By Farhan Asghar, CEO, The Solicitors, Advocates & Barristers Inc

Section 21 of the Housing Act 1988 grants landlords the power to evict tenants without providing a specific reason, often referred to as a ‘no-fault eviction’. This provision has been a cornerstone of the private rented sector, allowing landlords to regain possession of their property after serving a minimum of two months’ notice.

The Debate Over Abolition of Section 21

The potential abolition of Section 21 has sparked intense debate. Proponents argue that it will enhance tenant security and reduce the fear of eviction, encouraging tenants to report disrepair without repercussions. It could also potentially alleviate pressure on the housing market by discouraging landlords from using Section 21 as a tool to quickly vacate properties for higher rents.

Conversely, opponents of abolition contend that it will reduce landlords’ flexibility and increase the risk of being stuck with problematic tenants. They argue that this could lead to a decrease in available rental properties, as landlords may be deterred from entering the rental market or opt to sell their properties instead.

The Path to Abolition

In its 2024 election manifesto, the Labour Party pledged to abolish no fault evictions immediately. This seems unlikely. The previous Renters Reform Bill, introduced by the Conservatives, was dropped before the 2024 general election.

The King’s Speech 2024 confirmed there will be a new Renters’ Rights Bill which will overhaul the private rented sector and strengthen tenants’ rights. It will therefore be a substantial piece of legislation dealing with things in addition to section 21 notices. All of this will take time and by the time the Bill passes through Parliament and is actually implemented, it will likely be well into 2025.

The abandoned Renters Reform Bil proposed strengthening the current grounds for possession set out in section 8 of the Housing Act 1988, this included new grounds such as if the landlord intended to occupy or sell the property, if there were repeated rent arrears or anti-social behaviour. It seems likely that at least some parts of the Renters Reform Bill will make it over to the new Renters Rights Bills, but exactly how much remains to be seen.

Beyond Abolition: The Broader Picture

The abolition of Section 21 is just one piece of the puzzle. The government will also need to address the broader landscape of the private rented sector. This includes:

• Strengthening the current grounds for possession – Landlords will need to have the right to evict tenants for genuine reasons, such as non-payment of rent or anti-social behaviour. The government may well opt to incorporate some or all of the additional grounds for possession from the Renters Reform Bill given it has promised to introduce new expanded possession grounds.
• Improving the court system – As Landlords will have to rely on grounds for eviction which involved disputed facts there will likely be a significant increase in contested court hearings. The court system is already underfunded and overburdened. Reforms to the court system and additional funding will be necessary. The Conservatives had tabled an amendment to their bill that section 21 won’t be abolished until it has been established whether the courts can handle the increase in claims before it, this would seem like a sensible idea and as former head of the CPS Keir Starmer will be acutely aware of the strains on the court system.
• An Ombudsman Scheme for disputes – The Kings Speech set out a new Ombudsman Scheme for quicker resolution of disputes. Any scheme is unlikely to be suitable for all disputes and many will still end up in court. In any event, an Ombudsman scheme will likely receive significant volumes of work and will need proper funding. The Legal Ombudsman for example has had significant difficulties missing key targets for resolution of complaints. At one stage it was taking 16- 24 months for a complaint to reach an investigator. A housing ombudsman is likely to receive larger volumes of work and the government must be wary to ensure the Ombudsman Scheme is in fact faster than the court process, otherwise it will merely be taking one step forward and two steps back.
• Protecting tenants – Measures to safeguard tenants from rogue landlords are welcome and some would say well overdue. With the cost-of-living crisis, many landlords are turning to cut corners, often at the expense of their tenants. The Labour Party Manifesto stated the new legislation will introduce Awaab’s Law to the private sector, a law named after two-year-old Awaab Ishak who died from mould exposure, which requires landlords to investigate and fix reported health hazards within specified timeframes.

Impact on Landlords

One argument against abolishing Section 21 is that it could lead to a decrease in the number of properties available to rent. This could occur for several reasons:

• Landlord Exit – Some landlords may choose to sell their properties rather than deal with the increased complexities and risks associated with longer tenancies.
• Increased Investor Caution – Property investors, who often rely on rental income, may become more cautious about entering the market due to the perceived uncertainties.
• Increased costs – Landlords are  likely to make more use of lawyers to get tenancy documentation right, incur greater legal costs in evicting tenants and this increase may well also be reflected in higher insurance premiums.

Impact on the Legal Profession

Housing Lawyers will need to be braced for the changes. There are likely to be a flurry of landlords serving section 21 notices before any changes take effect, and once changes come into force there is likely to be an increase in contested court hearings, and therefore increased demand for legal services. Legal Aid for housing claims has been cut significantly over the years, and there is likely to be an upsurge in the amount of tenants appearing as litigants in person. Housing Lawyers will also need to ensure their clients are making use of any new Ombudsman Scheme where applicable.

Impact on Private tenants

The abolition of Section 21 may also influence the types of tenant’s landlords are willing to accept. To mitigate risks, landlords might:

• Prioritize professional tenants – Those with stable incomes and strong rental history may be favoured.
• Increase screening processes – More rigorous checks on potential tenants’ financial situations, employment history, and references could become commonplace.
• Require guarantors or larger deposits – To reduce the risk of rent arrears, landlords may demand guarantors for tenants or even greater security deposits.
• Pass increased costs onto tenants – increased legal costs, screening fees and insurance premiums are likely to be passed onto tenants by landlords in the form of higher rents.

These changes could disproportionately affect young people, those on low incomes, or individuals with less traditional employment, limiting their housing options. The private rented sector will undergo a period of significant change. The success of the reforms will depend on a careful balance between the rights of landlords and tenants, as well as effective implementation and enforcement.

Ironically, the changes may well create a tighter rental market, potentially driving up rents and reducing tenant choice. Disputes may also end up taking longer if an Ombudsman Scheme is not properly funded; the government must be wary of the law of unintended consequences.

Farhan Asghar, CEO, The Solicitors, Advocates & Barristers Inc