Whose fault is it?

3 July, 2019

For its first 25 years or so, Section 21 of the Housing Act 1988 (“Section 21”) led a relatively trouble free existence.  It set out a straightforward process for the termination of assured shorthold tenancies or “ASTs”.  But then things began to change.  First came a spate of litigation in the Court of Appeal, over the seemingly uncontroversial subject of tenancy deposits.  Now, Section 21 stands accused of facilitating ‘revenge evictions’, where landlords evict their tenants after legitimate complaints are raised about the condition of the rental property.

It’s not you, it’s me …

This type of retaliation is enabled by the fact that Section 21 allows the landlord and tenant relationship to be ended without any reason.  Landlords must comply with certain preconditions, which include serving notice on the tenant in a specific format.  But if they do, the tenant must then leave the rental property after the notice period has expired.

Alternatively, Section 8 of the Housing Act 1988 (“Section 8”) allows landlords to bring possession proceedings against their tenants (at any time) if they breach a term of their tenancy.  Most landlords still prefer to use Section 21 though.  This is because as long as the preconditions are met, there is no defence to a Section 21 claim (as there is no allegation of fault for the tenant to defend).

By contrast, the most common grounds for a Section 8 possession claim (set out in Schedule 2 of the 1988 Act) require the landlord to prove that the tenant has breached a term of the tenancy agreement before an order for possession of the property can be granted.  A court hearing is usually required.  The process is usually slow and never inexpensive.  Given the choice then, it’s not surprising that most landlords would prefer to rely on the more straightforward process of making a Section 21 claim (some of which can be concluded without a court hearing, using the ‘accelerated procedure’).

A question of intent

The abolition of Section 21 could, effectively, create ASTs that continue indefinitely.  Landlords would only be able to recover possession of their properties if their tenants were to breach the terms of their tenancy agreements.  To redress the balance, the Government intends to introduce two new Section 8 grounds:  landlords will be entitled to possession of their properties if (a) they want to live there themselves; or (b) they want to sell.

These proposals sound fair and reasonable in theory.  But how would they apply in practice?  Most people would consider placing an advertisement with an estate agent and carrying out a number of viewings as sufficient evidence of an intention to sell.  But that would be a very low evidential test for landlords to meet.  Add to this the fact that Section 8 grounds can be used to claim possession at any time and you could end up with a situation where tenants actually have less security than they currently have under Section 21 (where the AST must be allowed to continue for the length of the contractual term – usually a year).

Also (and somewhat ironically) the introduction of these new Section 8 grounds will mean that the unpopular ‘no fault eviction’ won’t be disappearing anytime soon.  Landlords will only have to prove that their intention to sell or move is genuine.  The tenant’s conduct and circumstances will presumably be irrelevant.

Stepping into the breach

The Government has also given an assurance that:

“Court processes will also be expedited so landlords are able to swiftly and smoothly regain their property in the rare event of tenants falling into rent arrears or damaging the property.”

There would be a risk of injustice if orders for possession were to be made on the untested evidence of one party where fault is alleged (even in simple cases of rent arrears, which are anything but rare!) or where the landlord is under a burden to prove that their intention to sell or move into the rental property is genuine.  But if the Court is required to hear all of the new Section 8 claims, there’s no doubt that the resulting increase in its workload will be significant.

All this makes it difficult to understand quite how the proposed changes will benefit the court system, or offer landlords any comfort that their claims for possession will be handled swiftly or smoothly.

Summary

It would be better, we think, to review and amend the Section 21 process with a view to reducing the potential for misuse.  Abolishing it and introducing two new Section 8 grounds for ‘no fault evictions’ in its place could well end up defeating the object of giving tenants greater security.

We suspect that the Government is unlikely to change its mind about introducing these reforms.  Hopefully though, further details will soon be published about how the new process will work in practice.  There is a risk that the current uncertainty could lead many landlords to simply pull their properties from the market, reducing available stock and driving up rents as a result.  That would be a serious blow for all residential tenants.  A consultation on the proposals is expected to take place during the summer.  Watch this space …