Reform of Assured Shorthold Tenancies: Abolishing Section 21 Notices
Currently, and as has been the case for many years, landlords are able to bring assured shorthold tenancies to an end by way of service of a Section 21 Notice. This is often referred to as a ‘no fault’ eviction as a tenant does not need to be in breach of the tenancy agreement in order for such Notice to be served.
Generally speaking, a Section 21 Notice would give a tenant at least two months’ notice in which to vacate the property.
In recent years there has been substantial commentary as to whether these ‘no fault’ evictions should continue and in 2019 the Government announced an intention to remove a landlord’s ability to serve a Section 21 Notice. A consultation process was undertaken between July and October 2019 following which a Government consultation paper proposed the abolition of Section 21 of the Housing Act 1988.
In June 2022, the White Paper: “A Fairer Private Rented Sector” outlined the Government’s plans to remove Section 21 and to introduce the Renter’s Reform Bill during the course of this year.
Alongside the abolition of Section 21, the Government plans to transition Assured Shorthold tenancies to periodic tenancies. This means that in the future those tenancies will no longer have a fixed term (i.e. there will be no set end date) and a tenant will need to provide two months’ notice to a landlord to terminate the tenancy and vacate.
In addition, the Government plans to strengthen the statutory grounds for possession available to landlords to seek possession. For example, where a landlord requires the property to move into or sell albeit, a landlord will not be able to serve notice on the tenant within the first six months of the commencement of the tenancy. There is also an intention to introduce a new mandatory ground for possession in respect of repeated serious arrears.
It is understood that the Government plans to transition to the proposed new system in two stages with at least 6 months’ notice of the dates that they will take effect and at least 12 months between the two dates.
Stage 1 - all new tenancies to be periodic tenancies pursuant to the new legislation;
Stage 2 - all existing tenancies will fall under the new legislation. Under the Government’s proposals, a landlord would be able to increase rent once per year by serving a notice of increase of rent provided a minimum of 2 months’ notice is given to tenants. This procedure is currently available but rarely used because landlords and tenants often agree any rent increase within a further fixed term Assured Shorthold Tenancy. If a tenant challenged the rent, it could refer the matter to the First-Tier Tribunal (Property Chamber).
The Renter’s Reform Bill has not yet been introduced to Parliament but is expected this year. It will be necessary to consider the precise details of the Government’s proposals when that legislation is published because, as ever, devil will be in the detail.
We are tracking developments on our Essential Residential hub and our timeline: Evolution of the private rented sector
Please do not hesitate to contact Tanya Pinto or your usual Charles Russell Speechlys contact if you have any queries.