Some thoughts on the intention to abolish section 21 of the Housing Act 1988 - part 2
20 September 2019
The Consultation Survey
The consultation on the abolition of section 21 allows for an online survey to be completed. The way information is provided and the questions posed appear to be carefully designed to obtain a specific response so to justify what is being proposed.
The Fixed Term and Break Clause – misrepresentation or illusion?
After the questions relating to the length of the fixed term, users are asked whether they support the inclusion of a break clause. The reality is that a break clause to end the tenancy will only be able to be exercised by the tenant. This will relieve the tenant of their obligations and taking away the certainty of the fixed term from the landlord.
In other words the break clause is not an "as of right" right for the landlord to obtain vacant possession on a break date. The landlord still has to obtain a court order by satisfying the statutory grounds to obtain possession.
So what is the benefit to the landlord in agreeing a break clause? Assuming there will not be a statutory right to serve a notice on the basis of an intention to sell or provision accommodation for a family member during the fixed term there is one minor benefit of a break clause to the landlord and that is that it would create the opportunity to serve a notice to quit for these reasons. However, if these provisions are there to provide a safe guard for a landlord who has an unexpected change of circumstances why not simply allow for notice to be served under these grounds during the fixed term? There could be a minimum period in which such notice could not be served, say, 6 months. If there is no statutory provision for this to happen within the fixed term all that is likely to happen is that the standard tenancy will include a clause that provides for a break clause to cover these possibilities. Accordingly the benefit is illusory.
As currently proposed there is simply no incentive for the landlord to agree to a tenant break clause as there is no benefit to the landlord. If there is a good tenant adhering to the terms of the tenancy why would a landlord wish to let them go early for nothing?
The Tenant's Fixed Term obligation
Another factor that is not drawn to the tenant's attention is the fact that a lease creates an absolute requirement to perform the obligations in the lease for the whole of the fixed term and if the tenant breaches those obligations there is no duty on the landlord to mitigate the loss.
For example, say the minimum term is 3 years and 12 months later the tenant has the opportunity to obtain better employment elsewhere the tenant cannot simply hand notice in. The tenant will remain liable to perform the tenant obligations including payment of rent and also be liable for council tax unless the tenant negotiates a surrender. This negotiation will probably involve paying the landlord to end the tenancy early. Nowhere in this consultation or the previous consultation is this made clear. Of course, tenants like the idea of long term security but I am sure that at least 53% (see the Orwellian point in Part 1) are not aware that this inhibits their freedom to move.
Obviously if there is a contractual break clause it removes this problem but the landlord may decide to offer the property to a different tenant who does not want a break clause.
In relation to the alterations to the grounds on which possession can be sought the survey omits material questions. This is the opportunity for the Government to ask for and then consider views as to what would be reasonable grounds for granting possession. For instance, in the section on requiring possession on a sale of the property the consultation fails to provide any thoughts or guidance or to seek comments on what may or may not be relevant circumstances to allow a court to grant possession within 2 years of the grant of the tenancy.
You would hope that if the landlord fell ill and had to release funds to pay for term care that this would be a good reason without having to justify why this particular asset ought to be sold rather than another asset. The Government appears to be abrogating responsibility for these decisions which will no doubt result in considerable stress, uncertainty and cost for both the landlord and the tenant. As with much bad legislation the courts will have to address these issues. This is good news for lawyers but not for the participants. Perhaps the Government can seek views and then provide some commentary for a further for comment.
There are many serious defects with the survey. By the very nature of its questions it is clear that the answers are not going to impact on the ultimate decision made by the Government. The survey is a very good example of a survey designed to justify the "decisions" made by Government once the survey results have been analysed. By way of example, if you read the questions relating to victims of household abuse the answers do not allow for considered input from the survey participants - Yes, No, Don't know - are the only options and there is no opportunity for the respondent to illustrate issues so that the government can consider the matter further in the light of the additional issues/examples that they would be been provided with. It is a real shame that the Government have allowed the consultation to proceed on such basis.
The consultation is muddle headed. If s.21 is abolished there is in fact no need to specify a minimum term. Such requirement becomes otiose (save other than to tie the tenant to performance of its obligations for the length of the fixed term) because the only grounds on which the landlord can secure possession is either fault based – i.e. wholly within the tenant's control – or within other existing or other grounds to be included that allow for possession within the fixed period save for occupation by family member or a sale – see above.