Repealing section 21 and the new grounds for repossession
The bill seeks to repeal section 21, also known as the notice-only or “no-fault eviction ground and instead require landlords to rely on new and improved grounds under section 8. It also abolishes Assured Shorthold Tenancies (ASTs) and fixed term tenancies. The majority of tenancies will therefore be fully assured, and, over time, all assured tenancies will be periodic, i.e. run from month to month. There will be no minimum or maximum term.
Grounds under section 8 can be either mandatory or discretionary. For mandatory grounds, judges must award possession when a landlord can evidence the ground is met. Discretionary grounds allow a judge to consider whether it is reasonable to award possession, even where the ground is met.
The CLA has been working hard to ensure that the new and amended grounds for possession under section 8 work effectively in a rural context. Some positive examples for members in the bill include:
- A new ground for possession where the property is required for an incoming agricultural worker.
- The “employers’ ground” which ensures possession is granted when an employment contract ends, has been strengthened.
- A new ground for “Repeated Rent Arrears” – Possession will be granted if a tenant has been in at least two months’ rent arrears at least three times in the last three years. This closes the loophole which meant tenants could clear arrears on the day of a court hearing and keep possession of the property.
However, these new and amended grounds do not go far enough to convince CLA members that they will be able to repossess their properties in the absence of section 21.
The CLA will be calling for the following changes as the bill progresses on its legislative journey through Parliament:
- Under the new ground for incoming agricultural workers, we would like to see this amended to say “The property is needed for an incoming rural business worker” – This would reflect the needs of the 85% of businesses that have nothing to do with farming or forestry.
- A new ground – “The landlord intends to use the property or the land on which it is situated for non-residential purposes”.
- A new ground – “Persistent refusal by the tenant to allow the landlord (or their agents) access for statutory inspections (e.g. gas and electrical safety) and related compliance works”.
- A new ground – “The property is required to house an outgoing agricultural worker that the landlord has a statutory duty to house and who is being moved to Suitable Alternative Accommodation”.
Since 2010, 74 county courts have closed in England and Wales, which has vastly increased workload. Covid-19 also increased this workload as evictions were paused and courts unable to hold hearings - creating a significant backlog. In the last quarter of 2020, there was a spike in housing repossession cases causing the median average time from claim to landlord repossession to peak at 43 weeks, up from 21 weeks in the same period in 2019.
Overall, in 2019, the average time between claim and repossession for private rented sector properties was 17 weeks, in 2022 it was 24 weeks, demonstrating that the backlog created by suspension of housing repossessions during Covid-19 is still having an impact. Landlords and tenants in rural areas are further impacted by fewer county courts, as they may have to travel further to attend court. Despite government plans to introduce a “new online system to speed up and simplify the court process”, for landlords in rural areas with inadequate broadband connection, this will be of little comfort.
The CLA has argued that the benefit of section 21 is that it is the “paper-based” route and therefore, in most cases, does not require a court hearing. It would be sensible for the proposed mandatory section 8 grounds to also be “paper-based”. This would avoid overloading the courts with cases, and at the same time would reduce time taken for landlords and tenants to reach a resolution.
Tenancies over seven years and agricultural occupancies
Tenancies of more than seven years will fall outside of the new assured tenancy regime altogether. These will be contractual tenancies (i.e. not governed by the new statutory regime) so will be governed by their own terms and relevant common law rules. Importantly, this means that landlords who grant tenancies for a fixed term of more than seven years could still contract out of the repairing obligations set out in other legislation. It is unclear whether landlords of these longer fixed term tenancies will need to be members of the private rented sector ombudsman.
The bill retains Assured Agricultural Occupancies (AAO), and their greater security of tenure will be preserved. Landlords of an AAO will be excluded from using some of the new grounds for possession. However, as now, landlords will be able to contract out of this security of tenure by serving an equivalent of the “form 9” notice prior to granting the tenancy agreement, and thus preserve the right to repossess the property when the job is over.
The bill states that landlords must consider and may not “unreasonably refuse” a tenant’s request to keep a pet. To balance this, landlords may make it a condition that the tenant obtain pet insurance against damage, or they may recharge the tenant for increased insurance costs borne by the landlord due to a pet being kept at the property. A CLA member has asked whether landlords may specify that the tenant has to pay for the insurance premium annually, and we will seek clarification on this. We will also work to influence the guidance of what reasonable reasons to refuse may be.
Impact on the private rented sector
The proposals, while workable, will be the biggest change to the private rented sector in a generation, and landlords are demonstrating their concern. We have significant evidence that landlords are leaving the private rented sector in rural areas. A 2023 CLA survey on rural housing in England found that the rural rented property market is shrinking. You can read a blog on the results of the survey here.
While some of the provisions in the bill are concerning, there are still opportunities for the CLA to influence government thinking and lobby for amendments. Additionally, the provisional timescales for introducing the changes in the bill are relatively long-term.
The commencement date for legislation to apply would be six months after the bill completes its Parliamentary process. We have asked that the “commencement date” is not set until such a time that the courts can cope with the increased workload.
We will continue to work closely with our Parliamentary and Civil Service contacts to make sure this bill is drafted to minimise the impact on the rural private rented sector. As always, case studies are some of our most effective lobbying tools, so please do share them with us, they will be treated anonymously.