A Bleak Time for Landlords – Now and Forever?
In the Theatre of Confusion, Knowing the Location of the Exits is What Counts.
Mason Cooley
Ending a tenancy has long been, for a landlord, an ever-darker forest of uncertainty. In the last year, the government has been under immense pressure to further protect tenants from Coronavirus. In addition, seemingly radical left-wing organisations have leaned very heavily on the government to tip the balance of power yet further to the tenant, not only in the teeth of the pandemic but forever.
This is a quick look at the practicalities of evicting tenants today and some random thoughts about the future of being a landlord.
Eviction Notices
Let us begin with eviction notices. Notices are undoubtedly the most difficult part of the whole process of ending a tenancy. There are many things that must be in order before you can serve a valid notice, for example, deposit protection, disrepair, licensing, gas safety certificates to name but a few examples. The requirements are different for different types of notice and different in England and Wales. Now, because of the Coronavirus pandemic, there are frequent changes just to add to the difficulties.
There are two categories of notice.
Section 8 Notice
Firstly, notice to evict for a reason, sometimes referred to as s. 8 notices.[1] These notices can be given to tenants in response to a range of situations, referred to as grounds.[2] At SJV we believe that the most common ground for a tenant eviction in practice is by far is the tenant’s rent arrears, with serious anti-social behaviour accounting for most of the rest. Prior to the pandemic, there was a range of notice periods for different grounds, most commonly, 14 days’ notice for rent arrears.
Currently, in response to the Coronavirus pandemic, a s. 8 notice on rent arrears grounds requires the tenant to be given 6 months’ notice.[3] In England, but not Wales, if there are very serious arrears, that is where more than 6 months’ rent is in arrears, four weeks’ notice is required.[4] When the notice expires, if the tenant has failed to surrender the tenancy, the landlord can commence possession proceedings through the court.
Section 21 Notice
Secondly, the s. 21 Notice,[5] sometimes referred to as “notice only” or “no-fault notice.” The tenant or the landlord can end the tenancy without giving a reason. The landlord and tenant will have agreed to a fixed term for the tenancy, usually 6 or 12 months. Both are committed for this period. When the fixed period ends, the landlord and tenant can agree on a further fixed term, or, if they prefer, they can just let the tenancy roll on month-to-month; this is called a periodic tenancy. A section 21 notice cannot expire during the fixed period. Prior to the pandemic, a tenant had to give a months’ notice and the landlord two months’ notice.[6] In response to the pandemic, the tenant can still give one months’ notice, but the landlord must give six months’ notice.[7] In Wales and England, the extension to the notice period to 6 months is effective until 31.03.21.[8] [9]
Possession Claim Through the County Court
Once a valid notice has expired, if the tenant has failed to abide by the notice, the landlord has no option except to issue possession proceedings in the county court. https://www.sjvsolicitors.co.uk/tenant-eviction/ The only changes to this process, except for the Coronavirus control measures at the court, are that if your claim was issued before 03.08.20 you need to file and serve a reactivation notice before proceeding and that in all cases, there is a “review hearing.”[10]
Most if not all possession claims that were stayed under earlier rules made in response to the Coronavirus pandemic will by now have been “re-activated,” so we will ignore re-activation.
Review Hearing
The review hearing requires the claimant to re-file at court and re-serve on the defendants all the relevant documents in the claim. Then the parties need to be available by phone in case the court wants to contact them. At the review hearing, the judge will look at the documents and prioritise the listing of a proper possession hearing.
Otherwise, once the possession proceedings are issued and reviewed, it is pretty much business as usual. The much-discussed delays in the process are turning out not to be as bad as first thought.
That is, business as usual right up to the point that the tenant ignores the order of the court. Bizarrely, tenants are positively encouraged by the various organisations that advise and lobby for them, not to mention the local authority in many cases, to simply ignore the order of the court.
Instructing Bailiffs for Possession
The only recourse for the landlord is to instruct bailiffs to attend and if necessary, remove the tenants https://www.sjvsolicitors.co.uk/tenant-eviction/. This is fairly simple and can be done in the County Court (less expensive but fairly slow) or the High Court, (mores expensive, sometimes difficult to arrange, but usually quicker). However, bailiffs cannot currently enforce possession orders in Wales or England. The block on evictions in Wales applies until 31.03.21. It applies to most evictions but there are potential exceptions in certain circumstances for the eviction of trespassers, anti-social behaviour, and criminality.[11] There is a similar position in England, save that bailiffs can evict if there are more than 6 months’ arrears.[12]
In both England and Wales renting is becoming less attractive for landlords. Landlords will, if they are not already, bear increased taxation, increased regulation, the greater obligation to the tenant, and less control over their properties. All these factors reduce the profit, and letting is a business after all. That direction of travel seems likely to continue.
Possibly worst of all is the uncertainty. Uncertainty makes doing business more difficult. There were regular changes in housing law even before the Coronavirus pandemic. Increasing regulation and empowering tenants at the landlord’s expense cause uncertainty. Investing in a buy to let property is a very big expense. Landlords and potential landlords are inevitably uncertain about the direction that housing law will take. But they can be certain that the direction will be ever greater regulation, ever greater control to the tenant, and consequently ever reduced profit.
