In a well-publicised announcement made on 15 April, the Ministry of Housing, Communities and Local Government will "shortly" be launching a consultation regarding the abolition of s21 notices.
At present an assured shorthold tenancy ( AST) can be terminated on or after the expiry of its fixed term by service of a notice under s21 of the Housing Act 1988 (HA 1988). In theory provided at least two months' notice is given then there is usually no defence to a claim to possession on these grounds, and there is an "accelerated route" under the Civil Procedure Rules for possession without a hearing. No breach of tenancy or other grounds for possession need to be shown, in contrast with assured (non shorthold) tenancies under which possession can only be obtained if one of the grounds listed in Schedule 2 HA 1988 can be made out. These include rent arrears, anti-social behaviour and other breaches of tenancy.
In recent years the ability to serve a valid s21 notice has been restricted in various ways, including requirements on the landlord to have provided prescribed information and complied with certain statutory requirements before the notice is served. It has been something of a hot topic recently as to whether breaching one of those requirements (serving a CP12 gas safety certificate at the start of the tenancy) can ever be remedied, with a number of recent first instance decisions suggesting that such a failure would prevent a valid s21 notice ever being served at all.
The government press release describes the ability of landlords to terminate tenancies without having to give any reason as being "unfair", and causing many tenants to live in fear of eviction despite fully complying with their tenancy terms. The proposal – "the biggest change to the private rental sector in a generation"- is said to remedy a housing market which has not kept pace with changes in society, namely the increasing numbers who rent rather than buy a home.
It is said that this approach will be balanced by "expediting court processes" where landlords have a "legitimate reason" for seeking possession, such as the "rare events" of tenants falling into rent arrears or damaging the demised premises.
There are not yet any detailed proposals, which will be awaited with interest by many in the market.
Whether or not possession claims based on s21 notices are "unfair" depends perhaps upon the side of the fence on which one sits. Tenants may consider it most unfair that despite a flawless record of rent payment and compliance with tenancy terms, they may be evicted without reason on two months' notice. Landlords may consider that it is their property which they have let out on the terms of a mutually agreed contract for a limited term, and obtaining possession once that contract has expired simply vindicates their ownership rights (long established as a "legitimate aim" for the purposes of the Human Rights Act) rather than representing any unfairness.
In any event it will be interesting to see how the proposals deal with some of the more challenging questions which may arise, such as:
- Typical "buy to let" mortgages only allow landlords to let out properties on AST's so that possession can be easily obtained by the lender in the event of mortgage default and the need to sell the property. Will lenders be more reluctant to lend on such mortgages if possession will be more difficult to obtain, and could this reduce the supply of houses to let and push up rents?
- Will the removal of an "automatic" right to possession cause some landlords simply to leave the market so reducing the supply of rented accommodation and pushing up rents?
- In view of an ongoing programme of court closures, will Courts really be able to provide an "expedited service" and, if so, which other cases will be pushed down the queue to make room for expedited possession claims?
- Will there be an increase in the legal aid budget to provide advice to tenants facing possession claims in matters which might previously be dealt with under an accelerated possession route not requiring a court hearing?
- Many social landlord use ASTs as a form of "probationary tenancy " for the first year so that tenants who do fall quickly into arrears or engage in anti-social behaviour can be evicted speedily. Will a new tenancy type be created for this purpose?
- Where assured tenancy agreements (including ASTs) do not contain a rent review mechanism, landlords may serve a notice under s13 HA 1988 to increase rent annually; only if the tenant objects is the matter referred to the first tier tribunal to set the rent. Will some landlords use this mechanism to artificially inflate rents in the hope that tenants will fail to object and then seek possession on grounds of rent arrears? If this process starts to be used a lot more as a result of these proposals, is there to be an increase in resources for the FTT to cope with the increased workload? Will legal aid be available for tenants to receive advice on what to do when faced with a s13 notice or FTT claim?
- Will an exception be made for student lettings and, if not, will this hinder new students from obtaining housing as landlords will not be sure when and if current students will be moving out?
Careful thought will need to be given to the detail of these proposals to ensure that the law of unintended consequences does not leave tenants, landlords and HMCTS in a worse rather than a better position. Those with an interest in the residential rental sector may wish to keep a close eye on the Gov.uk website and respond to the consultation once it is published.