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The end of fixed term tenancies and the section 21

Published: 31/05/2023

The Renters Reform Bill has been heard in Parliament again and the the wheels are firmly in motion to change how the Private Rental Sector currently operates. The governmant is set on ithe bill's implementation, which will see the biggest shake up the industry has seen in decades.

We now have much of the detail that is coming. The implications of this bill are far reaching...

The end of fixed term tenancies

You read that right. Periodic tenancies will replace fixed term tenancies - tenancies will begin on periodic from day 1 of a new tenancy, and stay periodic until they end.
The notice period from a tenant is at least 2 months notice. This needs to be served by the tenant - in any form of writing - and before a rent due date, to take effect.
This part of the bill has caused on outcry from the student rental sector in particular, for obvious reasons. - how do you re-let the property out-of-season if your tenants leave after a few months? The cost of a void could easily run into tens of thousands here. A recent amendment to the bill shows that purpose built student accommodation is exempt and tenancies for these properties may continue to operate on a 12 month fixed tenancy basis.

This exclusion is yet to include non-purpose built student accommodation such as large houses that have been converted to student HMO's, of which there are many thousands of in the UK. It is widely believed that common sense must prevail and the government must address this issue and also include these student properties in the exemption. Time will tell.

The end of Section 21

The Section 21 has been the mechanism for removing tenants from rental properties since the introduction of the Housing Act 1988. Landlords serving this notice needed no give no reason for serving it. The Section 21 has been the quickest way of gaining vacant posession and in most cases, doesn't rely on going to court. It has therefore been used in the vast majority of situations where Landlords want posession of their property from a tenant.

Tenants groups have been calling for the end of "no fault evictions" in recent years in order that are afforded more security of tenure. As the PRS has grown, the government believes it's now time to act on this.

Landlords will now need to cite their reason for evicting tenants and the valid reasons will include:
  • Where sale of property is intended, or required
  • Where a Landlord, or a member of the Landlord's family intends to move back in to the property
  • Where there is evidence or a conviction of anti social behaviour or harrassment by the tenant
  • At least 2 months of rent arrears, or persistent late payment of rent
In our experience however, it is extremely rare for a Landlord to serve a Section 21 notice for reasons other than these in any case.

The Section 8 notice

Eviction proceedings must now go via the Section 8 notice, which is due to be revised and strengthened. The Section 8 notice has been the other main route for eviction in the 1988 Act. Within the Section 8 there are a number of mandatory and discretionary grounds for eviction and the ones being used must be heard in court.
Typically Landlords have only used on Section 8 where there are mandatory grounds for eviction, and most commonly for rent arrears, where the tenant has been in more than 2 month's of arrears, or where there has been persistent late payment of rent, or commonly in both of these scenarios.

New grounds for eviction within the Section 8 will include anti-social behaviour including nuisance, annoyance, and harrassment reasons. Some of these grounds will be madatory grounds for eviction, whereas others will be discretionary depending on the serverity of the circumstances and whether or not there has been a conviction.


Will the courts be able to cope?

A new court will not be set up to hear evictions, the existing system is going to be used to absorb all eviction cases. With many thousands of new cases going to court every year via the new Section 8, it is questionable as to how the existing court system with the pressure, and how long it will take for cases to be heard.
Rent Protection insurance could be a great solution here. This product covers missed rental payments and legal costs. If you don't already have it, please enquire and we may be able set this up for you straight away. It's a lesser expense than most think it will be, and well worth the cost.

When will the changes come in to play?

The detail of the bill needs final approval in Parliament before being given Royal Assent but both of these appear now to be much of a formality. There will likely be a 6 month transition period once the bill is signed off. We should therefore expect all of this to come into play next year.