The government has announced proposals to stop landlords ending residential tenancies on a no-fault basis.
The government announced on Monday in a press release – with no warning – that it is proposing to end the practice of residential landlords ending assured shorthold tenancies (ASTs) in England on a no fault basis.
The current legislation permits landlords to terminate assured shorthold tenancies on just two months’ notice by serving a notice under section 21 of the Housing Act 1988. It is not necessary for the landlord to provide any reason for ending the tenancy, once the contractual term that was agreed at the outset has expired.
Instead, the government’s proposal is that landlords will have to provide ‘a concrete, evidenced reason already specified in law for bringing tenancies to an end’. This will effectively create open-ended tenancies, which the government says will bring greater peace of mind to millions of families who live in rented accommodation.
Landlords’ organisations have pointed out that these changes are likely to make residential property investment less attractive, which could result in fewer properties being made available for renting, and perhaps lead to higher rents as well. To assist landlords who want to occupy their property once again, or sell it, the government says that the current eviction procedure will be amended ‘so property owners are able to regain their home should they wish to sell it or move into it.’
The government intends to launch a consultation ‘shortly’ on these proposals, but we have not yet been told when this might take place.
Further uncertainties in relation to these proposals include:
- When will these changes take effect? There is to be a consultation, which suggests a delay of at least six to nine months before any new legislation can be passed – even if Parliamentary time is available
- Will the changes apply to existing ASTs, or only to new ones entered into after the new law takes effect?
- Will rent increases be permitted under the new-style tenancies and, if so, on what basis?
Wales and Scotland
The proposals announced by the government apply only to tenancies of properties in England. Residential tenancy law in Wales is devolved to the Welsh Government, and an entirely new code contained in the Renting Homes (Wales) Act 2016 is due to take effect at some time in the future. However, section 21 applies until the new code is brought into force, and the Welsh Government announced at the end of last week that it too will be outlawing the section 21 possession procedure.
In Scotland, reforms to residential tenancy law were adopted in December 2017 by the introduction of the new Private Residential Tenancy, primarily to give great security to tenants.
Proposals for a minimum term for residential tenancies
The government has also taken this opportunity to publish its response to the replies to its consultation ‘Overcoming the barriers to longer tenancies in the private rented sector’. As we outlined in our article ‘Proposals for a minimum term for residential tenancies’, the government issued a consultation document in July last year, seeking views on a proposal that new tenancies in the private residential sector should be for a minimum of three years. It has concluded in its response that there is no consensus around mandating a particular length of tenancy. Replies to the consultation showed that tenants favoured different lengths of tenancy depending on their circumstances, and landlords preferred the status quo. Accordingly the government has no plans to introduce a minimum length of tenancy, but instead will put an end to ‘no-fault’ evictions by repealing section 21 of the Housing Act 1988, as set out at the start of this article.