What Will Happen if the Government Abolishes No Fault Evictions?

Landlords and tenants in the private rental market are living through a period of increased uncertainty over what the future might hold while we wait to see whether the Renters’ Reform Bill makes its way through parliament and into law. One of the key proposals of the Bill is to remove landlords’ ability to evict tenants ‘at will’ through no fault evictions. While the idea is popular with renters and tenants’ rights groups, it is important to consider what effects it will have. In particular, what impact it will have on landlords and the rental market as a whole.

How things stand – section 21 of the Housing Act 1988

Currently, landlords have the right to retake possession of a property from their tenants without the need to show that the tenant has breached the terms of their tenancy. Because there is no need to show fault on the part of the tenant, these are referred to as ‘no fault’ evictions. This right is set out in section 21 of the Housing Act 1988.

Landlords can exercise this right from the time the fixed term of the tenancy expires. They must give at least 2 months’ notice to the tenants.

What is an assured shorthold tenancy?

Assured shorthold tenancies (ASTs) are the type of tenancy used for most private rentals in England and Wales. A tenancy will generally be an AST as long as:

• The tenancy started on or after 28 February 1997
• The landlord does not live in the property with the tenant/s
• The rent is less than £100,000/year
• The rent is more than £250/year (outside London) or £1,000 a year (in London)

An AST will either be for a fixed term, often of 6 or 12 months, or on a rolling weekly or monthly basis.

Why is the government proposing to abolish no fault evictions?

In their 2019 manifesto, the Conservative Party promised “a better deal for renters”. This included ending landlords’ right to no-fault evictions. Having won the 2019 election, the Conservative government announced a Renters’ Reform Bill and carried out a public consultation on their proposals, which were titled: ‘New deal for private renters’.

The intention behind abolishing no fault evictions is to give tenants more security. It has been suggested that tenants are reluctant to request repairs or challenge rent increases out of concern that their landlords may simply choose to evict them and find new tenants. Tenants may also experience a negative impact on their wellbeing due to housing insecurity, as shown in some of the responses to a 2018 consultation.

While the Renters’ Reform Bill was not introduced in the 2019-2021 parliamentary session, the government reaffirmed their commitment to the Bill in the 2022 Queen’s Speech. This confirms that the government intends to introduce the Bill in the 2022-2023 parliamentary session.

What are the proposals of the Renters’ Reform Bill?

As well as abolishing no fault evictions, proposals covered in the Renters’ Reform Bill include:

• Moving all tenants onto a single system of periodic tenancies, so they can leave a tenancy more easily if they need to move or the housing is of poor quality
• Outlawing blanket bans on renting to people receiving benefits or with children
• Limiting rent reviews to a maximum of once per year
• Doubling notice periods for rent reviews
• Giving tenants the right to request to have a pet and for landlords not to be able to unreasonably refuse this
• Introducing a Private Renters’ Ombudsman to settle disputes between tenants and landlords

What problems would ending no fault evictions cause for landlords?

Removing the option to evict tenants at will is likely to cause several issues for landlords. As well as giving landlords less control over their properties in general, it will make it much harder to get rid of problem tenants, as landlords will have more limited options for regaining possession. Where a landlord has multiple properties, they could find themselves stuck with a large number of problem tenants, needing to go through lengthy and complex possession proceedings for each.

Combined with the proposal to limit rent reviews, getting rid of no fault evictions will also curtail landlords’ ability to adjust the rent they are charging in line with the market. This could cause serious issues for landlords if their borrowing costs increase and they are unable to increase the rent on their properties to match. For landlords with substantial property portfolios, this could result in very substantial deficits between their rental income and borrowing costs.

It is likely some form of rent control would be needed to ensure rents are set at a fair level for both landlords and tenants, meaning rents would be set by the state rather than the market.

There is also the potential for an impact on the private rental sector as a whole. If investors are worried about the possibility of being stuck with problem tenants, such as those who cannot pay, and of having less control over setting rents, it is realistic to assume this may deter investments.

With the UK already struggling to meet the demand for rental properties, anything that puts off landlords from investing in the sector could cause real problems for renters as well.

What options would landlords have to end a tenancy if no fault evictions are abolished?

If no fault evictions are abolished, landlords who want to regain vacant possession of their properties would need to have reasonable grounds for doing so.

Under Section 8 of the Housing Act 1988, landlords can seek possession for issues such as rent arrears, breach of the tenancy agreement, neglect of the property, anti-social behaviour and the tenancy having been granted on the basis of false information supplied to the landlord by the tenant.

It is also expected that any changes introduced if the Renters’ Reform Bill becomes law will include provisions for landlords to regain possession if they wish to sell their property.

Speak to our property law experts

Longmores’ team has strong expertise in property litigation, including all aspects of tenancy disputes. We regularly advise landlords with substantial property portfolios, giving us a keen insight into the challenges in this sector.

Our experts can provide clear advice on your rights with regard to a tenancy, including the options for ending a tenancy. We provide up-to-the-minute expertise, so no matter how the law changes, you can always be confident that we will find workable solutions.

To discuss how we can help with any aspects of tenancy management, please get in touch with Partner and Head of Property Litigation John Wagstaffe, and we will be happy to advise.

Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.