Michael Gove, the government’s ‘levelling up’ tsar, has announced that it is now government policy to scrap Section 21 notices as part of improving tenants ‘pride of place’. Whilst this has long been seen as low-hanging fruit in the quest to improve the lot of England’s 5 million tenant households, could there be unintended consequences?
What is Section 21?
A section 21 notice, sometimes referred to as no-fault eviction, is a legal mechanism through which a landlord can regain vacant possession of a property after the expiry of a fixed tenancy term. In layman’s language this means that a landlord can, at the point many regard to be the ‘end’ of a tenancy agreement, require that the existing tenant leaves.
It doesn’t matter if the tenant has always paid the rent on time and caused no fuss for the landlord, with a Section 21 notice the landlord can evict the tenant if they choose to stay on past the end of their fixed term. This is the origin of the ‘no-fault’ nickname for Section 21 evictions.
Section 21 has rightly or wrongly gained a negative reputation amongst housing campaigners, many of whom claim it has been abused by rogue landlords to kick out tenants who make legitimate complaints or to force rent increases. Over 6,300 Section 21 notices were served in London since April 2019 (when the government first promised to review their use).
What has been announced?
The government recently announced the white paper for their Renters’ Reform Bill, debate on which is expected to begin sometime this year. The white paper, published this month, includes measures to repeal Section 21 of the Housing Act 1988. This is in line with the previously states aims of the government, who promised to look at eviction procedure in their election manifesto in 2019.
What could the effects be?
This interventionist mood within government has enjoyed a cool reception within the private rental sector. The last big intervention in the property rental market created the conditions for the exponential growth of the sector – it also created Section 21, which has been a crucial safety net for landlords.
Section 21 has, over years of government underinvestment in the court system, become an insurance policy for landlords who fear losing months of rent and potential thousands in legal fees trying to evict problem tenants through Section 8.
All a landlord with a difficult or dangerous tenant has to do is give notice under Section 21 and wait for the tenancy term to end. There are no tribunals or tedious bureaucratic procedures, the process of regaining full possession of their property is almost automatic.
You might ask why a landlord would be so apprehensive of using the ‘correct’ process set out to remove a problem tenant. The biggest factor is the process of showing cause.
Section 8 can only be served in certain circumstances and under certain conditions. Proving that these conditions have been met to a tribunal is difficult enough, however, some tenants choose to make the process even more difficult by running interference and extending the hearing beyond its allotted time. This can lead to weeks more delay as dates for further hearings are set.
Tenants lose out
An understandable desire to avoid a hellish eviction process has caused landlords to greatly value the certainty that Section 21 has offered. With the proposed replacement, housing tribunals, seeming very reminiscent of the most broken parts of the existing Section 8 system, landlords are more scared than ever of the prospect of getting a problem tenant.
This will have three key effects:
The first and most obvious is that landlords will be far less likely to give the benefit of the doubt to potential tenants. Bank statements not brilliant? Sorry I can’t risk being out 6 month’s rent. No previous landlord reference? Sorry but I don’t want to risk waiting months for a hearing at a county court still reeling from the Covid backlog.
The second is that for those tenants who are still under consideration, getting a tenancy will become more expensive. Landlords will insist on a greater portion of the rent up front in order to hedge against risk. It may become much more common for tenants to have to pay both the first and last months’ rent up front.
The last effect, which will be the most ironic for the Government and housing campaigners, will be felt hardest by councils. One of the ‘talking points’ deployed in the campaign to get the government to scrap Section 21 has been that councils lose out when someone is evicted from private accommodation and needs to be rapidly housed at public expense.
It seems somewhat short-sighted that councils have not considered what will happen to the tenants who will not meet a much higher bar for success with private lettings applications. These people will find themselves at the mercy of an already overstretched public housing sector, who in turn will be forced to turn to the very landlords they just disadvantaged to make up the shortfall.
It remains to be seen whether landlords will have the confidence to accept these public sector tenants, and what compensation or protections they may demand in return. In the end, the people currently calling for the abolition of Section 21 may be those who miss it the most.