Ending s21 and the New Grounds for Possession

17th June 2022 Commercial Litigation

Having now had some time to digest the White Paper and the other consultation responses which appeared yesterday and which I provided an overview of here, I am going to write a couple of posts about some of the more crucial details in the various documents.

One of the most substantial changes in the reform package is the ending of s21. This will mean that assured and assured shorthold tenancies will disappear and all tenancies, or at least all tenancies under the Housing Act 1988, will be periodic from the start. Tenants will have to give 2 months notice, which is a change from the common law position of one tenancy period’s notice (usually one month). Landlords will only be able to give notice if they have a ground for possession.

Tenant notice may be a bit complex and is likely to lead to court cases. Depending on how the legislation is written two months may be the notice period or it may be a minimum notice period with tenants having to give longer notice if they pay rent quarterly, for example. I can see some landlords moving to quarterly payment just to gain a longer notice period. Thought will also need to be given to joint tenants. At the moment in a fixed term tenancy all tenants must give notice together but in a periodic tenancy only one tenant needs to give notice. How will the amended legislation deal with scenarios where one tenant of a group wants to end the tenancy and the other tenants do not?

Tenants will also have to remember to give two months’ notice. I imagine that landlords will generally be aggressive in holding them to these notice periods. However, if a tenant just leaves then the landlord is likely to be out of pocket as the tenant’s deposit will not cover two month’s rent and there is not likely to be much point in pursuing a small claim for a relatively small sum with little prospect of recovery.

It is also notable that students are included as well and so the student let market will face considerable upheaval. It has long been an article of faith for student groups that students should not have lesser tenancy rights than everyone else. That is understandable and for some students will be important. But it hardly reflects the position of the majority of students. Landlords will not be able to have confidence that students will leave and that they will be able to go ahead with new tenancies. Therefore they are likely to not execute tenancies and leave them in abeyance until they can be sure that they will get possession. This will substantially disadvantage students who will potentially lose properties at the last minute with little opportunity to find an alternative. Slightly unfairly the government has also decided to make an exception for student blocks run by providers who are registered with the appropriate code. Why there should be this distinction is less than clear and it is likely to create confusion for students. Landlords will also be further disadvantaged as students are likely to give notice at the end of term leaving the landlord with a void period during the summer. Where there is a group of students sharing and one drops out of their course they may also seek to give notice potentially leaving all of the student group without accommodation.

As part of the loss of s21 all the things that restrict these notices now will be dropped. So issues around Gas Safety Certificates, property licences etc will not affect possession. There will still be a requirement to have deposit information and failing to deal with the deposit properly will bar the use of some grounds for possession, but it is not clear which ones.

There will be a new ground for possession for landlords who want to sell. It is not clear what evidence will be required to take advantage of this. It may be that the landlord’s assertion is enough but Generation Rent has already claimed that in Scotland a third of landlords are being dishonest about intent to sell. However, if more is needed then landlords are going to have to list properties for sale and then have them sit in abeyance for weeks while possession proceedings are pursued. Even then they could just withdraw the properties from sale once the tenant was evicted.

Landlords will also be able to move into their properties or move their family members in. Presumably this will mean that ground 1 is to be modified.

There will be a further new ground to require tenants to be evicted where they have been in at least two months arrears three times within the last three years, even if they are not in arrears at the hearing. This will be welcome news to some landlords. The mandatory ground for two months of arrears (ground 8) will remain but the notice period will increase from two to four weeks.

The government has also moved its position on implementation a bit. Originally they had said that these changes would not apply to existing tenancies. They are now saying they will give six months notice of initial implementation after which all new tenancies will fall into the new regime. Existing tenancies will also convert over to the new regime as well. The government has undertaken to give not less than one year’s notice of this happening. But this means that these changes will apply to existing tenancies.

Ultimately all of these changes will need to await publication of a Bill so that we can really look at the details but there will be a lot to keep landlords, agents, and lawyers busy.

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David Smith is a Partner located in Londonin our Commercial Litigation department

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