Section 21 Notices in Future
Housing law is diverging throughout the United Kingdom. Scotland has abolished the s. 21 notice altogether and the court always has the discretion to not grant a possession order if it sees fit. Early signs are that Wales will keep the s. 21 notice but the landlord will need to give 6 months’ notice. England appears to have committed to abolishing the s. 21 notice.
Tenants pressure groups such as Generation Rent and Shelter have made the abolition of s. 21 a central policy ambition. Just to recap, a s. 21 notice is the notice that the landlord must give to end the tenancy, after the agreed fixed term of the tenancy has ended. Prior to the pandemic, the landlord had to give 2 months’ notice. The tenant has a similar right to end the tenancy without reason but on one months’ notice.
Tenant-focused pressure groups argue that permitting the landlord to end the tenancy without reason robs the tenants of security. However, others might argue that there is a flaw in the logic of this argument. That is that a tenancy is never ended without a reason. The s. 21 notice just allows the tenancy to be ended without giving the reason, as the tenant is also entitled to do.
Good tenants will not be more secure if the s. 21 notice is abolished. It does not take much to keep a landlord happy. If a tenant pays the rent on time, takes reasonable care of the property and does not terrorise the neighbours, then the landlord will bend over backwards to keep them. The number of evictions going through the courts in normal times testifies to the endless supply of less satisfactory tenants. These tenants are not being evicted just for the amusement of their landlords. The only time when a tenant is likely to be evicted without fault is when the landlord needs to sell the property. In other words, decent tenants will not be more secure by virtue of abolishing s. 21 notices.
Bad tenants are the only ones who will benefit from abolishing the s. 21 notice, and often this will be at the expense of decent tenants. The s. 21 notice is never used without a reason. Sometimes the reason is that the savvy or well-advised bad tenant will know to keep their behaviour, be it rent areas or anti-social behaviour within the limits of discretionary grounds for possession. This means that even if the bad behaviour is proven, the court can decide whether or not to grant a possession order. Therefore, the landlord is unsure whether a possession order will be made, it depends entirely on the view of that particular judge on that particular day. Often a landlord will choose to take the more certain s. 21 notice route even though a longer notice period must be given.
But it is not only landlords that will suffer from the abolition of s. 21. The s. 21 notice is often used where there is anti-social behaviour and other tenants and neighbours are suffering. Anti-social behaviour is a discretionary ground for possession and requires more complicated evidence than a simple arrears case. This makes it both an uncertain ground and an expensive ground for possession. But most of all, a common feature of anti-social behaviour claims for possession is that the witnesses are frightened to give evidence. Without evidence, there is no way to get an eviction on the anti-social behaviour ground. The solution is a s. 21 notice, even though it takes quite a lot longer, there is no requirement for anyone to give evidence and a possession order is certain.
The s. 21 debate is just one example of the ocean of uncertainty surrounding landlords now and in the future. Letting a property is a very big investment, a predictable and sensible return is necessary. The ever-increasing difficulty of removing defaulting or misbehaving tenants leads to significant losses for the landlord. This is just one example of a darkening future for the private rental sector.
Landlords will be exiting the stage left, right and centre.
Can
there be any doubt that making letting less attractive will reduce the rental
stock available? Will that make the
current housing crisis better or worse?
Simon Vollans, LL.M. Solicitor, 26.02.21
This is not legal advice and must not be relied upon in any way. We cannot and do not give legal advice on the website. This website is not intended to and does not take the place of legal advice.
Nothing on this website creates a solicitor/client relationship. We will be very happy to assist you if you contact us directly.
[1] Section 8 Housing Act 1988 https://www.legislation.gov.uk/ukpga/1988/50/section/8
[2] Schedule 2 Housing Act 1988 https://www.legislation.gov.uk/ukpga/1988/50/schedule/2
[3] The Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment) (England) Regulations 2020 SI 2020/914 https://www.legislation.gov.uk/uksi/2020/914/contents/made
[4] As above.
[5] Section 21 Housing Act 1988 https://www.legislation.gov.uk/ukpga/1988/50/section/21
[6] As above.
[7] Coronavirus Act 2020 Sch 29 paragraph 7 https://www.legislation.gov.uk/ukpga/2020/7/schedule/29/enacted
[8] The Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Wales) Regulations 2020 SI 2020/1044 https://www.legislation.gov.uk/wsi/2020/1044/contents/made
[9] The Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment) (England) Regulations 2020 SI 2020/914 https://www.legislation.gov.uk/uksi/2020/914/contents/made
[10] See generally Practice Direction 55c https://www.gov.uk/guidance/civil-procedure-rules-parts-41-to-60/practice-direction-55c-coronavirus-temporary-provision-in-relation-to-possession-proceedings
[11] The Public Health (Protection from Eviction) (Wales) (Coronavirus) Regulations 2021 SI 2021/12 https://www.legislation.gov.uk/wsi/2021/12/contents/made
[12] The Public Health (Coronavirus) (Protection from Eviction) (England) Regulations 2021 SI 15/2021 https://www.legislation.gov.uk/uksi/2021/164/contents/made
