The Tenancy Reform Bill & The Deregulation Bill – An Attack on Section 21 Notices and a Threat to the Private Rented Sector

The Tenancy Reform Bill & The Deregulation Bill – An Attack on Section 21 Notices and a Threat to the Private Rented Sector

Tenancy Reform Bill & Deregulation Bill - an attack on Section 21s?

Tenancy Reform Bill & Deregulation Bill – an attack on Section 21s?

Who started them? What are they?

The Tenancy Reform Bill was introduced by Sarah Teather, Liberal Party MP for Brent Central in July 2014. It had it’s second reading in the commons on the 28th November 2014 and was defeated when the reading used up it’s allotted time and Philip Davies and Christopher Chope, Conservative MPs, were accused of filibustering.

In fact very few MPs were in the commons that day, as this picture shows. This suggests a lack of support for it, however due to the Deregulation Bill as I will mention below, this may rear its head again, so we must be aware of it.

Empty seats in the commons

Empty seats in the commons

The Deregulation Bill is a House Of Lords Bill that aims is to make provision for the reduction of burdens resulting from legislation for businesses, organisations or individuals. It also looks at the voiding of any legislation that no longer has practical use.

Within this bill is a section relating to Preventing Retaliatory Evictions, so if the Deregulation Bill goes through then The Tenancy Reform Bill that was defeated last year will go ahead. 

What this means for Section 21 Notices

Firstly, I just want to clarify what a Section 21 does for landlords now.

A Section 21 notice is now the only means that a Landlord can retrieve possession of his or her property without grounds or reason. It can be issued at any time, with a minumum notice of two months, during a fixed term contract in order to regain possession at the end of that fixed term.

It can be issued also during a Statutory Periodic contract, again within a minimum notice period of two months, for possession to be gained by the Landlord. Should a tenant not vacate at the end of the notice period, possession will be granted by the court and will always be granted as long as the notice has been issued correctly and the dates are in line with the dates of the tenancy.

Landlords may require their property back for a variety of reasons, it may be financial, personal or because the tenancy has not been successful. Many landlords may not want to issue the Section 21, they may have a perfectly good tenant in the property but for a personal reason they need the property back.

A Section 21 allows the owner of the property to claim possession of their property.

What the Tenancy Reform Bill would mean for Section 21 Notices:

  •  A Section 21 Notice cannot be served within the first 6 months of a tenancy
  • A Section 21 Notice served, after a tenant had made a complaint to the landlord or local authority which resulted in a Notice being served by the local authority, would be invalid
  • A judge cannot issue a Possession Order, based on a Section 21, if a complaint was made and the local authority had not decided whether to inspect or not or had not carried out the inspection, had not decided whether to issue a Notice or not or had decided to issue but had not yet done so at the time of the hearing
  • A Section 21 Notice cannot be served within 4 months of a Statutory Periodic tenancy beginning or a new fixed term beginning
  • Proceedings cannot begin in court until 6 months after the Notice was issued
  • A Section 21 Notice may not be issued if the landlord has failed to meet all his legal obligations 

What the Deregulation Bill would mean for Section 21 Notices:

  • A Section 21 Notice cannot be served within the first 6 months of a tenancy
  • A Section 21 Notice is invalid if before it was issued a tenant had made a complaint in writing to the landlord regarding the condition of the dwelling, and
  • The Landlord did not respond to the complaint in 14 days, did not provide an adequate response, or gave a Section 21 Notice following the complaint
  • A Section 21 Notice would be invalid if then a tenant took the same complaint to the local authority, and
  • The local authority served a relevant notice to the landlord in relation to the complaint, and
  • If the Section 21 Notice was not given before the tenants complaint to the local authority, it was given before the service of the relevant notice.
Tenancy Reform & Deregulation Bill making you Confused

Tenancy Reform & Deregulation Bill making you Confused

Ok, so let’s put these points into simple terms:

