The end of the assured shorthold tenancy?
2 August 2019
This is the first of a two-part review on the consultation issued by the Government in respect of the future of section 21 and assured shorthold tenancies. In this first article Mike Ellis and Alexandra Sollohub look at the consultation terms and in the second Peter Bourke will draw readers' attention to the court experiences of property litigators throughout England, explain why the consultation questions are flawed, and comment on why it is important for everyone who is involved in the private rental sector ("PRS") to respond to the consultation.
In July 2018 the government launched a consultation about modernising the PRS. The results were published in April 2019. In the government's response following the consultation the government published a further consultation seeking views on implementing its proposal to end no-fault evictions of residential tenants.
The government has revealed its intention, in effect, to abolish the assured shorthold tenancy by repealing section 21 of the Housing Act 1988 ("the HA")(bringing to an end 'no-fault' evictions). In return the government says that it will:
- improve the possession process under section 8 of the HA to ensure landlords are able to obtain possession should they want to occupy themselves or sell the property but there are constraints on this and there are many questions that have to be addressed including what amounts to extenuating circumstances; and
- overhaul and improve the court process for possession of residential properties.
On 21 July 2019 the government launched a further consultation called "A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants". The purpose of this consultation is to gather views of those involved in the housing industry on the proposal to abolish section 21 of the HA and to improve the process under section 8 of the HA.
This consultation follows considerable legislative changes to the PRS. Assured shorthold tenancies were introduced in 1989, amended slightly in 1997 but since 2004 there have been many legislative changes including:
- Housing Act 2004 (introducing the Tenancy Deposit Scheme and Landlord Licensing);
- Deregulation Act 2015 (introducing further constraints on serving section 21 notice including the Section 21 Regulations (requiring landlordsto give an energy performance certificate, gas safety certificate and 'How to Rent' guide);
- Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (requiring properties to have minimum energy performance standards);
- Homes (Fitness for Human Habitation) Act 2018 (enabling tenants to make claims against landlords where the property is not fit for habitation); and
- Tenant Fees Act 2019 (prescribing what payments may be taken under a tenancy and preventing service of a valid section 21 notice where there is default).
In this consultation the government is seeking views on the following points:
- how to implement the government's decision to abolish section 21 and improve the implementation of removing assured shorthold tenancies, and
- whether there are any circumstances where a tenancy should be ended without the tenant being at fault;
- whether the reforms should relate to all tenancies under the HA;
- when section 21 is abolished, whether the existing grounds for possession can be improved (and if so how); and
- how to improve efficiency in the courts.
For this to work, there must be corresponding improvements to the section 8 process which will enable landlords to obtain possession in appropriate circumstances. The government says "Our aim is that wherever a section 21 notice would have been appropriate to use, an appropriate section 8 ground can be used instead".
Landlords will welcome the news that the government hopes to introduce a new online system to speed up the court process. This, the government claims, will be designed to ensure that landlords are immediately notified if they have made a mistake in the paperwork before it is submitted (meaning that only valid claims will proceed). Readers will be only too aware of what happens when the government changes computer systems and so may consider with some scepticism whether this will actually result in an improved and more timely court service.
These reforms will undoubtedly have far-reaching consequences. In our second article some of these consequences are explored.
The consultation ends on 12 October 2019 following which the government will announce its response. A link to the new consultation can be found here.
The government's outcome to the July 2018 consultation can be found here.