No Fault Evictions: Striking a Good Balance

Should landlords be able to evict their tenants without giving a reason? It is a question that is attracting increasing attention in Wales.

At the moment, a landlord can break contract with their tenant at any time, provided they give 2 months notice. This is commonly referred to as a ‘no-fault eviction’ or as a ‘Section 21 notice’ (after the relevant part of the original legislation enabling this).

Labelled as a demeaning and degrading practice by the First Minister, Mark Drakeford, the Welsh Government has signalled its intention to follow the lead of the Scottish Government and to remove this option from the statute books.  Whilst tenants’ groups broadly welcome this move, landlords are vociferous in their opposition.  In this blog we examine the arguments being put forward and consider the existing evidence regarding no-fault evictions.

Under Section 21 of the Housing Act (1988) landlords are able to evict tenants with assured shorthold tenancies simply by serving notice on them to leave.  They do not have to give a reason for their decision.  Landlords argue that Section 21 is the fundamental backbone of the private-rental sector.  They claim that, in legitimate circumstances, it is essential that private landlords have an effective mechanism which enables them to regain possession of their property.  They highlight the value of this for circumstances such as when tenants are in rent arrears, engage in anti-social behaviour or where the landlord wishes to sell the property or move into it themselves.  Significantly, they point to the alternative mechanisms under the current system being unduly difficult, lengthy and expensive.  In particular, they argue that the alternative ‘Section 8’ provision is often ineffective.  Under Section 8 landlords are required to apply to the Courts to evict tenants and to demonstrate specified reasons or “grounds” which need to be appropriately evidenced.  The court system itself is also considered to be overly complex, difficult to access and under-resourced. On average it takes 5 months for an application for repossession to be dealt with under Section 8.

Set against this is the concern that the current system leaves tenants at the whim of the decisions taken by their landlord, creating an underlying sense of insecurity for tenants. If a landlord decides that they want to evict a tenant, they can, with tenants potentially being evicted for little reason other than the landlord wanting to increase the rent or because tenants are ‘being difficult’.  This uncertainty can have implications for the tenant’s mental health and can leave tenants reluctant to raise maintenance issues for fear that this may prompt the landlord to seek a retaliatory eviction.  With no right to challenge or ‘defend’ the eviction and knowing that a forced move within two months is possible, tenants can feel powerless. In addition to the costs to the tenant of having to move, the two-month notice period provides only limited time to find a new home and prepare for a house move, thus limiting their options especially in areas where there is a shortage of private rental properties.  For those with school age children, the move may necessitate a change in schools, whilst for those with existing medical conditions, it can mean a disruption in the care and support that they receive.

Welsh Government’s proposals seek to amend the period of notice required, rather than ending the practice of no-fault evictions entirely. This is in line with other recent reforms to housing policy such as the Housing (Wales) Act 2014 and the Renting Homes (Wales) Act 2016. Together this provides a new system of regulation for landlords and letting agents in the private rented sector as well as replacing the secure tenancy and assured tenancy regimes.  In response to the concerns voiced on behalf of tenants, Welsh Government are currently consulting on proposals to amend the Renting Homes Act to:

  • Extend the minimum notice period required under a section 173 notice (the Welsh equivalent of Section 21, as contained in the 2016 Act) from two months to six months, and
  • Restrict the issue of such a notice until six months after the date of issue of the contract (as opposed to four months as currently set out in the Act)

This would effectively mean that tenants, upon starting a new tenancy, would have the security of being able to stay in their home for at least 12 months providing there is no breach of contract.  Whilst groups such as Shelter Cymru broadly welcome this move, they hold that it still does not go far enough to provide long term-security for Wales’ half a million private tenants.  In contrast, the Residential Landlords Association (RLA) believe that this is a “scandalous move” that is essentially introducing 12-month contracts by default, and leaving landlords powerless when it comes to problem tenants.

Balancing the interests of landlords and tenants is notoriously difficult and is not helped by a lack of objective evidence in this area. The proportion of tenants affected by no-fault evictions is not known as many tenants leave their tenancy without contesting a Section 21 (or Section 173) notice. Equally, it is not yet clear how ending or amending this practice might affect the private-rented sector.  In Scotland, which abolished no-fault evictions in December 2017, it is still too early to assess the impact of the changes.  In contrast to Wales, Scotland has abolished fixed-term tenancies to give tenants indefinite tenure.  To evict tenants landlords are now required to give tenants a minimum of 84-days notice and must persuade a First Tier tribunal (part of the Scottish Courts and Tribunals Service) that one of 18 possible criteria for eviction are being met.  Eight of these provide grounds for mandatory eviction, whilst the remaining ten are discretionary in nature, allowing the Tribunal to determine whether grounds to evict exist or not.

The role of the Courts in this process highlights an area where Welsh Government has less control.  As this is not a devolved power, reforms to the Courts and Tribunal service are led by the Ministry of Justice. They recognise that the process of seeking repossession through the Courts can be overly time-consuming and are introducing proposals, such as on-line systems, to reduce average case times.  In practice, however, Welsh Government has to act within a wider judicial approach covering both England and Wales, potentially limiting the opportunities for more root and branch reforms as introduced in Scotland.

In Wales, the consultation provides an opportunity for all sides to present their case and the hope is that an appropriate balance can be struck which will mean that there is not an adverse impact on the vibrancy of the private rental sector in Wales.  For this to happen, it needs to be acknowledged that the proposals that the Welsh Government is consulting upon will likely form just part of the reforms, with England’s own consultation on Section 21 notices outlining the work that is being undertaken with respect to the courts.  It may therefore be some time before the full impact of any changes become apparent in Wales.

In the meantime, it is to be hoped that the vibrant debate that has been established in this instance leads policy-makers to strike the right balance between providing tenants with an invaluable security of tenure whilst also enabling landlords flexibility in gaining repossession of their property.  If this also leads to a stronger evidence base, drawing on experience from across the UK, then we will have a better basis for making policy decisions in the future.

Tags