April 2019 Government announcement
In April 2019, the Government announced that it will end ‘no-fault’ evictions of residential tenants under assured shorthold tenancies. This would be done by repealing section 21 of the Housing Act 1988. There is a concern about the vulnerability of tenants to eviction at short notice and under the proposed new framework, a tenant cannot be evicted without valid reason giving them more stable occupation. The Government also proposed to strengthen the section 8 eviction process, so landlords can regain their property should they wish to sell it or move into it themselves. We reported on the Government announcement here.
The Government on 21 July published a consultation on implementing its decision to repeal section 21 and modifying section 8. The consultation closes at 11:45pm on 12 October 2019 and click here for further details including how to respond. The consultation proposals relate to England only.
The impact, if these changes become law, is that landlords will not be permitted to grant (residential) assured shorthold tenancies (ASTs) in the future. This means that a landlord will not be able to terminate the tenancy and regain possession by serving a section 21 notice (two months’ notice where the landlord does not need to provide a reason to end the tenancy and there is an accelerated possession process not involving a hearing before the court). All future tenancies will be “assured tenancies” (either periodic or fixed term), which can only be ended by the landlord if they gain possession through the courts. The Government is consulting on whether a minimum time period should apply to fixed terms.
The consultation seeks views on:
- the circumstances in which landlords should be able to regain possession,
- the implications of not allowing landlords to grant ASTs in the future,
- the improvement of the process for repossession orders through the courts, and
- whether the proposed changes should apply to other landlords, for example, housing associations, or those in the build to rent sector, or in a student accommodation context.
New additional grounds for possession
The consultation proposes three new additional grounds for landlords to seek possession:
- Where they need the property for occupation by a family member (extending the existing ground which relates to occupation by the landlord themselves). This would be a mandatory ground where the landlord has served prior notice that they may use this ground, but note that the tenancy must have been in place for at least two years.
- Where they need to sell the property. This would be a mandatory ground where the landlord has served prior notice that they may use this ground, but note that the tenancy must have been in place for at least two years.
- Where a tenant prevents landlords from maintaining legal safety standards at the property. This would be a discretionary ground.
With the exception of the no-fault section 21 ground, the consultation does not propose abolition of the existing grounds for possession under the Housing Act 1988 such as for rent arrears or other breaches, but makes proposals in relation to them.
It is proposed there will be a transition period when landlords and tenants can still enter into ASTs. The reforms are not proposed to be retrospective. So landlords will still be able to use a section 21 notice to end an existing assured shorthold fixed-term, or an assured shorthold statutory periodic tenancy that continues beyond the date when legislation comes into force. The Government is minded to commence the new law six months after it receives Royal Assent.
The Government intends to protect the benefits of the AST regime (such as the protections for tenant’s deposits or protections under the Tenant Fees Act) throughout these reforms.
The Government acknowledges that to deliver the reforms, landlords must have confidence they can gain possession of their property through the courts efficiently. So the Government will seek to reduce national average landlord possession case times through the courts by two weeks and simplify the court process through an online system. The Government also wishes to explore whether some or all accelerated applications for possession could be used for some or all of the mandatory grounds for possession.
The Government does not support the introduction of rent controls to set the level of rent at the outset of a tenancy, but is clear that there must not be any mechanism for landlords to force a tenant to leave the property by including clauses in fixed term tenancy agreements which hike up the rent by excessive or unreasonable amounts just before the agreement is due to expire. It intends to legislate to stop this by preventing tenancy agreements from containing any clauses that would change the contract after the fixed-term has ended. Landlords would still be able to adjust the rent in line with market levels by negotiating a new fixed term contract with the tenant. If the contract moved onto a statutory periodic tenancy, the landlord can adjust the rent under section 13 of the Housing Act 1988.