The Government are set to make significant changes to Section 21 (S.21) of the Housing Act 1988 in the UK, which are part of the broader reforms in the Renters (Reform) Bill. These updates are likely to dramatically change the way private renting works at present. With the change in government, it is unclear whether Labour intend to pass the Bill in its current form, or whether changes will be made before it is passed.
While a date has not yet been set for these updates to begin, it is noted that these changes may likely occur within the next few months. In any event, the demise of S.21 seems imminent, so landlords will need to prepare themselves for the upcoming changes.
What Are the Key Changes (Under the Current Version of the Bill) and How These Will Affect Landlords?
The Abolition of S.21 Notices
Arguably, the biggest update from the new Renters (Reform) Bill is the abolition of S.21 Notices. Under the current system, S.21 of the Housing Act 1988 allows landlords to evict tenants without giving a reason provided that they give at least two months’ notice after the fixed term tenancy has come to an end, or during a periodic tenancy. S.21 Notices effectively allow landlords to evict tenants on a ‘no fault’ basis.
The new reform plans to abolish S.21 Notices in their entirety thus removing a landlord’s ability to evict tenants without a reason. The aim of this reform is to provide tenants with greater security and stability while they rent.
The Introduction of stronger grounds for possession
Due to the abolition of S.21 Notices, the Government will introduce new and strengthened grounds under Section 8 of the Housing Act 1988. This means that landlords will be able to repossess their properties under specific circumstances such as; they wish to sell the property, move into it themselves or a close family member wishes to move into the property. Further, under the current Bill a landlord will still be able to serve notice on tenants in circumstances where there are rent arrears or repeated rent arrears, breach of contract, nuisance, and anti-social behaviour, amongst the other grounds set out in Schedule 2.
Notice periods under the new grounds differ depending on the reason for possession, varying from 2 weeks to 2 months. For a full list of the Reformed grounds and the notice periods, please see below link to the Government website.
Guide to the Renters (Reform) Bill – GOV.UK (www.gov.uk)
The Rent Review
The new reform proposes to limit rent increases to once per year and will require landlords to provide tenants with two months’ notice of any increase. The new system replaces the Section 13 process. Tenants also have the ability to challenge the rent increase if they deem it excessive (above market rate). This must be before the proposed new rent start date and the tenant must notify the landlord that they are disputing the increase.
The latter may have a substantial impact on landlords as the potential for disputes over rent increases may escalate, potentially leading to more involvement from the Court.
What Evidence Does a Landlord Need to Provide if the Tenant Fails to Leave the Property
If the tenant fails to leave the property after the end of the notice period, a landlord will need to prove to a Court that they are seeking possession of the property for one of the grounds specified in the new legislation. For example, if the landlord is serving notice because they wish to sell the property, evidence of a sale is required.
These reforms (along with others) represent considerable changes to the private rental sector in England. While the removal of S.21 Notices are aimed at providing greater security for tenants, landlords are required to adapt to a more regulated environment. It is advised that landlord’s familiarise themselves with the new reforms and also keep up to date with any additional changes. Landlords planning to evict tenants will need to navigate the new rules and provide appropriate notice under the new grounds. In addition, landlord’s may be faced with adjusting their current property management strategies to ensure that these fit with the new reforms.
If you are a landlord and wish to seek professional advice regarding the proposed changes and the potential implications, please do not hesitate to book an initial consultation with our Litigation team.
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