21 Again

If you have any interest in housing and the residential property market in the England you will at least heard of a Section 21 notice.

Currently Section 21 notices are in the news as a contentious issue as part of the new, Renters (Reform) Bill being considered by Parliament.

The Renters (Reform) Bill was introduced by Michael Gove on 17^th May 2023. It will establish a simpler tenancy structure where all assured tenancies become periodic. The periodic tenancy changes pose potential issues for both tenants and landlords and revising the Section 21 notice forms part of the changes.

The important thing to remember in any type of legislative reform is there are always implications for the market affected, in this case the private rented sector (PRS) which the country relies on to provide 4-5 million homes.

Achieving a balance between tenant and landlord rights is always difficult and not without issues. The more it swings towards the tenant the more it impacts the security of the sector and the more towards the landlord the more the impact on the security of the tenant. The sector has to be viable, or it will collapse and bring uncertainty to everyone in particular the value of property values in the economy. At the same time Landlords need to be held to account to provide decent housing. There is currently limited tenant choice of Landlords available due to the lack of supply of housing.

The Conservative Government is being accused of delaying the revised bill and the scrapping of the Section 21 notices with Labour stating they would ban them immediately if they gained power. The Liberal Democrats would also ban them “without delay”. I haven’t managed to find a Green, Reform or other party’s stance. In the West Midlands there doesn’t appear to be any statement specific to Section 21s by any of the Mayoral candidates. Housing needs to be top of all political agendas as shelter is the one thing essential to life, we all need above air, water and food. As we suffer very cold and inclement weather it literally can mean the difference between life and death. Please also bear in mind that sometimes more haste less speed could be entirely relevant here and what needs to happen is the right thing not rushed political knee jerk reactions we all pay for later. The Government has made a commitment to resolve this matter by January 2025 which is the end of this term of parliament.

In this article I’m going to try and examine the issues surrounding whilst providing some context and observations. I’ll attempt to summarise the current application and concerns as well as comment personally on the issues not being addressed by the current debate. I do feel very strongly that this focus on Section 21 notices is a distraction from the underlying cause of homelessness and presenting solutions that will actually change that.

Please remember that everyone has a right to free, duty solicitor legal representation in court on housing matters but also that some Landlords do not rely on Section 21s or indeed any legal means to evict tenants. Please also bear in mind some tenants work with their Landlords to agree a Section 21 is served because from the moment they are served they can then access homelessness housing support from their Local Authority (albeit there are income related issues there, lack of supply and chronic underfunding of service provision).

Housing Supply is the underlying issue that drives all of the contention over the housing crisis and abolishing Section 21 notices will not solve that.

Cost of living is the greatest pressure I believe that is impacting tenants right now and some can’t afford to pay their rent. If you give notice you can be deemed intentionally homeless and prevents access to help you could otherwise get and if you fall into arrears most registered providers will not accept you plus that impacts any reference and credit ratings. A section 21 can be a mutual agreement. Of course, we all recognise however that many people are served and its devastating for them.

Firstly let’s look at what the Section 21 Notice is. Please note this is in England only as there are different legislative issues in Scotland, Wales and Ireland which are not discussed here.

What is a Section 21 notice?

A Section 21 notice is a legal tool used by private landlords in England to start eviction of assured shorthold (sometimes assured) tenants without having to prove the tenant did anything wrong. The notice is called a Section 21 as it relates to Section 21 of the Housing Act 1988. Section 21 notices are often known as a “no-fault” evictions. They do not apply to Social Landlords or registered providers and are not applicable in other types of tenancies.

• Purpose: Allows landlords to repossess their property at the end of a tenancy agreement or during a periodic tenancy (one with no fixed end date).
• Notice period: Must be at least 2 months, but can be longer depending on the tenancy agreement.
• Court involvement: Landlord can apply to court for a possession order after the notice period ends.
• Tenant rights: Tenants have the right to remain in the property until a court orders them to leave. They also have rights to challenge the validity of the notice.

The abolishment of Section 21s is expected to make it more difficult for landlords to evict tenants without a valid reason.

When did Section 21s come in?

