Coming full circle - the death of Section 21 Notices?

Senior Solicitor Gary Leverett considers the government's proposal to abolish the Section 21 Notice procedure.

We are used to things coming full circle in fashion and culture, but it is very rare that this occurs in the law. However, the government’s recent announcement that it proposes to abolish the Section 21 Notice procedure seems to be one of those very rare occasions…

Prior to 1989, most private residential tenants had protected or secured tenancies, which normally meant that the landlord could not evict them unless they were in breach of the terms of their tenancy. Simply put, it was not easy to evict a tenant.

In the white heat of capitalism, the Thatcher government was of the opinion that this regime discouraged investment in private rental accommodation. To encourage this investment, the government decided that they should make it easier for landlords to be able to evict tenants, so brought in the Housing Act 1988, which introduced us to Assured Tenancies and Assured Shorthold Tenancies.

From 15th January 1989, all new private rented tenancies were deemed to be Assured Tenancies, which still required the landlord to prove one of a number of grounds - most of which were based on breach of the tenancy - before a tenant could be evicted. However, if the landlord gave a Notice to the tenant that it was going to be an Assured Shorthold tenancy (under Section 20 of the Housing Act 1988) before the tenancy was entered into, this would allow the landlord to serve a Section 21 Notice giving the tenant two months’ notice seeking possession, which could not expire earlier than six months after the tenancy was entered into.

On the 27th February 1997, the provisions of the Housing Act 1996 came into effect, whereby the default position for all private rented tenancies was an Assured Shorthold Tenancy - and if the parties wanted to enter into the more protective Assured Tenancy, then due Notice had to be given. Essentially a reversal as to what happened before.

These provisions have, in my opinion, lead to the boom in buy-to-let that’s occurred since that time.

From the tenant’s point of view, one of the unintended consequences of this policy has been the insecurity of private rented accommodation. Unlike on the continent, most rental agreements can be measured in months rather than years, which has led to ‘Generation Rent’ not being able to set down secure roots and potentially living in fear that their current home will merely be temporary.

Due to the prevailing housing crisis in this country, government policy seems to have reverted to the pre-1989 era, with a focus on increasing the security of all private rented tenants in rented accommodation – thus enabling them to put down settled roots and create a stable home.

Centre to the government’s proposals, first broached in April, is the abolition of the two month Section 21 Notice seeking possession, whereby a tenant can be evicted for no fault of their own. In future, a landlord will only be able to evict his tenant under the current Section 8 procedure, on proving one of the relevant grounds for evicting the tenant.

One of the main reasons that buy-to-let landlords use the Section 21 procedure, is to enable them sell their property with vacant possession, rather than with a tenant occupying it. The proposals will still allow a landlord to evict a tenant, but only if they can prove to the court that they only wish to evict on the grounds that they intend to sell the property with vacant possession.

The government has given no indication when they intend for these proposals to be brought into effect. Bearing in mind Brexit, I wouldn’t hold my breath as to when this welcome policy will become law. However, the true effectiveness of the policy will remain in the detail, when the full set of proposed legislation is eventually published.

Although the Section 21 procedure is possibly facing a death sentence, I think that we can safely say that at the moment it is merely on death row and it remains to be seen whether that sentence will eventually be carried out.

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