Rental reforms on the way: the abolition of Section 21 and more
Mark Brayfield explains the proposed changes to the private rental sector and how they will affect both tenants and landlords
The much-anticipated legislation to ban “no-fault” evictions is well under way with proposals being published in a government White Paper on Thursday 16th June. Entitled A fairer private rented sector and presented by the Housing Secretary Michael Gove, this legislation will form part of the Renters Reform Bill and the government’s wider agenda of “levelling up”.
As the title suggests, the government says that this will make the sector fairer and redress the balance between landlords and tenants. The one change dominating the headlines across the mainstream media is the banning of Section 21 evictions. Landlords will no longer be able to terminate a tenancy without giving a reason.
However new grounds of possession will be introduced if the landlord wishes to sell, or if they or close family members wish to occupy the property (although this cannot happen in the first six months of the tenancy). Another new ground is with regard to rent arrears when a tenant repeatedly paying off a small amount of arrears to take them under the 2 month threshold. If they have been in at least 2 months’ arrears three times within the previous 3 years, then grounds of possession to evict would now be allowed under this change – although the notice period will increase to four weeks.
A summary of the key changes
- Section 21 “no fault” evictions banned – only a tenant can end a tenancy (or a landlord with valid grounds)
- Evictions of antisocial tenants to be expedited
- Private Renters’ Ombudsman to be set up
- Tenant’s right to request a pet in their home; landlords cannot unreasonably refuse but can request pet insurance be taken out
- Rents may only be increased once per year, notice period for rent increase to be doubled
- Blanket bans on families with children, or tenants receiving benefits, will be illegal
- All tenants on a single system of periodic tenancies
- Stronger enforcement powers giving to local authorities
In the foreword to the White Paper, Gove highlights the many tenants living in damp, dangerous, cold homes; living in fear of a sudden eviction or rent increase if they raise a complaint. The aim is to halve the number of “non-decent” homes by 2030 and require properties in the sector to meet the Decent Homes Standard.
Gove also recognises the vast majority of responsible landlords in the sector and makes a commitment to strengthen the grounds for possession where there is a good reason for a landlord to take their property back. All private landlords will be obliged to join the proposed Ombudsman, which will strengthen tenants’ ability to hold their landlord to account. It is claimed that this will provide a fair, binding and impartial resolution to disputes that will be cheaper and quicker than going through the courts.
Another significant change will be to increases in rent. Landlords will no longer be able to impose arbitrary rent review clauses in their tenancy agreements. Instead they will only be able to increase the rent once per year, and the notice period they must give will be doubled. Furthermore it will be easier for the tenant to challenge excessive rent increases through a First Tier Tribunal.
The growing consensus among landlords is highlighting the imbalance in these proposals, in particular the fact that tenants can end a tenancy at their convenience whereas a landlord must present a valid lawful reason. In addition a proposed Property Portal will allow landlords to understand their responsibilities but tenants will be able to “check up” on their landlord’s compliance and potentially access a database of “rogue landlords”
There’s no doubt that we have seen an increase in the number of landlords selling part or all of their portfolio, surely in part attributable to the increasing legislation and taxation, that may have made investment in property less attractive. At Pygott & Crone we can only reiterate that with the help of a letting agent such as ourselves, who can advise you and take care of property management, buy-to-let can still be a very good long-term investment. With thorough tenant referencing, regular property inspections, full compliance with all current legislation landlords can be assured of the very best service if they choose Pygott & Crone to let and manage their property.