Abolition of Section 21 – New Grounds for Possession
Back in June 2022 the Government published its White Paper ‘A Fairer Private Rented Sector’. This document has stirred much debate but unusually it seems to have fairly wide political approval.
The Royal Assent of the Bill is unlikely to happen before the end of the first quarter of 2024 which would mean the earliest it could come into force would be 2025. This would mean that there could be a change of Government part way through the process.
The political consensus around change means that changes to the rented sector are highly likely.
A Significant Change for the Rented Sector
The proposals represent a change for the rented sector with the broad thrust being a move to protect tenants. In particular, this would involve the abolition of Section 21 and introduce new grounds of possession for landlords.
It looks as if a tenancy will only end if the tenant ends it or if the landlord has a ‘valid ground’ for possession. This will mean that the existing framework under section 8 of the Housing Act 1988 will be reformed and will include further mandatory and discretionary grounds for possession. All tenants who would previously have had an assured or assured shorthold tenancy will be moved onto a ‘periodic tenancy.’ However, there will be an exemption to private student lets.
What constitutes valid grounds for eviction will be key and will likely involve issues such as antisocial behaviour, unpaid rent, or a need to sell the property. There are some concerns amongst landlords that this could become an extended process and that their interests are being ignored.
The White Paper goes further and suggests the need for the Decent Homes Standard to be extended to the private rented sector, it will outlaw blanket bans on children or tenants on receipt of benefits whilst actively encouraging landlords to accept tenants with pets. It is also envisaged there will be a Private Renters Ombudsman to settle disputes.
Whilst the changes have received wide political support, some landlord groups have voiced their concerns. Areas that have received comment include a fear that Courts will become clogged with requests for possession even where there are good grounds for possession. The NRLA in particular has called for an end to anti-landlord rhetoric as well as expressing some practical concerns as to how the new Bill will work.
There have also been some concerns about a change to the way pets are viewed as part of the tenancy process. Under the proposed format permission to keep a pet must not be ‘unreasonably refused’ however, landlords should be able to recover the costs of insurance policies from tenants.
Rental Market ‘Runs Hot’
These changes come at a time when commentators such as Zoopla report that the rental market is ‘running hot’ with demand high and availability low. It reports that:
“Rents have risen by 20% in 3 years – an extra £2,220 a year – which is an ongoing concern for renters, especially those on lower incomes and/or in receipt of housing benefit.”
Some small landlords have decided to exit the rental market as a result of higher mortgage costs and concerns about the Bill. This could push rental costs even higher.
There is no doubt that the rental sector will remain high on the political agenda for some time given the likelihood of new regulations and sustained high demand.