Implementation of the key proposals — removal of the assured shorthold tenancy (AST) and abolition of the Section 21 no-fault eviction process — if adopted as planned, will mark a landmark moment for the private rented sector (PRS).
Interestingly, both measures were brought in as part of the Housing Act 1988 and both helped to encourage investment in the sector by enabling much more flexible arrangements, not only for landlords but also for tenants.
The expansion of the sector is well charted and, with one in five people now relying on the UK’s PRS for a home, the government hopes its proposals will introduce greater security for those tenants who need it, while maintaining flexibility for those who don’t.
What will change?
If implemented, the proposals mean all new tenancies will either be an assured periodic tenancy — effectively an indeterminate tenancy — or an assured fixed-term tenancy, which reverts by default to a periodic tenancy.
Tenants will be able to end a tenancy with two months’ notice.
Landlords, by contrast, will only be able to end a tenancy where they can prove they have legitimate grounds under Section 8 of the Housing Act, with a notice period of between two weeks and two months, depending on what those grounds are.
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Improving Section 8
Section 8 does already give a wide range of grounds, including a breach of tenancy agreement, such as rent arrears or damage.
However, it doesn’t allow for a situation where a landlord is looking to move into their own property or to sell it and the government is proposing an update to accommodate this change.
Process is key
Equally critical for landlords is the process they need to follow if a tenant refuses to leave at the end of the notice period.
Today, whether using Section 21 or Section 8, landlords need to make a court application for possession if they find themselves in this situation.
However, while landlords using Section 21 can follow an accelerated possession process where appropriate — making a formal court hearing unnecessary in many cases — landlords using Section 8 don’t have this flexibility.
Few would argue the court system is sufficiently resourced to manage the increase in workload these proposals will deliver and indeed the government is exploring whether to introduce a specialist housing court.
However, given that the median time from claim to possession using the court process is currently 16 weeks and a survey of our landlords showed 85% felt this should be eight weeks or less, a solution needs to be found quickly.