Is the proposed abolition of Recovery of Possession using the Section 21 procedure a return to Regulated Tenancies?
18 April, 2019
The Government has this week announced its intention to consult on the abolition of the procedure used to recover possession of properties held under AST’s pursuant to S21 of the Housing Act 1988.
The right currently gives landlords the ability to recover their property at the end of the fixed term of the tenancy without having to give a reason. Pressure for change has come from tenants groups who say that families who rent do not get enough security and the procedure is sometimes used as a way to get rid of tenants who complain or to bring in new tenants at a higher rent. Certainly one would not advocate its use in either of those situations but in giving tenants more security what does this mean for landlords? Should this plan go forward the only way to recover possession of a property will be pursuant to Section 8 of the Housing Act 1988 whereby a Landlord must prove one of the specified grounds for possession. The difficulty at the moment is that this is a lengthy process, tenants can defend any claim and if they want to be made intentionally homeless they will play the system for as long as they can; in the meantime the Landlord loses out. Often landlords are advised to commence Section 21 proceedings at the same time as Section 8 in order to recover possession sooner and to mitigate their losses.
The Government says that it will amend the procedure to allow for a landlord to recover possession if the landlord wants to sell the property or move back in himself but propose a two year wait before they can invoke one of those grounds. That is no good if a landlords circumstances change. The Government also plans to expedite the court process but courts and bailiffs are already under pressure, this might be aided by a new housing court if that comes to fruition. There must surely be concern for buy to let owners with smaller portfolios, if they need to recover possession it will be a lengthy and costly process for them and given that they are already being squeezed by tax changes this could be the final straw.
Those of us who spent a large part of their early working lives recovering possession of Rent Act properties will know the times judges would award a suspended order to allow a payment of rent arrears meaning costly proceedings for the landlord and a tenant who would always pay up in the end. If the smaller landlords decide to leave the market the sales market will be overrun by properties as landlords seek to offload their portfolios or alternatively they might start to rent them on Airbnb or as holiday lets ( if their leases permit). Worse still is the fact that with fewer properties for rent rents will naturally increase and that doesn’t help the very people these changes are intended to protect. Perhaps the properties will be bought up by the large private landlords and create a return to their regulated portfolios? Worse could be to come if there should be a change of Government because they would likely go further and cap rents and introduce a review which looks very much like the old Fair Rent system. We would have open ended tenancies with set reasons for recovery of possession and rents set by third parties.
If you need any advice in relation to this, please do not hesitate to contact our Residential Property expert, Jane Canham at Jane.Canham@storrarcowdry.co.uk.