Government Changes to Section 21 Notices
On 15th April 2019 the government issued a press release that it would be aiming to bring about the biggest change for renters in a generation by creating open-ended tenancies and making sweeping reforms to the current no fault Section 21 Notice procedure.
The full press release can be read HERE>>
There is a 3-step summary:
- New deal for renters to end unfair evictions – preventing private landlords from evicting tenants at short notice and without good reason
- Step-change to create open-ended tenancies for all private renters – bringing greater peace of mind to millions of tenants in the private rented sector
- Landlords to have more effective means of getting their property back when they genuinely need to do so
This news came as a shock to the landlord community because whilst in the past owning buy to lets was compelling, of late, the increase in Stamp Duty and changes to the way in which Mortgage Interest was treated for tax purposes have eroded much of the yield to the point where many landlords are either pausing their activities in this sector or divesting altogether.
What is changing?
Until now, landlords could end an Assured Shorthold Tenancy without giving any reason providing they serve a valid Section 21 Notice in the prescribed form and have complied with their many duties as a landlord, (the handling of Tenancy Deposits for example). However, it seems to many, including the government that unfair evictions (even malicious at times) have been on the rise due to landlords evicting tenants without good reason which causes anxiety, stress and at its worst, homelessness.
Where there is a good reason to evict a tenant, landlords have always had it open to them to use the Section 8 Notice Process whereby they give a valid reason. The main reasons are rent arrears, (must be more than 2 months), property damage and anti-social behaviour. However, many landlords have opted for the less contentious no-fault section 21 process because it is quicker and cheaper. In fact, various landlord surveys have indicated that it is about one month quicker to use the Section 21 procedure versus the Section 8 Notice procedure due to the Court’s handling capacity. In other words it is slow and for landlords with rent arrears, time equals money.
This is understandable but the private rented sector has now grown to about 4 million tenants and such a lack of security is deemed undesirable for communities.
Prime Minister Theresa May said:
“Everyone renting in the private sector has the right to feel secure in their home, settled in their community and able to plan for the future with confidence.
But millions of responsible tenants could still be uprooted by their landlord with little notice, and often little justification.
This is wrong – and today we’re acting by preventing these unfair evictions. Landlords will still be able to end tenancies where they have legitimate reasons to do so, but they will no longer be able to unexpectedly evict families with only 8 weeks’ notice.
This important step will not only protect tenants from unethical behaviour, but also give them the long-term certainty and the peace of mind they deserve.”
If Section 21 cannot be used how do I get my property back?
The answer is Section 8. But, the consultation and the press release make clear that there will be amendments made to the Section 8 process so that whilst landlords will be required to give a valid reason for eviction, the process will be expedited by the Courts so that landlords can mitigate their losses if their tenants fall into arrears. The government promises it will be far quicker once these changes come into force.
These changes are expected to save tenants some £240 million per annum. These proposed changes are in addition to the sweeping changes brought about by the Tenant Fee Act 2019 in which most fees are banned.