Section 21 consultation: what its missing
Article Posted - 9th August 2019
A New Deal for Renting: Resetting the balance of rights and responsibilities between landlords and tenants, otherwise known as the consultation on the abolition of section 21, has now been out for a couple of weeks, giving everyone time to digest its contents. We've gone through it with a fine-toothed comb and picked apart a couple of areas we feel it doesn't cover in nearly enough detail.
Given that a reformed court process with faster processing times and lower costs would alleviate concerns to at least some extent for 60 percent of NLA members*, this was something we had hoped would be covered in detail in this consultation. Admittedly, the Government did call for evidence to support a housing court at the end of 2018, however they have yet to publish a response to this.
The section 21 consultation does propose changes to speed things up, but it doesn't go far enough. We saw in Scotland the introduction of a housing tribunal, with specialist judges and lawyers, that aimed to speed up and simplify the process. From the statements produced by the Ministry of Housing, Communities and Local Government (MHCLG), they appear to be seriously considering it However, in the questions about the court processes, this doesn't appear to be an option. There is only one question around accelerated possession, which asks which of nine grounds could be disposed of without a hearing, while others ask about potential new grounds that could be added to section 8.
This is an important aspect of the consultation as the courts are already under strain due to high volumes of cases, a lack of funding, and closures across England. The abolition of section 21 will see more cases having to go through the courts, likely with even longer wait times, causing chaos for all involved. And even if a housing court is established, it needs to be fully funded and staffed. In Scotland, the number of cases thought to go through the Tribunal was grossly underestimated, leading to severe delays and a continued distrust in the system. We must take learnings from this if a housing court is to be successfully introduced in England.
The wider impact
This section of the consultation feels abbreviated and not thoroughly thought through. It covers homelessness, landlords' selectivity and the potential impact on those with protected characteristics under the Equality Act 2010. There is one comment box where respondents can suggest potential mitigations. There is no option to raise any other possible consequences of this proposal, of which there are several.
The first will be that landlords are likely to require a longer initial fixed term. While this is what the Government wants and will be beneficial for families living in the private rented sector, it has downsides for those who value the flexibility currently on offer. The current set-up is tailor made for young professionals entering the workforce and those on short-term contracts who can't be tied down to one place for a long period. Many tenancy agreements include a break clause after the first six months, which can include a cost for tenants as landlords are within their rights to cover the lost rent until a new tenant is found. Similarly, if the tenant surrenders a tenancy, they are contractually obliged to pay the rent for the full fixed term period outlined in the tenancy agreement, unless a new suitable tenant is found. While landlords and agents cannot benefit financially from this, the charges may still be prohibitive to tenants.
Another missing consequence is the likelihood of more people with County Court Judgements (CCJs) against them. Moving to a fault-based system, where everything has to be processed by the courts, tenants who are evicted due to rent arrears will end up with CCJs against them. Unless the debt is paid, records of CCJs last for six years, which can make it hard to get credit or loans. This will inevitably make it harder for those on LHA and Universal Credit, who have higher rates of arrears, to get out of debt and stabilise their financial situations.
Throughout the entire document, houses in multiple occupation (HMOs) are barely mentioned, if at all. Managing an HMO is decidedly different to managing any other type of property and need to be considered. Landlords are likely to evict one tenant to keep the other tenants happy, particularly if they're behaving in an anti-social manner. How this will work with the court system, especially if there are delays in the courts and/or the other tenants have to testify, has not been thought through at all. There is no question that could be the obvious place to raise this point (though question 49 could be considered a catch-all).
Essentially, MHCLG want us to tell them how this should work, rather than put any thought into this themselves. All of the abovementioned issues need to be made clear. For those of you planning to respond to the consultation, we suggest you put as much information as possible in your submission along with any possible mitigations. We will be doing the same for ours.
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