What does the abolishment of Section 21 mean for landlords?05-05-2023 | Legal Issues
The primary aim of the proposed renters’ reform bill will be to provide actionable changes and reforms that ensure the private rental sector is fairer and more secure for renters and landlords alike.
One of the main changes to eviction rules stated in the proposed renters’ reform bill is the abolishment of section 21 ‘no-fault’ eviction notices. If passed, the reform bill could be implemented into law as early as the end of 2023 or early 2024.
But what does the abolishment of Section 21 mean for landlords? As experienced landlord insurance brokers working with landlords renting private properties to tenants, here, CIA Landlords has come up with a few ideas about the implications of abolishing section 21 for landlords.
Why are Section 21 eviction notices being abolished?
At the moment, Section 21 notices can only be served once a tenancy’s fixed term has ended, or in a periodic (rolling) with no set end date. But why are section 21 eviction notices being abolished?
Well, the perception by those in power is that as things stand, it is currently too easy for landlords to evict tenants on a whim and reclaim their property with two months’ notice without finding any ‘fault’ on the part of tenants, even if they haven’t broken the terms of the tenancy agreement.
Tough times in this country due to inflation and the cost of living are causing more people to have problems with paying their rent. The government believes getting rid of section 21 notices will help to protect tenants experiencing financial difficulties since they can end tenancies they can no longer afford more easily, as opposed to getting ‘lock into’ fixed-term tenancy agreements.
The renters’ reform bill’s proposals will mean private renters can choose to end their tenancy at any time, as long as they provide two months’ notice to the landlord.
However, as we shall discuss later on, replacing section 21 with extended grounds for landlord possession under section 8 could likewise also have beneficial consequences for landlords.
The consequences of the abolishment of section 21 for landlords
Now that we have looked at a few reasons why section 21 eviction notices are being abolished, let’s take a look at examples of what this change will mean for landlords.
All tenancies will become periodic tenancies
Fixed-term Assured Shorthold Tenancies will be a thing of the past where you are locked into contracts of 6, 12, or 18 months for instance, ASTs shall all become periodic tenancies where tenants can leave at any time, provided that they give landlords at least 2 months’ notice so they can give you time to recoup costs and find new tenants.
Greater reliance by landlords on section 8 for possession
When the reform bill is introduced and section 21 notices are abolished, landlords will have to rely on Section 8 of the 1988 Housing Act more for property possessions. For example, landlords looking to move into one of their rental properties to live there themselves or to sell it on will now be considered as legitimate section 8 grounds for landlord possession of a property from tenants.
So, the abolishment of section 21 notices will lead to the extension and strengthening of section 8 grounds for landlord possession. Therefore, there will be benefits for landlords as well as tenants to the new system.
You will have to provide ‘legitimate grounds’ for repossession
‘No fault’ evictions where you don’t need to provide reasons for property repossession as a landlord will cease to become a thing. So, the onus will be on you to provide ‘legitimate grounds’ for repossession. All this means is that you will have to give a valid reason as to why you want tenants to leave, such reasons could be anti-social behaviour by tenants or you wanting to live in the property yourself.
Minimum housing standards for the private rented sector will be introduced
Another consequence of the renters’ reform bill and the abolishment of section 21 notices is a push for the introduction of minimum housing standards. This will raise the minimum living standards landlords are expected to provide for private rental tenants, and will be much like the ‘Decent Homes Standard’ that has already been in place since the early 2000s for social housing.
The notice period for section 8 existing rent arrears grounds for eviction will be increased
The notice period that landlords have to give tenants with existing rent arrears to leave with a section 8 notice is 14 days’ at the moment, and this will be increased to four weeks when the renters’ reform bill comes in. The threshold tenants being in at least two months’ arrears at time of the serving the notice will stay in place.
Notice periods for rent increases will go up
To provide greater protection for private renters from the effects of the cost of living crisis, rent increases will be limited to once per year and the minimum notice periods landlords must provide for changes in rent will be increased to two months from one month.
So, now you understand a fair deal more about the abolishment of Section 21 and what it will mean for landlords. You always need to cover your back by getting excellent landlord insurance. Check out our cheap landlord insurance here at CIA Landlords. We compare quotes from 9 leading insurers to get the best deal for your needs.
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