The recently proposed Renters (Reform) Bill by the Government brings forth much-needed changes to current housing laws, particularly by attracting attention to its plan to eliminate ‘no-fault’ Section 21 Notices.
In order to address the void created by the elimination of these notices, new justifications for issuing a notice of possession under Section 8 have been introduced, alongside significant revisions to certain existing Section 8 grounds. In the following discussion, we delve into the crucial modifications and explore their implications for both landlords and tenants.
Section 8 Grounds Undergo Transformative Revisions: Unveiling the Impacts of the New Amendments
Under Section 8 Ground 1, landlords can give a two-month notice if they or their spouse/civil partner intend to occupy the property. The revised version of Ground 1 expands this provision to include the landlord’s cohabiting partner, parents, children/grandchildren, parents/grandparents, siblings, and children of a cohabiting partner. To rely on this ground, the tenancy must have been in effect for at least six months. Notably, the landlord is no longer obligated to have resided in the property prior to the start of the tenancy for this ground to be applicable. This does raise concerns about the potential for unscrupulous landlords to manipulate the situation by arranging for a relative to move in, with the intention of evicting the tenant.
The Bill has taken into account the issue by prohibiting landlords from advertising the property for rent for three months following the expiration of the Section 8 Notice based on Ground 1. However, it seems that they are allowed to lease the property after that period. In such cases, the Bill states that landlords could face fines or legal action if reported. Nonetheless, the likelihood of such a breach being reported may be low, as the outgoing tenant would be the primary party aware of the situation after vacating.
Furthermore, a new provision, Section 8 Ground 1A, has been introduced, enabling landlords to serve a two-month notice if they intend to sell the property. Again, the tenancy must have existed for at least six months. The inclusion of this ground is a significant compromise for landlords since selling a property with tenants in place is often a key reason for seeking repossession. Similar to the proposed new Ground 1, landlords are prohibited from renting out the property for three months after the expiration of the notice under Ground 1A of Section 8. However, this also opens up the potential for unscrupulous landlords to evade fines and legal action if their actions go unreported.
Under Section 8 Ground 2, mortgagees are currently permitted to serve notice to regain possession of the property for sale with vacant possession, but only if the mortgage was granted before the start of the relevant tenancy. However, the Bill proposes to amend this ground to apply to all mortgages, regardless of whether they were granted before the tenancy began. This change significantly benefits mortgagees. However, sub-tenants residing in mortgaged properties will have less security under the new proposals.
Ground 8 is presently the most frequently used provision by landlords seeking to reclaim possession under Section 8. It necessitates a two-week notice period and is applicable when the tenant is two months behind on rent at both the time of issuing the Section 8 Notice and the possession hearing. However, in the Bill, the notice period has been extended to four weeks. Furthermore, any outstanding Universal Credit payments that the tenant is entitled to receive should not be considered when calculating the arrears if those payments would bring the arrears below the two-month threshold.
The Bill introduces a new provision, Section 8 Ground 8A, which mandates a four-week notice period in cases where the tenant persistently remains two months or more in arrears. Ground 8A is triggered when the tenant falls into at least two months of arrears on at least three separate occasions, with each occasion having at least one day in between when the arrears drop below the two-month mark. If the tenant falls into arrears exceeding two months on only one or two occasions, Ground 8A will not apply, but the landlord can still rely on Ground 8 (and the discretionary rent grounds).
This new provision aims to address a perceived loophole in the existing legislation, where Ground 8 cannot be utilized by landlords if a tenant reduces the arrears below the two-month threshold (even by a small amount) before or on the day of the possession hearing. If Ground 8A is successfully invoked, the landlord will have the right to a mandatory possession order, irrespective of whether the tenant clears the arrears. Landlords will need to ensure they have robust systems in place to monitor tenant payments and identify tenants who persistently pay rent late throughout the tenancy.
Another highly publicized aspect of the Bill pertains to the proposed expansion of landlord powers in evicting tenants due to anti-social behavior.
These powers primarily involve modifications to Section 8 Ground 14. Currently, Ground 14 allows landlords to initiate legal proceedings immediately after serving a Section 8 Notice if the tenant is engaged in conduct that is deemed to cause or likely to cause nuisance or annoyance to the landlord or others. The phrase “likely to cause” has been replaced with “capable of causing.” In theory, this broadens the scope of behaviors that can fall under this ground, as the landlord only needs to demonstrate that the tenant’s conduct is capable of causing nuisance or annoyance, rather than proving that it is likely to do so.
However, we believe that this change is unlikely to significantly impact the application of Ground 14 in practice. Ground 14 is discretionary, meaning that a judge must assess whether it is reasonable to grant a possession order, even if the tenant is found guilty of the alleged conduct. In instances where the tenant’s transgression is trivial and only capable of causing a minor nuisance or annoyance, it is highly improbable that the court would deem such behavior sufficient to warrant a possession order.
Understanding Possession Requirements in Section 8 and the Changing Landscape of No Fault Evictions
The majority of the existing conditions necessary for a Section 21 Notice, such as providing an EPC, gas safety certificate, and How to Rent Guide, will no longer hinder a Section 8 claim, which is positive news for landlords (though penalties for non-compliance may still apply, if applicable). However, landlords should be aware that the requirement to register deposits and provide prescribed information about the deposit will remain a prerequisite for obtaining a possession order (unless the deposit is returned to the tenant beforehand).
This stands in contrast to the current requirements, where a Section 21 Notice is considered invalid if the deposit requirements are not met at the time of serving the notice. Under the new regulations, it seems that landlords can fulfill the deposit requirements at any point before the possession order is granted in order to succeed in a Section 8 claim (though they will still be liable to compensate the tenant if they failed to meet the deposit requirements within the 30-day deadline).
Takeaways:Â
While much attention has been given to the elimination of the ‘no-fault’ Section 21 procedure, the actual impact of this change might be exaggerated. ‘No-fault’ is often associated with ‘no reason’. However, the majority of responsible landlords will have a legitimate justification for serving a Section 21 Notice, and it seems that these reasons are covered by the expanded Section 8 Grounds. Additionally, it should be noted that some of the proposed new Section 8 Grounds are also considered ‘no-fault,’ such as Grounds 1 and 1A, so evictions without a specific reason will continue under the revised Section 8 process.
In our perspective, the significance of abolishing Section 21 is that it now safeguards tenants from being evicted without being provided a reason, and it ensures that any reason given by the landlord is legally valid, as determined by the court. This is a positive change.
It’s important to mention that until the legislation is officially passed, Section 21 remains in effect. The Bill is currently in draft form and may undergo amendments or revisions as it progresses through the legislative process in Parliament. If and when the Act is passed, there is likely to be a considerable transitional period to allow landlords and tenants to become familiar with the new provisions. Therefore, Section 21 is expected to remain in force for a considerable period of time.
