Section 8 is in dire need of reform
Article Posted - 13th November 2018
For landlords, section 8 has become a time consuming and expensive process with a distinct lack of success compared to a section 21 notice. Section 8 does have some advantages such as shorter notice period (two weeks as opposed to two months), as well as allowing the landlord to register a county court judgement against the tenant.
However, these are outweighed by the challenges of navigating the process, with risks such as local authorities advising tenants to remain in the property, the discretion of judges, and tenant counter-claims. The National Landlords Association (NLA) believes this causes unnecessary financial and emotional distress for landlords using section 8 for its intended purpose: to regain their asset quickly where tenants have breached the conditions of their tenancy agreement.
To win your section 8 case, you need to prove that your tenant is in breach of the terms of your agreement. If you are successful you should obtain a possession order under one of 17 specific statutory grounds (Housing Act 1988, section 8, schedule 2). Plus if there's debt involved, i.e. rent arrears, a landlord can also obtain a money order (CCJ).
The section 8 form
The section 8 form itself carries a range of risks to the landlord, notably:
- There is nowhere on the form to ask for the enforcement to be transferred to the High Court. It has to be squeezed into another answer
- A large proportion of the 18 grounds in the form do not work in court; this is largely due to judges acting on discretionary grounds on issues such as anti-social behaviour. Judges typically don't take the landlords side and evict tenants, undermining the process (see below)
- These decisions often leave landlords powerless. The NLA advice line has to give a disclaimer/caveat about the unlikelihood of a section 8 eviction succeeding
- A Section 8 form is unclear compared to a section 21. A section 8 form does not outline the procedures.
A time-consuming process
The whole process can take up to 12 months. The NLA landlord possession stats for Q1 2016 has found an average of 18 weeks between claims and repossessions. Discretionary issues such as nuisance, noise, general anti-social behaviour, and damages are contentious issues and notoriously difficult for a landlord to prove. It's generally only worth pursuing the section 8 route as far as the courts in these circumstances if the tenancy has a long period left to run and perhaps where neighbours or other tenants are complaining. It's a reminder to landlords that issuing long tenancies can introduce an element of risk for if the tenant is not proven in performance.
There is always a temptation to use section 8 because the shorter notice period (usually two weeks) makes it appear the quicker option. However, landlords have to use the standard procedure at court to recover possession, which may mean an eight-week delay in recovering possession, and result in more than one court hearing.
Under Section 8 the tenant can put in a defence, who can force an adjournment and delay proceedings. The tenant can also defend the claim on the grounds of disrepair of the property. If the tenant pays part of any arrears owing (even just before the hearing), then the landlord may have to rely upon discretionary grounds such as persistent delay in paying rent and/or some rent being lawfully due from the tenant. Obtaining the possession order is not as certain as under the section 21 notice, provided the notice has been properly served.
Counter claims from tenants
Once you commence legal action, there's no turning back. A landlord must see the process through to its conclusion or pay the other side's legal costs to back out. If your tenant decides to defend the case or brings a counter claim against you, then you will be in for some serious costs, especially if your tenant has legal aid and legal assistance.
A further risk to landlords is that a successful counter claim to the action can result in costs awarded against the landlord claimant running into thousands of pounds and will usually result in the landlord will failing to obtain a possession order.
Local authorities advising tenants to remain in possession
Recently, many local authorities have been advising tenants to stay put even after an order of possession has been granted. This undermines the key advantage of section 8, which is that the landlord gains possession within two weeks rather than the two months as mandated in the section 21 process.
According to Paul Shamplina of Landlord Action there has been a developing trend of tenants bringing defences in eviction cases and of appealing judges' decisions.
“Some judges are showing a surprising degree of sympathy with tenants in arrears. In other cases, it would seem the tenant is just more knowledgeable about the law than is the landlord or is legally represented against an amateur landlord.”
The NLA believes there needs to be far more robust protections in place for landlords. aligning with former Minister of State for Housing and Planning Brandon Lewis' letter to all chief executives of local councils saying that households should not be put in this position and clarifying the guidance about homelessness.
Lewis said: “Authorities should not routinely be advising tenants to stay until the bailiffs arrive; there is no barrier to them assisting the tenant before this. By doing this, local authorities miss a valuable opportunity to prevent homelessness.”
An expensive route to eviction
For landlords, the cost of delay can be substantial if their tenant is not paying rent. It can take many months to get back vacant possession because:
- The notice period can last up to three weeks (taking into account service) for the rent arrears-based section 8 notice
- The ‘accelerated procedure' will take between six to 10 weeks, depending on how busy the court is. Standard proceedings will generally list the hearing six to eight weeks after issue of the proceedings
- Once you have got your possession order, it can take anything between three weeks and three months to get a bailiff's appointment. Again, depending on how busy the court is.
So if it takes you six months to obtain possession and if your tenant is failing to pay £1,000 per month rent, that is £6,000 lost. However, if you delay you could find yourself facing far greater costs in terms of money and time.
Ever increasing costs
The cumulative effect of the increased fees and delays on landlords is significant, as this testimony highlights:
“We have a tenant owing us over £10,000 in rent. Their 12-month tenancy still had 3 months to run when I took the tenant to court using the rent arrears ground 8 – section 8. Hours before the hearing the tenant's solicitor (tenant is legally aided) filed a counter claim, claiming damp in the property. Because of the counter claim the hearing was adjourned and a new one fixed for next year – 6 months away. I am concerned about the cost of all this as my solicitor has estimated legal costs of around £15,000 if I lose.
“To end the process now I am told I will need to pay the defendant's legal costs to-date and as he is represented these are already substantial.”
New court fee rises mean that landlords will now need to set even more money aside in order to be completely prepared for every scenario, including possession. Since March 2016, there have been a number of increases on a range of fees.
Section 8 Fees
Possession claims online or through the PCOL system
General applications made without notice
Applications made by consent
Most importantly, the fee for a possession claim has increased by a quarter (26 percent). The online system for making a claim (PCOL) has seen an even larger increase at 30 percent. The fees for general applications made without notice and applications made by consent have increased by 100 percent.
What we believe
Richard Lambert, CEO of the NLA, says:
“As it stands, the system is failing and needs urgent reform. Landlords are forced to rely on section 21 ‘no fault' notices, even when there is a breach in tenancy. This is essentially a sticking plaster covering the fundamental issue – that the section 8 process is no longer fit for purpose.
“While the majority of tenancies are ended by the tenant, landlords need to be confident they can regain possession of their properties efficiently in the event of a breach of tenancy to effectively manage their business risk.”
¹ Ministry of Justice Mortgage and Landlord Possession Statistics in England and Wales, April to June 2018
² Ministry of Justice Civil and Family Court Fees (from February 2018)
³ NLA Landlord Panel Survey Q2 2018 (681 respondents)
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