The Conservative manifesto included a promise to end ‘no fault’ evictions. But what exactly is going to happen? And what does it mean for landlords?
We asked three experts for their views as the private rented sector enters a year of reform.
A New Bill
If 2019 was the year of the Tenant Fees Act, 2020 will be the year of the Renters’ Reform Bill (RRB). The Bill is expected to contain measures to:
- Repeal Section 21 of the Housing Act (1988)
- Strengthen Section 8 of the same Act
- Modernise tenancy deposits
Consultations on tenure and deposit reform were both launched last year. They closed in autumn and responses are currently being analysed.
Robin Stewart, a Senior Associate Solicitor at Anthony Gold, expects the RRB to begin passage this year. “The formal briefing document which accompanied the Queen’s speech in December 2019 contained some additional details about the Government’s plans.”
“[The Bill] will abolish section 21 notices but give landlords additional rights to recover property “where there is a legitimate need for them to do so”. That will mean adding new grounds for possession which landlords must prove when they serve a section 8 notice and then rely on this at court to try to obtain a possession order.
“The new grounds are likely to include allowing landlords to obtain vacant possession when they are selling a property. A change to ground 8, the non-discretionary ground relating to high rent arrears, to make it easier to landlords to rely on, is on the table. The Government is also considering what special rules might be needed for lettings to students, short-term lets, and other groups of landlords and tenants with particular needs.”
The Tenant Perspective
Section 21 meant that landlords could evict tenants without having to prove any grounds exist, as long as the tenancy was periodic (i.e. not within a fixed term). In practice, this meant that the minimum length of an Assured Shorthold Tenancy in England and Wales became just six months: among the shortest in Europe.
Tenant advocacy groups like Generation Rent have argued that the possibility of eviction without grounds has caused chronic insecurity for renters.
“[The scrapping of] Section 21 will provide tenants with much-needed security, allowing them to plan for their future and invest time in their local communities without fear of eviction,” says Caitlin Wilkinson, Policy Manager at Generation Rent.
“By requiring landlords to prove grounds for eviction, tenants will have more trust that their landlord will respond reasonably to requests for repairs, and more confidence to treat their home as a long-term home.”
The Future of Buy to Let
The ability of lenders to swiftly possess properties has been the sine qua non of the UK’s burgeoning buy to let sector for decades. Banks can already use Section 8 to possess the property in the case of the landlord falling into severe mortgage arrears, but Section 21 evictions are seen as simpler and faster.
It’s possible, then, that lenders will be less eager to invest in buy to let loans after the RRB is passed. Perhaps because of this, it looks like lenders, including the UK’s largest banks, will lobby hard to make sure that tenants’ new rights don’t get in the way of creating land-securitised credit for landlords.
A spokesperson from UK Finance, who represent big banks and other lenders in the UK said “A Renters Reform Bill is planned to deliver a fairer and more effective rental market. This needs to balance the rights of tenants and those of responsible landlords so that it doesn’t damage the buy-to-let market.”
If they succeed, then can the Government still claim to have ended ‘no fault’ evictions? Assuming the tenant is not in rent arrears, a landlord not paying their mortgage payments is clearly not the tenant’s fault. So if the Government is serious about ending ‘no fault’ evictions, this must also include stopping tenants from being evicted when their landlords don’t pay their mortgage. But this outcome seems quite unlikely the powerful interests aligning against it.