How will the changes to Section 21 of the 1988 Housing Act affect you?
Posted by tungstenmg on August 11, 2019
In April 2019, the UK Government announced its intention of scrapping the Section 21 legislation in a huge bid to overhaul the private sector laws. This law allows a landlord to give a tenant in a fixed AST 2 months notice period to hand back the property. This allows the landlord to swiftly evict someone from a house without having to provide a reason. This is in contrast to a Section 8 eviction, where a landlord has to divulge the reason for the eviction. Under Section 21, the tenant is given 8 weeks notice so they can secure a new home so they are not left homeless. This act is particularly useful with troublesome tenants. An eviction under Section 8 simply takes too long to complete, with the average eviction time being 170 days, which is nearly 6 months. In this situation, Landlords tend to make a section 21 eviction to avoid this long delay. There is a very interesting article on the NLA website with examples of problematic residents who need to be removed swiftly such as drunken tenants in a HMO or those over using amenities.
The reason for Section 21 being removed is that it can be seen to be used unfairly and I suspect rogue landlords have mistreated the system. Under Section 8, a landlord has to issue a Tenancy form 3: notice seeking possession of a property let on an assured tenancy or an assured agricultural occupancy which lists what section of the act you are using to remove the tenant. At TMG, we have had to issue one Section 8 to a tenant who would not pay their rent. Although they did stay in contact with me, the tenant was offering accuses or reasons to why the rent was late and eventually not being paid at all. The main issue with Section 8 is the time frame. It can take nearly half a year to evict someone, whilst the landlord has to cover the mortgage payments. TMG were lucky that the tenant removed themselves from the property once the Section 8 was issued and also left the property in a good condition. Perhaps the tenant took TMG seriously that we were going through with the eviction. TMG was very lucky as I am sure a lot of other people have such positive stories.
With the removal of Section 21, this adds to the multiple changes that is happening in our industry at the moment which has resulted in many landlords just breaking even as laws and tax policy has been changing quickly. A void period could see a landlord sell their asset which they have worked hard to acquire through no fault of their own. Mortgage orders, warrants and repossessions have grown by 42%, 19% and 11% respectively, relative to Q1 2018 according to the Property Reporter . The challenge is to have a product that attracts the correct tenants who are careful with your property, pay their rent on time and cause no issues to fellow HMO tenants or local residents, and this falls heavily on the letting agent and vetting process. To date, TMG have had no tenant issues or void periods and this is thanks to a fantastic lettings agent, Homeshare. They conduct regular visits in our Gillingham HMO, have an open dialogue with us and the tenants and stay on good terms with all parties. I appreciate that this may change, but as we start our 5th HMO, I am confident in their service and ultimately our business model.
However, if you do find yourself with a problematic tenant, phone the NLA and follow some of their straightforward advice:
Create a good relationship with the tenant so you can talk through any issues;
Serve by hand a Section 8;
If this is ignored, apply to the county court; Once you have a hearing date, you attend court on this date and are granted a possession order.
This all takes time and money, so I would suggest creating an open communication pathway between yourself, your letting agent and the tenants, so that the issues can be aired and looked at before a problem arises, thus avoiding serving notices and court.
Take Away Points
Know the law – you can only serve these notices if you have complied with the section (i.e. the landlord must have provided the tenant with an EPC certificate, the ‘how to rent’ guide and a gas safety certificate).
Open communication between all parties – prevent issues arising
Seek help from registered bodies for advice and guidance