Section 21 is a useful tool in a landlord's firewall and allows a landlord to regain possession of a property without reason. It can be hard to provide physical evidence for certain clauses in a tenancy agreement meaning a Section 8 . Landlords, on the whole, are responsible with Section 21 and have a legitimate reason for serving one. However, Section 21 has been open to abuse by unscrupulous landlords and for that reason, it is being abolished. Without Section 21 there will be no need for the differentiation between Assured Shorthold Tenancies (AST) and Assured Tenancies, therefore, the Government preposes to remove ASTs completely. You can find the full Government report here.
Section 21 Use
Data suggests that in recent years there has been a dramatic increase in homelessness caused by the end of an Assured Shorthold Tenancy (AST). This often occurred after a Section 21 notice was served to the tenant. We found the data particularly compelling in areas where the available housing stock is limited, for example, London. The graph1 below shows the increase in homelessness with the recorded reason as the end of an AST.
Acceptances: "A ‘main homelessness duty’ is owed where the authority is satisfied that the applicant is eligible for assistance, unintentionally homeless and falls within a specified priority need group. Such statutorily homeless households are referred to as ‘acceptances’."
The chart1 below demonstrates that in the private sector the use of no-fault evictions, i.e. Section 21, is far more prevalent than the social sector. This could be an abuse of Section 21 or it could be down to Section 21 processes being quicker and easier to complete than Section 8. Even if Section 8 is relevant, a landlord uses Section 21 due to its speed. It must be noted that the vast majority (90% according to the Government) of tenancies that end are down to the tenant ending the agreement.
The Government believes that removing Section 21 and adapting Section 8 to cover the legitimate use of Section 21 will help level the playing field and stop the opportunistic abuse.
The Consultation and Industry Response
Last year (2019) the Government launched a consultation into their proposed changes running until October 2019. The consultation found that:
"Those renting from private landlords have been left feeling insecure by short fixed-term tenancies."
This can cause disruption to a child’s education and impact a tenant’s ability to save for a deposit due to the cost of frequently moving.
The Government report said they recognise the following points for Landlords:
“Landlords need to be able to evict tenants who break the tenancy agreement in a way that would merit the ending of a tenancy.”
“Landlords also need to be able to regain their property if they need it for themselves or their families, or if they intend to sell it.”
“Landlords must have confidence they can gain possession of their property through the courts efficiently.”
The National Residential Landlords Association (NRLA)
The NRLA believe that review is important and welcomed but it must be done right. Section 21 was originally intended for use when landlords wish to sell or move into their property. They argue:
“Section 21 has become a backstop to overcome the inefficient section 8 process.”
This being said if Section 8 is reformed to increase speed and decrease cost there would be an argument for removing Section 21.
“It’s entirely dependent on the Government’s ability to re-balance the system through Section 8 and court process, so that it works for landlords and tenants alike.”
Our Point Of View
The takeaways from the Government's consolation are promising but for students and student landlords, they pose a few issues. In the student market ASTs are the most common form of agreement used. They provide needed flexibility for both parties. Section 21 or Section 8 are rarely invoked as most undergrad students need a property for a maximum of 2 years.
A student expects to change house each year, therefore, after their fixed term is up there is little uncertainty. Under the new proposal, students will have to give notice to landlords and this could be as little as 28 days. Current data suggests most properties are on the market between November and February. There may be a new wave of property availability occurring one month before term starts under the proposed rules. This could cause unnecessary stress and anxiety for students and landlords. As it stands landlords who wish to keep their tenants ask them via text early on and, under the new proposals, this would still suffice. However, if a student doesn't reply this could provide landlords with unnecessary stress, hence, the argument for automatic possession.
Automatic possession is when the fixed term is up, the tenant has to move and the landlord regains possession of the property. Students wanting to keep their house can simply sign another fixed term before their current term expires. Introducing automatic possession creates clear, defined boundaries for both tenant and landlord, allowing both parties to plan and mitigate stress.
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