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A Blow for Landlords The End of 'No Fault' Evictions?15th May 2019 Commercial
The Government recently revealed their intention to bring an end to what is widely known as ‘no fault’ evictions, a move that will be most unwelcome by landlords throughout the country. The proposed overhaul, which has been labelled by Housing Secretary James Brokenshire MP as being “the biggest change to the private rental sector in a generation„, could very well see an end to section 21 notice evictions and make the eviction of tenants significantly more troublesome.
The Current Position
At present, section 21 Housing Act 1988 provides landlords with the ability to evict residential tenants at the end of the fixed term of the assured shorthold tenancy agreement (“AST„) upon two months’ written notice.
The provision of section 21 is frequently utilised by landlords, with the Ministry of Justice reporting that the service of section 21 notices has steadily increased since 2011. Such notices are served by landlords in circumstances in which the residential tenant has complied with the terms and conditions of the AST, yet the landlord seeks to obtain vacant possession of the property in question.
The section 21 eviction process is largely adopted by landlords on the basis that it is less risky (in circumstances in which the landlord has complied with their various obligations), more cost effective and speedier than their section 8 counterparts. Whilst not the preferred route, section 8 of the Housing Act 1988 provides landlords the basis on which to seek the eviction of a tenant on the basis that one of the ‘grounds’ provided for within Schedule 2 of that legislation applies. Section 8 evictions are most common in instances in which a landlord has failed to comply with his/her obligations relating to the tenancy deposit and where a breach of the AST has occurred.
Impact on Landlord and Tenant Relations
Recent case law has seen a marked move away from section 21 evictions, limiting the circumstances in which a landlord may obtain an order for a no fault eviction. Cases such as Caridon Property Ltd v Monty Shooltz and Trecarrell House Ltd v Rouncefield have seen landlords fail to obtain such an order in circumstances in which a tenant was not provided with a Gas Safety Certificate (“the GSC„) at the outset of the tenancy. What is more, these decisions suggest that the failure to provide the GSC may act as an absolute bar to section 21, and cannot be retrospectively amended by providing the GSC at a later date.
The Government’s latest proposal may therefore be the final nail in the coffin for section 21, with landlords potentially losing the ability to evict residential tenants without reason and on relatively short notice.
As a result, the abolition of section 21 could see the creation of open-ended tenancy agreements, with landlords stuck with compliant tenants with little to no basis on which to seek their eviction. It is no surprise, therefore, that law firms up and down the country will be expecting an influx of instructions to advise on and proceed with the commencement of the section 21 procedure before the Government’s proposal can take effect.
Avoiding an open-ended tenancy
Admittedly the Government’s proposed overhaul proves tough reading for landlords, although it is not all doom and gloom. With the pending abolition of section 21 comes a slight amendment to Ground 1, Schedule 2 Housing 1988. At present, Ground 1 allows a landlord to seek recovery of the rented property provided that “not later than the beginning of the tenancy the landlord gave notice in writing [that]..the landlord who is seeking possession...requires the dwelling-house as his..only or principal home.„ Ground 1 is often utilised when a landlord requires the return of the property as they themselves are threatened with homelessness. Unfortunately, such a ground is at present difficult to satisfy, with a landlord required to serve a notice at the outset of the tenancy agreement.
The proposed amendment seeks to amend or introduce a new ground (at present it is not certain which) allowing the landlord to seek recovery of the property if they intend on selling the property or intend on using the property as their principal home. The amendment seems to suggest that prior notice is no longer required, and can therefore be considered a slight (albeit not full) dilution of the circumstances in which an open-ended tenancy could be created.
A Proactive Approach
Whilst the proposal is currently at the consultation stage, and therefore a number of years away from its introduction, it is not clear whether the proposal will be retrospective. Historic amendments to landlord and tenant law have shown a reluctance to introduce retrospective application, yet this is not uncommon. It is therefore of vital importance that landlords are aware of the proposed abolition of section 21 and can take steps to mitigate the prospects of an open-ended tenancy.
Should you be a landlord concerned about the introduction of the Government’s latest proposal, please do not hesitate to contact JMW’s experience Real Estate Litigation department who can advise on methods of avoiding an open-ended tenancy.