  • If we issue 6 month tenancies throughout the course of a tenancy you cannot issue a Section 21 Notice (ever!)
  • If we issue 12 month tenancies we can only serve a Section 21 in the last 6 months (definitely encouraging landlords to issue longer tenancies)
  • If we don’t issue a Section 21 within the last 6 months (as above) or the tenancy has become Statutory Periodic, we cannot issue a Section 21 Notice for 10 months after the start of the tenancy
  • If a tenant has made a bogus complaint and the local authority has not responded the judge cannot grant Possession (wow, gaining possession of our properties will be in the lands of the local authority!?)
  • If the local authority has not dealt with a complaint or has not issued the correct paperwork to squash or pursue it the Judge cannot issue Possession (again, our businesses in the hands of the local authorities)
  • If a landlord has slipped up on any legal obligation he cannot use a Section 21 Notice to gain possession (never, ever, ever, ever forget to get an annual gas check, protect your deposit)
  • You cannot issue a Section if a tenant has made a written complaint (but if it is resolved and the matter cleared up you can)
  • On receiving a complaint landlords or their managing agents must respond adequately within 14 days, must take any action to resolve the matter adequately (get all complaints in writing, have a process for complaints and maintenance issues)
  • If the matter is taken to a local authority any action instructed by the authority must be complete and satisfied before a Section 21 can be issued (again, waiting for the local authority to do their jobs before moving to issuing a Section 21 Notice)

In Summary

Landlords are going to have to think a bit more about the length of tenancy agreements that are issued. If you like to issue 6 months AST’s back to back then you won’t be able to issue a Section 21.

We currently issue a 6 month tenancy at the beginning, so all parties can be sure that they are happy with the arrangement, then we would where possible look to issue a 12 month agreement. In this example we could then not issue a Section 21 until after the first 6 months of the new 12 month agreement.

In my opinion all tenancy matters boil down to one thing, getting it right from the beginning. If you, where absolutely possible, get the very best person you can in your property from the very beginning then the ifs, buts and maybes of the law will not affect you.

The problem with this is that sometimes even the best tenant can get in a situation. That is why landlords need some of the laws to be on their side, if it is all too weighted in the tenant’s favour then landlords are going to also find themselves in a situation.

Would we find ourselves in a world where landlords are having to use brown envelopes to get their tenants to leave the property to save all the hassle of following the letter of the law – that can’t be a good place to be surely?

The other aspect of these bills means that all landlords and their agents are going to have to be spot on when dealing with maintenance issues, if at any point an issue escalates to a complaint status then you will lose the right to issue the Section  21 Notice until it has been resolved.

If a tenant makes a complaint about their house, landlords cannot simply issue a Section 21 Notice, ie a “revenge eviction”. By operating in this way a landlord gets away with not addressing the complaint. That scenario screams BOGUS LANDLORD to me.

If we receive a maintenance issue or worst case a formal complaint then we are straight on to resolving it. We want things to be made right, for the tenant and for the landlords property. We certainly do not think, oh, well let’s give them notice and then we won’t have to take action.

Nobody wants to evict a good tenant now do they?

From reading the report from the House of Lords in detail it seems that some members do believe that by trying to halt the actions of a few the bogus landlords from the market the measures will affect detrimentally those landlords who run good property businesses. The bad always ruin the party for everyone else.

The wider effect and threat to the Private Rented Sector

The other alarming thing about this is what impact will it have on the Buy to Let finance market? Do you think that mortgage providers will continue to issue buy to let loans when they may be faced with landlords who have mounting rent arrears while trying to evict a defaulting tenant.

For many landlords, a defaulting tenant will result in defaulting on mortgage payments, there is only so much in a landlords pot.

The Private Rented Sector has increased from 2.4 million households to 4.9 million in 2014, this would never have happened without the buy to let mortgage market satisfying the need for landlords to finance these purchases.

Could the loss of the Section 21 Notice mean the loss of buy to let mortgages and the end of the Private Rented Sector?

Get in touch with your thoughts

I would love to hear your thoughts on this rather alarming law change that is on the horizon for all of us. Rest assured I have an alert set up with Parliament to get any update as it happens on this bill. When something so potentially drastic is looming I do not want to miss a thing.

I look forward to hearing from you.

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