The Government has today (15th April 2019) released its response to a consultation carried out at the end of 2018 dealing with the perceived barriers to the granting of longer term tenancies.
The response can be found here: https://assets.publishing.service.gov.uk/...
The key proposal is that Section 21 of the Housing Act 1988 will be repealed. If the Government’s intention is enacted (and the Labour Party have given it a cautious welcome) then this will mark a once in a generation shift in the balance of rights and responsibilities between landlords and tenants.
Section 21, providing a no-fault possession route for landlords, was at the heart of the legislation creating the assured shorthold tenancy. A key element of Margaret Thatcher’s policy of creating a “property-owning democracy” the measure was designed to replace the previous system under the Rent Act 1977 and its predecessors. Prior to the introduction of the Housing Act 1988 the private rental market was tiny compared to today, with solicitors routinely advising clients not to let out homes they owned due to the difficulty of obtaining possession and the “fair rent” system which mandated rents to be set well below the open market rate.
The Government claims that the loss of the section 21 can be mitigated. They say:
“We are clear that any changes to Section 21 legislation will need to be underpinned by enhanced Section 8 grounds and a simpler, faster process through the courts. Landlords will benefit from the stability of long-term tenants, including the security of an assured rental income and fewer void periods.”
The Government intends to introduce new grounds for possession into Schedule 2 to the Housing Act 1988 in order to mitigate the loss of the Section 21 procedure where the landlord has good reason for wanting to regain possession. However, there is no clear commitment to the nature of the new section 8 grounds (the case of the landlord who wishes to sell, or to move into the Property are expressly mentioned). Most worryingly for landlords, the Government does not state whether these new grounds will be mandatory or discretionary. Further, concerns raised by landlords about the slowness of the present section 8 possession procedure are waived away by a vague promise that the possession claims procedure will be “streamlined” and speeded up.
Members of Lamb Chambers are well aware that the present procedure is far from streamlined, with possession cases listed at 10am often not being heard until well after the lunch adjournment due to shortage of judges and delays whilst the tenant seeks advice from the duty solicitor. More and more first hearings of possession claims are being adjourned leading to further delay, increased legal costs and quite often lost rental income. And that is only after many weeks of waiting for a hearing date in the first place.
The Government’s current agenda is dominated by Brexit and a further consultation on the practicalities of the proposed changed will soon be launched. Consequently, the present proposals are unlikely to be enshrined in law until the end of 2020 at the earliest. But the support of both major parties for the proposed measure means that the private rental market and their legal advisors need to prepare for a significantly different landscape in the foreseeable future.
The real risk for landlords, tenants and the Government is that a poorly thought through reform will lead to many private sector landlords deciding to sell up and get out of the market. That will drive house prices down, which may be a desired by-product of the Government’s proposed reforms. But it will not help renters – those who either cannot afford to buy or who prefer the flexibility of renting at that stage of their lives. They will find that shortage of properties leads to increased rents, and that the social housing sector simply cannot cope with the increased demand placed on it.
Head of the Lamb Chambers Property Team
James Browne / 15th Apr 2019
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