Government is gearing up for a once in a generation change to the private rented sector – the abolition of Section 21.
As part of a complete PRS overhaul, housing secretary James Brokenshire has outlined plans to consult on new legislation towards that abolition and the creation, in effect, of open-ended tenancies.
Also on offer is an amended Section 8, clarifying circumstances in which can regain their property should they wish to sell it or move in, and quicker court processes.
Evidence shows that the end of tenancies through the Section 21 process is one of the biggest causes of family homelessness.
The proposed measures are pitched as providing “greater certainty” for tenants while creating a more secure rental market for landlords in which to remain and invest.
“By abolishing these kinds of evictions, every single person living in the private rented sector will be empowered to make the right housing choice for themselves – not have it made for them,” said Brokenshire.
“And this will be balanced by ensuring responsible landlords can get their property back where they have proper reason to do so – we are making the biggest change to the private rental sector in a generation.”
Pitching consultation of its own, the RLA warns of “serious dangers” of the proposed reform going wrong and urged government to move with caution.
Policy director David Smith said that with the demand for PRS homes on the rise, the “majority of good landlords” needed the confidence to invest in new homes.
“This means ensuring they can swiftly repossess properties for legitimate reasons such as rent arrears, tenant anti-social behaviour or wanting to sell them,” he said.
“This needs to happen before any moves are made to end Section 21.”
He added: “For all the talk of greater security for tenants, that will be nothing if the homes to rent are not there in the first place.”
The RLA references the government’s own data showing that, on average, tenants live in their rental properties for over four years and that in 90% of cases tenancies are ended by the tenant rather than the landlord.
“When the demand for rental homes is outstripping supply, especially among vulnerable tenants, the government risks exacerbating the problem if it does not ensure that landlords have complete confidence that they can repossess properties swiftly for legitimate reasons,” said Smith.
Again, he said, the government’s own data showed it takes over five months from a private landlord applying to the courts for a property to be repossessed to it actually happening.
“It’s vital that a reformed and improved court system is able to bed in, and the grounds to repossess properties are properly improved before making changes to Section 21 – this would follow the lead set in Scotland,” said Smith.
Research by Manchester Metropolitan University for the RLA has found that in a large majority of cases, where tenants are asked to leave their properties under Section 21 notices, there is a clear reason.
Half of the notices are used where tenants have rent arrears or are committing anti-social behaviour or damage to the property.
Other common reasons include the landlord needing to take back possession of a property for sale or refurbishment.
The report’s authors argue that this “raises questions” about whether the use of Section 21 notices can properly be described as ‘no fault’ evictions.
David Cox, chief executive, ARLA Propertymark, said the abolition could be devastating for PRS.
“The effects of the tenant fees ban have not yet been felt, and now the government is introducing more new legislation which could deter landlords from operating in the market.
“Until we have greater clarity on the changes planned for Section 8, today’s news will only increase pressure on the sector and discourage new landlords from investing in Buy To Let properties,” he said.
YouGov stats for Shelter show that in the last five years, one in five of families renting privately have moved at least three times, and one in 10 say that a private landlord or letting agent has thrown their belongings out and changed the locks.
Shelter chief executive Polly Neate said the abolition plan was an “outstanding victory” for England’s 11 million private renters, for which government will deserve great credit.
“One in four families now privately rent their home, as do hundreds of thousands of older people. And yet, we frequently hear from people with contracts shorter than your average gym membership, who live in constant fear of being thrown out at the drop of a hat,” she said.
“Ending Section 21 evictions will transform these renters’ lives – giving them room to breathe and put down roots in a place they can finally call home.
“We look forward to the government passing this law as quickly as possible.”
To Generation Rent, it was “absolutely right” that government should be considering abolition.
Hannah Slater, policy and public affairs manager, said: “For too long, landlords have been able to use section 21 in retaliation when tenants ask for repairs or challenge poor practice.
