Housing Act 1988, a definition widened by the Housing Act of 1996. Since 28 February 1997 the AST became the most common form of private residential tenancy, the equivalent in Scotland being the Short Assured Tenancy.
On 1 December 2022, the Renting Homes Wales Act came into force, whereby all existing assured shorthold tenancies and licences in Wales converted to occupation contracts. These new occupation contracts operate differently. There are a number of significant changes that landlords and tenants need to comply with in Wales.
And on 1 December 2017 a new type of tenancy - the private residential tenancy - came into force in Scotland, replacing the assured and short assured tenancy agreements for all new tenancies, again with significant other changes.
Section 21 is operating still in England. It gives landlords the power to evict without giving a reason. They do this by giving tenants two month’s notice after their fixed term contract ends (or when they are in a periodic tenancy), and by applying to the court for a possession order. The process generally requires no court hearing, which means eviction can normally be achieved in, between 6 and 9 months.
Campaigners have argued that the system is unfair and gives landlords the power to evict without a just reason, though landlords argue there is always a reason, the chief one being failure to pay rent.
It has to be said though, some landlords evict if they perceive their tenants are becoming – in their eyes – a nuisance, such as when the constantly ask for repairs.
Gove has faced an uphill battle because several dozen Tory MPs, many of whom are landlords, oppose the measure. Landlords also say that huge backlogs in the court system mitigate against a change.
With the changing nature of the private rented sector (PRS) in the UK, the decline in the social housing sector, mainly council house provision, more people are renting in the PRS, and that includes many more families than ever before. Families seek stability, especially as they may have children in local schools, so the idea of the landlord being able to evict them within 6 to 12 months without them doing anything wrong is very stressful for them.
There is some evidence that in an economic environment such as now, when rents are increasing apace, some landlords will evict to give them the opportunity to sell, or to re-let on a new tenancy, to tenants who can afford a higher rent.
This has to be weighed against the necessary time an expense to landlords of re-letting and whether the higher rent compensates. Evidence suggested that most landlords will want to retain good regular paying tenants, even if the rent is slightly below market levels
Landlords are afraid that removing bad tenants under the rules proposed in the Renters (Reform) Bill will be difficult and potentially much more expensive than the paper based Section 21 process.
Despite the promise of more comprehensive grounds for possession, landlords know that having to prove these grounds to a judge can be difficult and be expensive and uncertain of outcome. This is especially if litigation drags on in the face of a challenge from a tenant who possibly has legal aid financing. This can add months or even years to an eviction process and legal costs can be astronomical in the worst cases.
Landlords argue that moving to indefinite tenancies, as the Renters (Reform) Bill does, effectively abolishing the AST, and removing Section 21, means they will be powerless to evict without taking their tenants to court. It will automatically require a court hearing using the revised Section 8 provisions. Currently they are set out in the Housing Acts 1988 under the grounds listed in Schedule 2.
Landlords also argue that the county courts and county court bailiffs are an antiquated system with very limited capacity for the job they are doing now, let along when the extra court work, in-court hearing generated under the reforms. It will place much extra burden on the system when the new rules are introduced. Landlords have been asking for reassurance that the courts will be reformed before the Bill becomes law, but so far all the evidence suggests this won’t happen.
Michael Gove told Tory MPs - some of whom are landlords and tenants themselves - last month that the banning of Section 21 would be delayed until the court system is reformed, which Labour has argued would take years to implement. But the Government has said that it believed the court reforms could be completed quickly and that they were determined the Section 21 ban would come into force before the next election.
Other measures destined for airing at 11.30am today in the King’s speech include Leasehold reform.
The housing minister has confirmed plans to phase out leaseholds, a reform to feature in the King’s Speech. Rachel Maclean has tweeted: “We will restore true home ownership to millions of people and end the reign of “rip-off freeholders and incompetent, profiteering, management companies.”
The revised law is expected to prevent new houses being sold as leaseholds, other than in exceptional circumstances, along with some other reforms. But there is some doubt as to how far the reforms will go. It is felt likely that new flats will continue to be sold as leaseholds and existing leaseholds may not be unduly affected.
Efforts to reform or even replace the leasehold system have been ongoing for years, driven by concerns about onerous lease terms, exploitation, unfair practices, escalating ground rents, and eye watering lease extension fees.
There have been legislative reforms through the Leasehold Reform Act 1967, the Landlord and Tenant Act 1987, Leasehold Reform Housing and Urban Development Act 1993 and the Commonhold and Leasehold Reform Act 2002.
And in recent years there have also been proposals about specific legislative changes aimed at improving the situation for leaseholders. However, completely replacing the English leasehold system is acknowledged would be an extremely complex and challenging endeavour.
To make substantial changes to the leasehold system it is acknowledged would require major legislative change and would impact the rights and interests of numerous stakeholders, including property developers, freeholders, managing agents and the leaseholders themselves.