Section 21 notices were introduced in the UK as a part of the Housing Act along with assured shorthold tenancies in January 1989 under a Conservative Government led by Margaret Thatcher.

Why were section 21 notices brought in?

The reasons for introducing Section 21 notices in 1989 are complex, but there are two main arguments for why they were implemented.

• Increased flexibility for landlords: Prior to Section 21, landlords had limited options for repossessing their properties at the end of a tenancy, especially if the tenant didn’t break any rules. Section 21 aimed to streamline the process for landlords who wanted their property back after a fixed term or during a periodic tenancy.
• Encouraging growth in the private rental sector: The hope was that by making it easier for landlords to get their properties back, more people would be willing to become landlords, increasing the availability of housing in the private rental sector.

However, the ease of eviction through Section 21 has also been criticised for creating an imbalance of power between landlords and tenants. This is one of the reasons the government is proposing to abolish Section 21 notices. The Renters (Reform) Bill intends to provision for changing the law surrounding Section 21 notices (as well as some other issues) to improve fairness.

How many Section 21 notices are there in the UK?

The answer is nobody knows the correct answer as the data isn’t being collected (as far as I can tell).

There is also a difference between how many are served and how many actually result in willing surrender of the property or court action to evict.  Sometimes they are served when a tenant has already voluntarily left the property but the Landlord needs to execute legal possession. Sometimes it may not be the Landlord serving the notice but a lender if the Landlord has had the property repossessed. Sometimes it’s by mutual agreement. For a tenant not expecting one its horrible. You’ve suddenly lost security and need to find a new home. Its not however black or white or straightforward. At present data on the number of court evictions is recorded but not how many are via Section 21s.

A key point here is  not every Section 21 results in homelessness and not every eviction or homelessness case is caused by Section 21s. Indeed what is the cause is what has led to the eviction not the piece of paper that has executed it. There is also the possibility some tenants may choose to purchase the property if being sold or a new landlord takes them on. Many find new homes in the two months before the notice expires or before eviction.

How are Section 21s impacting homelessness in the UK?

Polly Neate, chief executive of Shelter spoke on Sky News in April 2024 and stated that their charity are dealing with 500 requests for help with Section 21 notices a day. Polly also went on to say “Section 21s are one of the leading causes of homelessness in the country”. 500 requests over 365 days is 182,500 households affected per annum.

We do have a documented rise in households in temporary accommodation and there is a perception that Section 21s are contributing to these figures. I would tend to agree personally they are rising but we need to see the data and currently it is not available as it appears only legally executed, court recorded evictions are being recorded by ONS. I do think we have a terrible habit of following the noise politically rather than actually examining the facts. I’d hope AI will help us make better priority decision in the future.

It is without doubt that being served a Section 21 can mean that an individual or family can be left homeless due to the lack of suitable housing in England. However I think it is unfair to blame Section 21s in their entirety.

Section 21s do not cause a lack of suitable housing in England.

They are a symptom of Landlords excising choice which is their right as property owners.

However, if Section 21s are increasing in number they can also be viewed as a symptom of Landlords struggling with documented rising costs due to inflation and increased regulations. Private rented stock levels have increased since 1989 as the buy to let market has grown but there is no data to prove or disprove the number of Section 21s is rising disproportionately to the level of stock in the UK since they were introduced in 1989 as no one monitors this specifically. If we take a view they are increasing it is reasonable to assume looking at press coverage and data quoted in, for example the Financial Times, that Landlord costs of borrowing, lowered yields and additional costs of extra regulation on private rented housing could be contributing to the level. More landlords are believed to be struggling and there is evidence many are leaving the market.

If you are a Landlord who needs to evict a tenant because you wish to or you need to for financial reason that is not an unreasonable thing to want to do. It is important that avenue is available or we could have bankruptcies etc.

• Ongoing Debate: The proposed Renters Reform Bill, introduced in May 2023, continues to be a major talking point. The Bill proposes abolishing Section 21 notices, a move supported by tenant advocacy groups and opposed by some landlords.
• Arguments for Abolishing Section 21: Campaigners for reform argue that Section 21 creates uncertainty and insecurity for tenants, making it difficult for them to plan for the future. They also highlight the potential for unfair evictions and the risk of homelessness, particularly for vulnerable tenants.
• Landlord Concerns: Some landlords express concerns that abolishing Section 21 would make it harder to regain possession of their properties at the end of a tenancy, potentially impacting their ability to manage their investments.
• Government Position: The progress of the Renters Reform Bill through Parliament is ongoing. Debates and amendments might provide clues about the government’s final stance on Section 21.

