5 minute read
Alternative Finance
More PRESSURE
The private rental business is facing further challenges with the proposed Renters’ Reform Bill
Last year saw, potentially, the biggest announcement and shake up in the private rental sector in recent years. From July – October 2019 the government opened an official consultation with the aim of resetting the balance of “rights and responsibilities” between landlord and tenants. In the Queen’s speech this was referred to as The Renters’ Reform Bill.
You may think that the current rights that tenants have weigh more in their favour. However, the consultation proposes the end of Assured Shorthold Tenancies (ASTs) and Section 21 (no fault eviction) from the Housing Act. The result of this would mean that assured tenancies would become the norm and the only way for landlords to end the agreement would be via Section 8, or the tenant leaving.
If the government proceeds with its plan it would mean all new tenancies will either be an assured periodic tenancy or an assured fixed term tenancy that would then revert, by default, to a periodic tenancy. Tenants will be able to end a tenancy with two months’ notice, however landlords will only be able to end a tenancy if they can prove they have legitimate grounds via serving a Section 8.
Landlords already have the option to serve a Section 8 and this offers several mandatory grounds to evict a tenant. Currently a S8 will not
WORDS: RICHARD BOND
on landlords
Could we see some investment landlords exit the market and offload their portfolios? We might see a further increase in housing demand plus higher rents in and around the capital.
permit a landlord to evict a tenant if the landlord wishes to move into the property for the first time, or sell the property as a vacant possession. However, there is consideration being given to update the S8 to allow this - this could just be another waiting game.
CURRENT MANDATORY GROUNDS FOR EVICTION 1 The landlord requires the property in order to use it as their main residence. This ground can only be used if the landlord used the property as their main residence prior to the tenancy beginning. 2 The mortgage lender on the property has served notice to foreclose. 3 The property was previously used as a holiday let and is required to return to the status of holiday let. 4 The property is being let by an educational institution and is now required by students of the educational institution. 5 The property is owned by a religious body and they require possession for a member of their church. 6 The landlord wants to demolish and reconstruct or redevelop all or part of the property. The tenant needs to have refused to live in all or part of the property while work is carried out for this ground to be feasible. If granted, the landlord is required to pay all reasonable moving costs to the tenant. 7 The current tenant is a tenant heir and is not named on the original tenancy agreement. The landlord must serve a Section 8 notice within 12 months of the death of the named tenant. 8 The tenant has failed to pay 2 months rent, in the case of monthly payments. If the tenant pays off part of
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the arrears shortly before the hearing, this ground can no longer be proved, and possession proceedings will have to be abandoned.
If you have a good agent at hand and a “tenant from hell” that you wish to evict, it should be recommended that you serve notice based on several of these grounds, which should then result in a successful eviction through Section 8.
One very important factor to consider is the process you would need to follow if a tenant fails to leave at the end of the notice period. Currently, if you are using S21 or S8, you or your agent will need to make a court application for possession. Whilst landlords using S21 can follow an accelerated possession process avoiding a court hearing, landlords using S8 will not have this benefit and a court hearing will be required when attendance by either yourself or your agent will be needed.
PROGRESS OF THE RENTERS’REFORM BILL There was mention of improvements to the court process included in this proposed Bill, namely to make it quicker and easier for landlords to get possession, but there was no direct mention of a Housing Court that many campaigners have demanded.
Given the history of changes in legislation (eg the tenancy fees ban was first discussed back in 2016 but did not become enforceable until 2019) this could mean that the end of the S21 eviction notices could be two years away.
A government spokesman said a timetable for the new Renters’ Reform Bill will be released “in due course”.
The government has confirmed
that currently there are no plans to make these changes retrospectively, so any current tenancies with ASTs will continue and you will still be able to use a S21 for possession. When that tenancy ends, any new agreement will be an assured tenancy.
When the tenant fee ban was implemented last year there was a decrease in profits for agents. This resulted in the large corporate companies closing offices and call centres, followed by many independents closing their doors for good. One opinion is that now these changes are impacting the tenants and landlords directly, will the same be said for them; could we see some investment landlords exit the market and offload their portfolios? If this is the case, we might see a further increase in housing demand plus higher rents in and around the capital. Only time will tell.
