A Section 21, or ‘no-fault’ eviction, may no longer be an option for landlords soon, but it’s not necessarily a bad thing for the sector.
If you’re a buy-to-let landlord and your tenants have broken the terms of their tenancy, such as by not paying rent for a certain amount of time, you can probably use a Section 8 notice in order to evict them. You can give between two weeks’ and two months’ notice to the tenants, depending on the circumstances.
However, many landlords have other reasons for wanting to evict their tenants, such as wishing to reclaim the property to sell it or to move back in, and this is where a Section 21 notice can be useful. Landlords do not have to give a reason, but must adhere to the rules that apply to a Section 21.
In England, this can only take effect at the end of a fixed term tenancy, or during a periodic tenancy, and tenants must be given at least two months’ notice. You can find out more about current rules here.
But with the much-talked about Renters’ Reform Act, which is expected to be introduced during the 2022-2023 parliamentary session (although could be delayed), Section 21 is set to be abolished. Under new rules, a tenancy will only end if the tenant ends it, or the landlord has ‘valid grounds’ to do so.
What’s the problem with Section 21?
The idea of a no-fault eviction has been problematic to some in the sector, who feel that landlords can abuse this eviction option in order to unfairly force tenants to leave so that they can increase the rent, for example.
The new eviction rules could mean a longer notice period for tenants, too, to allow them more time to find alternative accommodation. As Baroness Scott of Bybrook recently pointed out, abolishing Section 21 is to ensure a “fair deal for renters”.
However, while many landlords fear the tightening up of eviction rules and worry this will leave them powerless with their own properties, according to Gavin Richardson, the managing director of Mortgages for Business, the situation is unlikely to negatively impact the majority of landlords.
As he points out, at present, Section 21 evictions are rarely used by responsible landlords: “Sensible landlords rarely turf out good tenants who pay their rent as they want them to stick around. So this reform will disproportionately hit bad landlords abusing Section 21, rather than the reputable end of the market.”
When will landlords be able to end a tenancy?
While no-fault evictions will be scrapped, the existing Section 8 notice option will be strengthened, allowing landlords to legally regain possession of their properties should they wish to sell them, for example, but with new rules on notice periods.
But where there is an issue with the tenant, such as antisocial behaviour or rent arrears, the power to evict will still lie with the landlord.
“Tenancies can still be ended if there has been a breach of the tenancy by the tenant. Furthermore, the government has said it will introduce a new ombudsman to settle disputes between tenants and landlords without the need to go to court — and speed up court processes where possession cases require them.
“The government has also promised to digitise the courts’ agenda ahead of these reforms to ensure a swift resolution to these cases.”
Therefore, for any property investors or landlords baulking at the idea of letting out a property under the new rules, should they no longer be able to regain possession of it, this should provide reassurance that it will still be possible to do so after the Renters Reform Bill comes into play.
When investing in property, while rental yields are a vital part of the overall income over the long-term, realising the value of the housing asset when the time is right, through its disposal, is a key part of investment process.