Why pursue a “no fault” eviction?

Everyone assumes a no fault eviction means no fault. It’s not always the case. Providing proof of tenancy breaches depends on the specific nature of the breach but its immediately litigious so proof or argument can be contested. That raises costs therefore a no fault eviction can be cheaper even if there are breaches. It also poses difficulties for the tenant in accessing homelessness assistance if they are seen to be making themselves intentionally homeless by their behaviour or simply by just not being able to afford the rent anymore or for example they become disabled or suffer other life changes. Section 21s can actually help some tenants and can be a mutually agreeable solution.

We will assume here however that in the main the landlord simply wants their property back because it suits them. Many want it back because they want to sell and vacant possession increases value. Some want to refurbish and its easier without tenants in situ. Some want to increase the rent to cover costs. There can be lots of reason but the thing to remember is they own the property and have a right to do with it what they wish. Taking that away from them in its entirety will undermine the market and can cause significant financial difficulties for the Landlord as the institutional investors assess the increased risk raising costs for everyone including renters!

Why are landlords leaving the private rented sector uk?

There are several factors contributing to landlords leaving the private rented sector (PRS) in the UK including the uncertainty over this bill. That is actually exacerbating the problems in housing supply for renters. Many of those renters are the “middle lost” who earn too much to be eligible for social rent but not enough to purchase their own home:

Increased Costs:

• Rising mortgage interest rates: Interest rates on buy-to-let mortgages have been increasing, putting pressure on landlords’ profit margins. This can make buy-to-let properties less attractive investments.
• Higher repair and maintenance costs: The cost of repairs, maintenance, and safety checks for rental properties has also been rising due to inflation and new regulations.

Changes in Taxation:

• Reduction in mortgage interest tax relief: Previously, landlords could deduct a significant portion of their mortgage interest from their rental income for tax purposes. This tax relief has been reduced in recent years, making buy-to-let properties less tax-efficient.
• Increased capital gains tax: Changes in capital gains tax for buy-to-let properties have made selling them less lucrative for some landlords.

Regulation and Policy:

• Energy Performance Certificates (EPCs): New regulations require rental properties to meet a minimum energy efficiency rating. Landlords may need to invest in upgrades to meet these standards, adding to their costs.
• Renters Reform Bill: The proposed Renters Reform Bill including potential changes like abolishing Section 21 “no-fault” evictions and introducing rent controls. These proposals have caused uncertainty for some landlords about future regulations and potential reduced control over their properties.

Other Factors:

• Changing demographics: Some landlords may be leaving PRS due to reaching retirement age or changing life circumstances. If you look at when the buy to rent market was introduced and boomed it would explain a lot of the changes in the market as people seek to cash in their pension portfolios/SIPPs etc.
• Alternative investments: Investors may be finding better returns in other areas compared to the current challenges of the buy-to-let market.

The combined effect of these factors is leading some landlords to sell their rental properties or switch to alternative investment options. This can contribute to a decrease in the overall supply of rental properties in the UK, potentially impacting affordability and tenant choice. Conversely this could (if the data supports it) explain a rise in Section 21s.

How many landlords are there in the UK?

Estimates suggest there are around 2.82 million landlords in the UK. According to Property 118 this figure is based on the number of individuals declaring income from rental properties on their tax returns. It is important to note this data captures unincorporated landlords, which is the most common type. There could be additional landlords operating through companies or other structures that aren’t included in this number.

How many tenants are there in the UK (I’ve had to use UK figures here)?

There isn’t a single, definitive source that tracks the exact number of tenants in the UK.

• Data fragmentation: Information on tenants is spread across various sources like landlords, local authorities, and housing associations.
• Double counting: Some people might rent multiple properties, leading to potential double counting if data isn’t carefully analysed.
• Unrecorded tenancies: Not all rental agreements are formally registered, particularly in the private rented sector.

