Section 21 is arguably the most significant clause in the Housing Act 1988.
Allowing landlords to recover their property from tenants as of right at the end of the fixed term, kick-started the buy to let industry and is the main reason why it has developed into the buoyant industry we have today.
However it also has a dark side. The threat of eviction often prevents tenants from asserting their legal rights (for example for a safe property in proper repair) and so has been much criticised by tenants’ organisations.
Due largely to the lack of available housing and associated problems, there has been a lot of publicity about housing issues over the past year and as a result government has taken action to change and modify the way landlords can use section 21 with their properties.
Here is a brief outline:
1. Retaliatory eviction measures.
If (for a tenancy subject to these rules – see below) a tenant complains about your property condition you will need to respond within 14 days telling them (a) what you are going to do about it and (b) when you are going to do it.
If the tenant then complains to the Local Authority AND they take action by serving a notice about repairs on you, you will not be able to serve a section 21 notice (or use s21 to evict your tenant) for six months.
This will not apply however if the poor condition of the property is down to the tenants use of the property or if the property is genuinely on the market for sale.
These measures will come into force on 1 October.
2. A new prescribed form of section 21
We have not seen a draft of this yet, but it should be available by 1 October.
The new notice will undoubtedly provide details of tenants’ rights and so some landlords may be unhappy about this! However the good news is that provided you use the form, you should not be at risk of your claim for possession being struck out due to errors in the notice – as often happens now.
3. More preconditions for service of a section 21 notice
One of these will be requirements that landlords have complied with legal obligations such as getting the annual gas check done and serving energy efficiency notices.
The other is that you will be required to serve ‘prescribed information’ – like you do for deposits, but this will be a different prescribed information – before you can serve a valid section 21 notice. We don’t know yet what the prescribed information will contain but it is expected to be a statement of tenants’ rights.
4. Time limits
After October 1 you will not be able to serve a section 21 notice on tenants during the 1st four months of any new tenancy granted after that date, or use the section 21 notice more than six months after service. So a ‘use it or lose it’ rule.
The obvious thing to say is that as these rules will only (until 2018) affect new tenancies which start after 1 October 2015 – make sure you complete as many new lettings as possible before then!
The other thing is that as section 21 will be more difficult to use, and there will be more challenges that tenants can raise, landlords will be looking to evict tenants some other way.
There will always be the mandatory rent arrears ground to use if the tenants are in arrears of rent. However landlords renting out a property which they have previously lived in themselves may also want to consider ground 1 – which is the mandatory ground for recovering property where either you have lived in a property previously or where you intend to live in it yourself.
This ground has not been used much in the past as section 21 is so much better known, plus s21 has the advantage of the (so called) ‘accelerated procedure’. However with the changes coming, it may be time to think about ground 1 again.
However I don’t think the new rules will impact as badly on landlords as people some think. Provided your property is in good condition and you respond to tenants’ requests promptly, they should not be able to use the anti-retaliatory eviction grounds. And the preconditions being brought in relate to things that landlords should be doing anyway.
The only landlords who will suffer are those who, for example, do not do annual gas checks (although you may want to put in place procedures so you can prove that the notices were served, to protect you if this is challenged).
Still, it does go to show that the time of the amateur landlord is drawing to a close. Landlords who manage their properties themselves will need to ensure that they are up to date with the law and comply with all their obligations.
By Tessa Shepperson