The End of Section 21 – Protecting Your Position – And finally …

This is the final part of a series of articles for landlords on preparing for the removal of the no-fault ground for possession under section 21. 

Part 8. Summing it all up

The government has a lot on its plate just now. Housing legislation reform is fairly high on the agenda but even so, it is going to take a while before the Renters Reform Bill is published and we know what we are facing.

As discussed in Part 1 of this series, it is unlikely that any legislation will actually come into force before 2021.

Whether the removal of section 21 will ultimately benefit tenants is unknown:

• On the one hand, the uncertainty that the threat of a section 21 eviction creates for tenants is not good, as I discussed here
• On the other hand, if landlords pull out of the sector as a result of section 21 abolition, that will reduce the available accommodation for those unable to buy, which is also not good.

We live in interesting times. The whole world is spooked by the threat of Coronavirus and the impending climate catastrophe means that we will all have to accept changes in the way we live our lives.

Somehow the threat of section 21 removal, and even Brexit, seem less important in comparison.

However, for many landlords, it will still be very threatening and worrying. The point of this series has been to show landlords that, on the information available today (in March 2020), the removal of section 21 need not be a problem if proper precautions are taken.

Let’s review the situation on the basis of what we know now. These, as I see it, are the options:

1. Making section 21 totally irrelevant
2. Ensuring that you are less likely to need it
3. Making it easier to evict using a different procedure
4. Having protection in place if the worst comes to the worst

1 Making section 21 totally irrelevant

Section 21 is the section in the Housing Act 1988 which provides for ‘no-fault’ evictions of tenants with assured shorthold tenancies (ASTs).

It follows that if someone does not have an assured shorthold tenancy – section 21 cannot be used against them.  So which occupation types will these be?

Occupation types which are not Assured Shorthold Tenancies

Most tenancies nowadays are ASTs, but not all. For example:

• Protected and assured tenancies – here tenants have greater security of tenure and are more difficult to evict – so landlords will wish to avoid creating them or buying properties with tenants subject to them.
• Common law / non regulated tenancies – here tenants do not have long term security beyond their fixed term. Notices to Quit can be used to end the tenancy and section 21 is not needed.
• Other occupation types such as licenses and holiday lets – these tend to be short term and landlords should not have much difficulty in recovering possession should this been needed.

So if a landlord is able to create an occupancy where the tenant can be evicted easily other than by section 21, this will avoid the problem. In Part 6 of this series, we considered the creation of licenses.

Assured tenancies and the mandatory grounds

If the right to use section 21 is removed, all ASTs will effectively become assured tenancies.  The only procedure available for possession for these tenancies will be that in section 8 based on the grounds for possession set out in schedule 2 of the Housing Act 1988.

As I have discussed elsewhere, landlords should use a mandatory ground when evicting tenants as otherwise (with the system we have today) eviction proceedings can become long drawn out and expensive, even if the landlord is in the right.

So what mandatory grounds are available?

The mandatory grounds are grounds 1 – 8 in Schedule 2.  The best ground to use, if this is possible, is ground 1. As I discussed in Part 5 of this series, landlords who have either lived at the property in the past or who intend to do so in the future should include a ground 1 notice in their tenants’ first tenancy agreement as a matter of course. This will make their properties totally independent of section 21.

The other mandatory ground to consider is ground 8, the serious rent arrears ground. We are told that this is going to be tightened up and made more reliable for landlords in the new legislation.

However, in the meantime, landlords should try to ensure that all tenants allowed into occupation are fully able to afford the rent. We discussed this in Part 4. Sadly this may mean that it becomes even more difficult for benefit tenants unless the benefit rules are changed.

2 Making sure you are less likely to need section 21

The main key to this is a careful choice of tenant, as we discussed in Part 4 of this series.

Here are some other suggestions

• Do regular property inspections – this will keep you in touch with tenants so you are more likely to see problem situations coming.
• Treat your tenants well – if tenants trust you they are more likely to talk to you when problem situations arise which may make finding a solution easier.
• Be prepared to make concessions for good tenants – a good tenant is worth keeping, so allowing very occasional ‘rent holidays’ for example at times of trouble may make all the difference if they are in difficulties.
• Help tenants in financial difficulty – easy options are changing the day rent is paid and (provided this will not create problems with your insurance or mortgage or create an unwanted HMO) allow them to take in a lodger

3 Making it easier to evict using a different procedure

We are told that the reforms will mean that tenants can only be evicted under the new regime if there is a known reason. It follows therefore that landlords will need to be able to prove this reason. Which means having proper records.

We discussed this in Part 7.

Landlords and agents need put in place proper procedures for record-keeping. This cannot be implemented too soon. You will also need records to prove that you have complied with all the many rules and regulations which renting property is now subject to.

You will also find it considerably easier to use the eviction procedures if you are compliant with current legislation. I suspect that the current ‘section 21 pre-requisites’ such as dealing correctly with deposits, will become pre-requisites for any new procedures under the Renters Reform legislation.

We discussed the property condition in Part 3, but you need to be compliant with ALL legislation.

So this means that it is critical that landlords who self manage and all agents take steps to ensure that they are fully up to date and that they do regular training.

4 Having protection in place if the worst comes to the worst

This really boils down to having proper and comprehensive insurance. Which we discussed in Part 2.

Another precaution is taking suitable guarantees if you are worried about tenants.

Conclusion

Landlords and their agents are not unnaturally worried about the prospect of losing the right to evict with section 21.  As I explained in my history post here, section 21 underpins the private rented sector.

However as we have shown in this series, the loss of section 21 will not be a complete disaster – even if the law otherwise remains as it is.  However, this is unlikely, we are assured by the government that they are going to amend the eviction process to make it easier for landlords to recover possession in bad tenant situations and where the landlord needs to sell.

We shall have to wait and see what they decide to do.  In the meantime, I would strongly advise all landlords and agents to improve their record-keeping and put in place some of the other suggestions in this series of posts.