However, we can get a general idea of the number of tenants in the UK through estimates based on household surveys and rental market statistics. Here are some insights:

• Number of renting households: According to Nimblefins there are around 8.5 million households in the UK who rent their accommodation.
• Breakdown by rental type:
  • Private rented sector: Over 4.6 million households rent from private landlords
  • Social rented sector: Roughly 4 million households rent from social housing providers like housing associations or local .
  • While the exact number of tenants is elusive, these figures provide a good starting point for understanding the scale of the rental market in the UK.

• We know the estimated number of recorded private renting households in the UK (around 4.6 million). Not all tenancies are recorded.

How many tenants are being affected by Section 21 notices?

If the Shelter figures of 500 households a day are correct and we use the Nimblefins figures of 4.6 million private rented households Section 21s represent.

500 x 365 = 182,500

Of 4,600,000, 182,500 = 3.97% of the total market

Is that a huge amount?

Why would a judge deny a section 21

A judge might deny a Section 21 possession order for a few reasons in the UK. Here are some common scenarios:

Invalid Notice:

• Procedural errors can render the Section 21 notice invalid. These might include:
  • Incorrect notice format: The notice must adhere to specific legal requirements regarding wording and content.
  • Improper service: The notice must be served correctly on the tenant, typically in person or through registered post.
  • Insufficient notice period: The notice must provide the required minimum notice period (usually two months).
• If the judge finds any of these issues, they will likely dismiss the case and the landlord will need to serve a new, valid Section 21 notice if they still wish to repossess the property.

Tenant Cooperation:

• If the tenant has already indicated a willingness to leave by the end of the notice period, a court appearance might be unnecessary. The judge may simply acknowledge the agreement and conclude the case.

Protected Tenancy:

• Not all tenancies are eligible for Section 21. The judge might deny the order if the tenancy agreement falls under a category not covered by Section 21, such as a student accommodation agreement or a license to occupy.

Discretionary Grounds:

• Even with a valid notice, judges have some discretion. They might deny possession if they believe it would cause exceptional hardship to the tenant, particularly if there are vulnerable occupants like young children or those with medical conditions.

Local Authority Involvement:

• In some circumstances, local authorities might have the right to delay evictions, especially if the tenant faces homelessness. The judge might consider such intervention when making a final decision.

Even with a successful Section 21 if a tenant opposes the notice it can take many, many months to secure posession.

What are benefits of section 21 notices?

• Relatively speedy repossession: Compared to eviction through other means, Section 21 offers a potentially faster route for landlords to regain possession of their property, especially if the tenant leaves without contesting the notice. This can be helpful in situations where the landlord needs the property back quickly, such as for selling it or moving a family member in.
• Reduced legal complexity: Eviction through Section 21 notices avoids the need to prove fault on the part of the tenant (unlike eviction due to rent arrears or anti-social behaviour). This can simplify the legal process for landlords, potentially reducing costs associated with lengthy court battles.
• Flexibility for landlords: Section 21 allows landlords to repossess their property at the end of a tenancy agreement or during a periodic tenancy without needing a specific reason. This can be useful for landlords who don’t want to commit to long-term tenancies or who plan to sell the property in the near future.

Negative impacts on tenants

Uncertainty and insecurity: The possibility of eviction through Section 21, even if the tenant follows the terms of the agreement, can create uncertainty and insecurity for tenants. This can make it difficult for them to plan for the future or feel settled in their homes.

• Limited grounds to contest: While tenants can challenge the validity of a Section 21 notice on procedural grounds, they cannot contest the eviction itself if the notice is valid. This can leave them with few options, especially if they struggle to find alternative accommodation quickly.
• Uncertainty and insecurity: Tenants face constant uncertainty as landlords can use Section 21 to evict them at the end of a fixed term or during a periodic tenancy, even if they haven’t breached the tenancy agreement. This can make it difficult to feel settled or plan for the future.
• Pressure to accept rent increases or poor conditions: Knowing they can be easily evicted, tenants might be pressured to accept rent increases above market rates or hesitate to report issues with the property for fear of retaliation through a Section 21 notice.
• Potential homelessness: If a tenant is evicted through Section 21 and struggles to find alternative accommodation, they could face homelessness. This can be particularly disruptive for families with children or vulnerable individuals.
• Impact on mental health: The constant threat of eviction can be a significant source of stress and anxiety for tenants, potentially impacting their mental health and well-being.
• Disproportionate impact: The ease of eviction through Section 21 can disproportionately affect vulnerable tenants, such as single parents, low-income earners, or those with limited support networks.

