As we anticipate the demise of the s.21 process, probably within the next few months, many landlords in the residential sector may be reassuring themselves that it will still be straightforward to end a tenancy where the tenant falls into rent arrears. Unfortunately, the Renters Rights Bill looks set to make it harder and costlier for landlords to evict a tenant in arrears.
The current version of the bill provides that minimum accrued arrears for Ground 8 to apply will increase from two months’ rent to three months’ rent (where rent is payable monthly. Where rent is paid weekly, the threshold is increasing from eight weeks’ rent to thirteen). As this is the only rent-related mandatory ground for possession, and most landlords will prefer not to rely wholly on discretionary grounds, the effect is that one has to wait a month longer before serving the s.8 notice. In addition, the bill includes measures increasing the notice period that must be given to the tenant before proceedings can be started. For all three rent-related grounds, the notice period is increased from two weeks to four. The government’s website asserts that these changes will ‘allow tenants more time to repay arrears and remain in their homes, while ensuring landlords do not face unsustainable costs.’ What measure has been used to assess the losses that landlords will find ‘sustainable’ is unclear. For the tenants who do not repay the arrears but allow them to continue to mount until they are evicted, these changes will grant them an extra six weeks’ rent-free occupation of the property, at their landlord’s expense.
And it doesn’t end there. The new bill also provides that when calculating rent arrears for the purposes of Ground 8, ‘if the tenant is entitled to receive an amount for housing as part of an award of universal credit under Part 1 of the Welfare Reform Act 2012, any amount that was unpaid only because the tenant had not yet received the payment of that award is to be ignored.’ This introduces a significant new element of uncertainty for some landlords relying on Ground 8, as it means that even if there are definitely three months’ arrears both when the notice is served and on the eve of the hearing, the tenant could still turn up to court with evidence that they’ve applied for benefits which they have not yet received. The last government’s draft legislation also included this change, however that bill also included a new mandatory ground for repeated rent arrears where specific thresholds were reached, which is wholly absent from the new bill.
A final point to mention: at present landlords choosing between the s.8 and s.21 processes have to take into account the fact that the s.21 process is only available where the landlord’s obligations regarding service of EPC, gas safety certificates, How to Rent booklet and deposit protection information have all been demonstrably complied with, whilst s.8 doesn’t require the landlord to produce any of that paperwork. The Renters Rights Bill provides that in future, for most of the s.8 grounds, a possession order will only be made if the landlord can show that they have complied with the deposit protection rules.
In summary, when the new bill becomes law, evicting tenants for rent arrears is set to become a slower, more involved, and less certain process.
Dewar Hogan specialises exclusively in advice and representation in relation to residential and commercial property issues and disputes, including professional negligence claims against solicitors and other property professionals. Our services in relation to residential property include all landlord and tenant matters.