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No fault evictions: Are Tenancies Heading Back To The Future?

No fault evictionsJeremy Corbyn told the Independent recently that Labour’s next manifesto will contain plans to scrap laws allowing “no fault” evictions. Mr Corbyn wants more regulation of the private rented sector and believes the policy will help to reduce homelessness. Whilst this is only a comment in an interview and may never become law, it is worth considering how landlords would be affected by these proposals.

What are “no fault” evictions?

They were introduced by the Housing Act 1988, as there had been a decline in the amount of private rented property available. This was thought to be because the Rent Act 1977 restricted landlords from evicting tenants on all but a small number of grounds. Residential letting was, therefore, risky and not particularly lucrative.

The Housing Act 1988 established assured shorthold tenancies. “Shorthold” refers to an initial fixed term, after which the landlord can choose to serve notice and recover the property without having to prove fault by the tenant. This affords greater flexibility and reduced risk. 

Mr Corbyn’s proposal might reduce evictions, but would it deter you and me from becoming landlords?  

Currently, within the initial fixed term of an assured shorthold tenancy, which is typically six or 12 months, you may only take possession if one of the statutory grounds is satisfied. That process involves serving a Section 8 notice and seeking an order from the court. 

Once the initial fixed term has ended, you don’t need to rely on any statutory grounds. As long as the correct notice is served on the tenant under Section 21 of the Housing Act 1988, giving at least two months’ notice, you can apply to the court for possession.

Provided you served a valid notice and comply with all the other requirements, the court is obliged to grant your request. The tenant can ask for a postponement of up to six weeks in exceptional circumstances, but aside from that, there is no way the order can be declined.

Granted, this leaves tenants at the mercy of landlords, but in my experience at least, most will not evict someone who is paying rent and otherwise not breaching the tenancy. Typically, an issue such as rent arrears, the condition of the property, or problems gaining access for repairs triggers service of a Section 21.

What Mr Corbyn is proposing will take away this option from landlords. This would essentially mean the only way to remove a problem tenant is to wait until they breach one of the statutory grounds. 

What is wrong with this proposal? 

The existing alternative is the Section 8 process, which relies on very specific rules. 

It is difficult for a landlord to obtain evidence to prove some of the grounds and most are discretionary. This means even if you can obtain proof, the judge will only make a possession order if he/she considers it reasonable.

There is a considerable risk of time, legal expenses and court fees in serving a Section 8 notice, with no guarantee a judge will grant possession and the prospects of recovering these costs from the tenant are typically low, even if you are successful.

In my experience, the number of “no fault” evictions taking place could be misleading because many landlords will serve a Section 21 notice even where there is fault, because the process is easier and less fraught with risk. Section 8 would need improvement, if the other option was removed. 

Is better regulation needed?

The private rented sector and assured shorthold tenancies are far from unregulated, as Mr Corbyn suggests.

A valid Section 21 notice cannot be served unless the tenancy deposit is protected and prescribed information provided to the tenant. Equally, a landlord or solicitor must be meticulous in drafting and issuing the right notice or making the claim to the court, whichever process they use.

The ability to gain possession has been curtailed since October 2015, when stringent rules were introduced requiring landlords to serve gas safety certificates, the How to Rent booklet and an EPC before a Section 21 notice can be valid.  At the same time, new laws preventing retaliatory eviction were introduced. 

Landlords have to carry out Right to Rent checks, which concern the immigration status of tenants, there is legislation governing houses in multiple occupation and many local authorities are introducing selective licensing for all private rented sector properties. There are also new rules expected regarding tenant fees, not to mention the legislation governing gas safety checks, smoke alarms, etc.   

Sarah Coates Madden

 

If you have a problem tenant and you need advice about eviction or any other property litigation matter, don’t hesitate to give me a call on (0114) 218 4000 or email:          sarah.coates-madden@tayloremmet.co.uk

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