“Abolishing no-fault eviction and introducing open-ended tenancies, so that tenants can stay as long as they want in their home without being locked in, will make a real difference to the lives of millions of tenants in England, reducing housing and financial anxieties and strengthening our communities.”
Generation Rent director Dan Wilson Craw warned of private renters as a growing political force.
“Together we can win changes that will transform private renting into a tenure that is fit for purpose in the 21st century,” he said.
Catherine Ryder, NHF head of policy, said outlawing Section 21 – as welcome as that would be – didn’t negate a need for more social housing.
“Our research earlier this year showed that over the last decade the proportion of families renting privately has grown faster than couples and single people, largely because of the lack of affordable homes available,” she said.
“This is why we urgently need funding to build more social housing which is the most secure and affordable tenure for families.”
Over 75% of renters report that having a longer term or indefinite tenancy would make it easier for them to plan.
Under the proposals, landlords will have to provide a concrete, evidenced reason already specified in law for bringing tenancies to an end – a marked step-change from the current rules, which allow landlords to evict tenants at any time after the fixed-term contract has come to an end, and without specifying a reason.
And to ensure responsible landlords have confidence they will be able to end tenancies where they have legitimate reason to do so, Ministers will amend the Section 8 eviction process, so property owners are able to regain their home should they wish to sell it or move into it.
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 – meaning landlords have the security of knowing disputes will be resolved quickly.
Ministers will also work with other types of housing providers outside of the private rented sector, who use these powers and use the consultation to make sure the new system works effectively.
Confirmation of the consultation comes just weeks before the Tenant Fees Act takes effect on 1st June.
The Act is said to save tenants across England at least £240m a year – up to £70 per household – by banning unfair letting fees and capping tenancy deposits at five weeks’ rent.
Government committed to consult on overcoming the barriers to longer tenancies in the Private Rented Sector in the 2017 Autumn Budget.
That consultation ran for eight weeks and closed in August 2018.
In October 2017, the then Secretary of State committed to consult the Judiciary on whether to introduce a new specialist Housing Court.
The English Housing Survey found that, in 2017-2018, there were an estimated 23.3 million households in England. Of those, 4.5 million – or 19% – are in the private rented sector.
One in four families with children are now living in the private rental sector, with a million more families renting privately today than there were in 2003/2004.
Over three quarters of a million households living in private renting are headed by someone aged over 55 – this figure has doubled since 2003/2004.
CIEH recognised a “bold move” by the government, but also pressed the parallel case for landlord.
“Tenants have long been put off making legitimate complaints about poor conditions and disrepair due to the fear of being evicted for no reason and at short notice,” said Tamara Sandoul, Housing Policy Manager.
“However, we also recognise that there will be legitimate reasons for landlords to recover their property. These reasons should also be properly explored and addressed in the proposals.”
Citizens Advice helped nearly 200,000 people with housing problems last year – almost 60,000 of those in the private-rented sector with related research revealing more than two in five tenants fearing eviction should they talk to their landlord bout disrepair.
Tenants who made a formal complaint to either their local authority or to a redress scheme had a 46% chance of being issued with a section 21 eviction notice in the following six months, the research found.
Gillian Guy, chief executive of Citizens Advice, said: “Scrapping no-fault evictions is a groundbreaking shake-up of the private rented sector and will better protect the almost five million households who live in it.
“It means renters – including families – will be able to put down stable roots where they live and prevent landlords from evicting tenants for simply complaining.”
Facing 40% of London families living in PRS accommodation by 2025 – and 62% of all ‘no fault’ eviction notices issued in the capital – London Councils says the boroughs want to see a better balance of power between landlords and tenants.
“Government proposals to abolish ‘no-fault’ section 21 evictions are a welcome move that we have long been calling for.
“Too many Londoners have been asked by their landlords to leave rented accommodation unnecessarily, fuelling the capital’s homelessness crisis,” said Cllr Darren Rodwell, London Councils’ Executive member for Housing and Planning.