The abolition of ‘no-fault’ eviction?

Currently landlords who let properties under Assured Shorthold Tenancies (“AST’s”) are entitled to give their tenant 2 months’ notice, upon expiry of any fixed term, that they require vacant possession of their property by serving what is known as a Section 21 Notice. This allows landlords to seek possession of their property without having to provide any reason.

However, the Government is now promising to abolish the Section 21 Notice procedure which will result in landlords only being able to evict tenants if they are at fault.

The rationale behind the proposal is to give longer term security to tenants and would effectively bring about the end of fixed term tenancies.

Although the exact details of the proposals are yet to be set out and consulted upon, the proposals, at first glance, appear to have little regard to landlords’ interests.

If implemented, the only recourse available to landlords will be to wait until the tenant is in some way in breach of their tenancy agreement at which point they may be able to satisfy one of the various grounds set out in Schedule 2 of Section 8 of the Housing Act 1988 as a basis for seeking possession; a system itself in need of reform.

The reported distinction between no-fault and fault-based evictions is misleading. The process used by a landlord to obtain possession of their property is usually, in our experience, borne out of personal choice, taking into account many factors, including timescales, costs and risks. Very often a landlord will use what is seen as the non-fault-based Section 21 route despite the tenant actually being in breach of the terms of their tenancy because of the inherent problems associated with pursuing fault-based evictions.

The Section 8 grounds are, as they stand, a challenge to landlords seeking possession of a property. Take a classic example we often see – a tenant is in just over 2 months’ rent arrears. If the landlord commences proceedings to obtain possession but the tenant then brings the arrears below 2 months by paying any amount, even £1, the landlord will lose its mandatory entitlement to a possession order, despite the tenant still being in arrears. In this scenario, the landlords we act for will often choose to use the Section 21 route because it is faster, cheaper and minimises the risk faced in seeking to bring the tenancy to an end.

It is too early to tell exactly what changes will be made and what scope may remain for a landlord to bring a tenancy to an end if, for instance, they want to sell their property. However, if the Section 21 procedure is to be abolished it looks likely that landlords will face a far greater challenge in future to end residential tenancies. This will have a range of implications to existing landlords and landlords considering entering the rental market. What seems clear is that there will be an increasing need to assess the suitability of tenants before granting them a tenancy, to issue carefully drafted tenancy agreements and thereafter close monitoring of compliance with the terms of the tenancy to reduce landlords’ exposure.