The End Of No-Fault Evictions: What This Means For Property Investors

What Is a Section 21 Eviction?

Section 21 of the Housing Act 1988 allows landlords in England to evict tenants without providing a specific reason, provided they give at least two months’ notice. This provision enabled landlords to regain possession of their properties swiftly, often within two months, without the need to establish tenant fault. This was introduced during the 1980s, when the rental market was suffering from stagnation due to a lack of landlord rights and little recourse against problem tenants. Some people criticised Section 21, saying that it left tenants vulnerable to retaliatory evictions, in which unscrupulous landlords evict (or threaten to evict) their tenants if they make a complaint about the property. Section 21 has also been blamed for creating more housing insecurity and potential homelessness. The Renters’ Rights Bill aims to address these issues by ensuring that evictions are based on legitimate grounds, thereby enhancing tenant protections and promoting fairer rental practices.

After extensive consultations with landlord associations, tenant advocacy groups and others, the government committed to getting rid of Section 21, or at least, making significant changes to it to protect tenants’ rights. The Renters’ Rights Bill aims to abolish Section 21, thereby ending ‘no-fault’ evictions. This move is intended to provide tenants with greater security and stability in their homes. Landlords will still be able to evict tenants, but only under specific, justified circumstances, such as rent arrears, breach of tenancy agreement, or if the landlord intends to sell or move into the property.

What Will Replace Section 21?

Even after the Renters’ Rights Bill passes into law, landlords can still evict tenants under Section 8 of the Housing Act 1988. Unlike Section 21, Section 8 requires landlords to provide specific reasons for eviction, such as rent arrears, breach of tenancy agreement, or the landlord’s intention to sell or occupy the property. This can help to ensure that evictions are legally sound and not used as a retaliatory measure against tenants for making legitimate complaints. 

Key Changes Introduced by the Renters’ Rights Bill

In addition to the abolition of Section 21, the Renters’ Rights Bill introduces several other significant reforms that will increase protection for tenants and landlords and reduce discrimination against tenants who receive benefits or have children.

Transition to Periodic Tenancies

The Bill proposes replacing fixed-term tenancies with periodic ones, meaning tenancies will automatically renew on a monthly basis. This change aims to offer tenants more flexibility and reduce the administrative burden of renewing contracts. This can provide landlords with more flexibility, but also potential uncertainty, which could affect long-term plans for property investors.

Limitations on Rent Increases

Landlords will be restricted to increasing rent only once per year, and any increase must be in line with market rates. A minimum of two months’ notice must be given for any rental increase to take effect. This measure is designed to prevent sudden and unaffordable rent hikes. Tenants can also dispute a rent increase by applying to the First Tier Tribunal before the start date of the proposed new rent.

Enhanced Tenant Rights

The Bill seeks to strengthen tenant rights by prohibiting discrimination against those receiving benefits or with children. It will no longer be legal to reject applications for a property on the basis of the tenant receiving housing benefits, having children, or belonging to a specific demographic. All listings for rental properties must be written without bias, and all rejections should be based on purely financial or property-related factors. Some tenants have successfully claimed discrimination under the Equality Act, but the Renters’ Rights Bill seeks to strengthen these protections. Additionally, tenants will have the right to request to keep pets, and landlords must not unreasonably refuse such requests.

Improved Property Standards

The Bill will extend Awaab’s Law to the private rental sector. This law was implemented after the tragic death of 2-year-old Awaab Ishak, who died after a social house he lived in with his family suffered from extreme mould issues. Landlords will be required to address serious hazards, such as mould, within 24 hours. Failure to comply could result in penalties of up to £7,000.