Possession – A New Dawn!

On 21^st July 2019 the Government launched a consultation to seek views on implementing their decision to remove section 21 of the Housing Act 1988 and improving section 8 eviction grounds. This consultation close on 12^th October 2019.

Earlier this year, the Government announced that it will put an end to the process of “no fault” evictions under section 21 of the Housing Act 1988. It is proposed that under a new regime, a tenant cannot be evicted from their home without good reason. The objective behind this proposal is to give tenants more stability allowing them to stay in one place for longer.

To go hand in hand with this change, the Government also proposes to strengthen the section 8 eviction process so landlords are able to regain possession of their property should they wish to sell it or move into it themselves.

Current procedures on taking possession of a property

The current regime allows landlords to use the accelerated possession process to obtain possession of a property under a no fault ground by serving a notice under section 21 of the Housing Act 1988. It is thought that the section 21 process leaves tenants with little security as landlords can serve a section 21 notice where the tenant is not at fault, if they are able to show they have complied with the various requirements of the Deregulation Act 2015 and the deposit protection legislation. It should be noted that this legislation is itself causing problems for landlords and has made it a more of a challenge for landlords to obtain possession under the section 21 process. If the landlord has complied with all the requirements, it is possible to obtain possession without attending a hearing within 22 weeks.

Of course, landlords do not have to rely on the section 21 process, they can rely on the service of a section 8 Housing Act 1988 notice. This process requires landlords to prove one of the grounds under Schedule 2 of the 1988 Act. The most common ground is ground 8 which entitles a landlord to a mandatory possession order where he is able to show two months of rent arrears at the date of service of the notice as well as the date of the hearing. However, tenants sometimes take advantage of this ground by delaying their rental payments and then just bringing the rent below two months before the hearing leaving landlords arguing for possession under Grounds 10 and 11, which are discretionary grounds, and often result in no order being made. The landlord is then left in the unenviable position of having to start again if and when the tenant’s arrears reach two months again. The consultation paper looks to balance the rights of the landlord and the tenant.

Government consultation on property possession

With the abolition of section 21 process, all tenancies would be assured tenancies. However, this will not mean open ended assured tenancies, landlords would still have the flexibility of entering into periodic assured or fixed term tenancies. The Government requests views on whether a minimum period should apply to fixed term assured tenancies and whether contractual break clauses should be available to landlords in that period.

The consultation recognises that landlords may seek to put pressure on tenants to leave a property by including a provision which significantly increases the rent before a fixed term expires.  They comment that landlords will still be able to increase the rent by negotiating a new fixed term contract with the tenant and, if the tenancy has become a periodic tenancy to use the procedure under section 13 of the 1988 Act which allows an annual increase to the market rent once a year.

The Government is also considering revising ground 8 of Schedule 2 of the 1988 Act to penalise tenants taking advantage of landlords. The proposed regime is as follows:

• The landlord can serve a two week notice seeking possession once the tenant has accrued two months’ rent arrears;
• If there is still a month’s [or over] arrears at the date of the hearing , the ground will be mandatory
• If the arrears are less than a month at the hearing but the tenant has built up arrears and paid them down on three previous occasions, the ground will be mandatory. Otherwise the arrears will be considered under the discretionary ground.

With the abolition of the section 21 process, the Government will also have to consider in what other way to enforce the requirements under the Deregulation Act 2015. Currently, landlords cannot serve valid section 21 notices where a valid gas safety certificate has not been given to the tenant before the tenancy started. Without the section 21 regime the Government will have to consider how else to police this and the deposit protection requirements to ensure that landlords comply with them.

As stated above, the accelerated procedure allows landlords to obtain possession quickly. With its abolition, landlords will have to rely on the lengthy section 8 process. The consultation recognises that they will need to consider a faster and simpler process through the court system so landlords who genuinely have problematic tenants can get possession quickly.

It appears that when these reforms come in, they will not be retrospective so will not apply to existing tenancies. Landlords will therefore be able to use the existing section 21 process for the existing tenancies.

Given these changes are likely to have a significant impact on the way landlords obtain possession of rented properties, all those in the industry are encouraged to respond to this consultation.