What are the disadvantages of section 21 notices on the Private Rented Sector?

• Impact on the rental market: Some argue Section 21 discourages long-term tenancies, contributing to a more transient rental market, which can be less stable for both tenants and landlords in the long run. Impact on the rental market: Some argue that the ease of eviction through Section 21 discourages long-term tenancies and contributes to a more transient rental market, which can be less stable for both tenants and landlords.

What are the dangers to the rental market if a Section 21 ban came in today

The potential dangers of abolishing Section 21 notices in the UK are a complex issue with arguments on both sides. These are just some of the potential risks.

Reduced Supply of Rental Properties:

• Landlord Exits: Some landlords, concerned about the perceived difficulty of evicting problematic tenants, might choose to sell their properties, reducing the overall number of available rental options.
• Increased Selectivity: Landlords might become more selective about tenants, potentially requiring higher credit scores, guarantors, or rent upfront, which could limit options for some tenants.

Impact on Rent Prices:

• Market Imbalance: A decrease in rental supply could lead to increased competition for properties, potentially driving up rents, especially in areas with high demand.
• Uncertain Investment: Investors might be more hesitant to enter the buy-to-let market due to concerns about future regulations and evictions. This could limit the growth of the rental market.

Management Challenges:

• Courts unprepared for the changes and struggling with demand on the already causing significant delays in evictions (good for tenants – bad for landlords and the market risks)
• Lengthy Eviction Processes: Without Section 21, landlords might have to rely on alternative eviction grounds (e.g., rent arrears) which can be more time-consuming and expensive through the court system.
• Anti-Social Behaviour: Concerns exist that it might become harder to evict tenants for anti-social behaviour if alternative grounds require stronger evidence. An ASB eviction is bad for the tenant( if recorded) in helping them access alternative housing.

How long does it take to evict on a Section 21?

• Landlords must give tenants a minimum of two months’ notice to leave the property using a Section 21 notice.

Court Process (if the tenant doesn’t leave voluntarily):

• If the tenant doesn’t leave after the notice period, the landlord can apply to court for possession.
• The court process itself is typically considered faster compared to evictions based on other grounds (like rent arrears). This is because the landlord doesn’t need to prove fault by the tenant.
• However, it still involves some waiting times:
  • Court wait times can vary depending on location and workload. It could take a few weeks to get a hearing date.
  • Even after the court grants a possession order, bailiffs (enforcement agents) typically give tenants at least two weeks’ notice before eviction.

Total Timeframe:

• In the most optimistic scenario (tenant leaves after notice period and court isn’t involved), eviction through Section 21 could take a minimum of two months.
• Including the court process and bailiff notice, it could realistically take anywhere from four to six months to evict a tenant who contests the eviction through the courts.

Here are some additional points to consider:

• Tenant cooperation: If the tenant cooperates and leaves after the notice period, the eviction process can be quicker.
• Legal complexities: If there are complications with the notice or the tenant challenges the eviction on legal grounds, the process could take longer.
• Local authority involvement: In some cases, local authorities might have the right to delay evictions, particularly if the tenant is at risk of homelessness.

The greatest problem is the tenant having somewhere else to go and with the housing supply issues we have in this housing crisis everyone is disadvantaged.

What Next?

There isn’t a confirmed date yet for the abolition of Section 21 notices in the UK (as of April 28, 2024). The Renters Reform Bill: This bill, introduced in May 2023, proposes abolishing Section 21 and introducing a new framework for repossession of properties in the private rented sector.

• Parliamentary Process: The Bill is currently going through the UK Parliament’s legislative process. This involves debates, amendments, and votes in both the House of Commons and the House of Lords. The timeframe for this process can vary depending on the complexity of the bill and the level of debate it generates.
• Government Stance: The government has indicated its intention to abolish Section 21 “in this Parliament” which must take place by the end of January 2025. However, the final details of the Bill and the exact abolition date could be subject to change during the parliamentary process.

While there’s no exact date yet, it’s likely that Section 21 will be abolished sometime between now and the end of January 2025, assuming the Renters Reform Bill is passed.

Potential benefits of abolishing Section 21:

• Increased Security for Tenants: Tenants would likely benefit from greater security of tenure, reducing the risk of eviction without a valid reason.
• Improved Standards: Landlords might be more invested in maintaining their properties to encourage good tenants to stay for longer periods.
• More Stable Market: A system with predictable eviction procedures could potentially create a more stable rental market for both tenants and landlords in the long run.

The New Periodic Tenancies

Alternatives in the bill regarding tenure and evictions deserve their own article but there are concerns over the minimum 6 months terms of tenancy suggested. There are fears people can be trapped paying for properties they need to leave and Landlords with tenants who may simply not pay for six months before they move on leaving them without revenue. It’s all a bit of a mess really in my opinion and actually I personally do feel caution is better here. If we funded the ministry of justice, housing teams and legal aid more effectively things could improve greatly for tenants and landlords without the need for changing the legislation. I’d rather see that.

Summary

There are pros and cons of abolishing Section 21s but the main “con” right now is the lack of clarity on what the actual, tangible alternatives are and how they will work, how the courts will deal with the changes and how effective it will be.

Section 21s are only one way to evict people. Evictions will not stop – they’ll just get more expensive as they take longer. When costs rise the end user pays and that will be the tenant. The harder it is to be a landlord the less willing landlords there will be.

The cost of producing this bill could have built more homes – I’m not sure it would deliver 182,500 of them but it could have helped.

We have more and more people in need of homes and I’d rather see more focus on delivering the increase needed. People know I go on about it but no matter who is in power we don’t have enough workers trained in construction to build the programme of housebuilding we need and that is a far more important focus we should all be looking at.

For anyone affected by a Section 21 please do contact Shelter, Citizens Advice and ideally (if you can find one suitable dependent on your circumstances) a solicitor.

The views reflected within this article of those of the author.

ABOUT OUR AUTHOR:

Liz Williams is an expert on land acquisition, planning and development having specialized in all forms of housing for over thirty years.

Liz is a passionate advocate of the development of truly sustainable and diverse, new build and regenerated communities where every single person is afforded the best opportunities in life. Liz believes in safe, adequate and quality housing being a catalyst for socioeconomic growth.

In 1990 Liz joined Worcestershire Housing Association working in Development and has since then worked for Bromford, Orbit and Citizen Housing Associations in delivering hundreds of new homes across the Midlands. Liz has developed many social and affordable rented homes, fully accessible and supported housing, shared ownership and almshouse accommodation. A specialist in housing construction project management, rural housing, contaminated land, regeneration and historic buildings her technical knowledge is highly respected within the industry. Liz also has many years’ experience and skills dealing with complex legal acquisitions, planning and partnership working in housebuilding.

Community consultation matters to Liz and she prides herself on always trying to engage with those impacted by changes to their neighbourhoods and indeed homes as she believes empowerment through voice creates better outcomes all round.

Liz has also worked as a Land Manager and Director in the Private Residential Sector including major housebuilders. This has included bespoke private residential homes, large scale regeneration and retirement housing,

A strong advocate for Women’s Rights Liz supports local women’s groups including Women Acting in Today’s Society WAITS and has been involved in the design and development of purpose built women’s refuges for Women’s Aid.

Liz was also a non-commissioned officer in the British Army and is a strong supporter of Veterans and their housing needs. Having been a military wife and mother during the Gulf Wars as well as a veteran herself Liz has a deep understanding of the needs of families impacted by service.

An environmentalist at heart Liz believes all development should seek to achieve the best outcomes for the environment possible with sustainability being the key. Liz has an in depth knowledge of working with alternative technologies, biodiversity and protected species.

Liz is a member of Worcestershire Ambassadors and has close links to the business communities within Worcester and the wider West Midlands with her home being in rural Worcestershire.