Labour to end no-fault evictions of tenants, but estate agents warn of landlord exodus without court reform

The King’s speech confirmed that the Government will introduce a Tenants’ Rights Bill to end Section 21 “no-fault” evictions.

The Conservative government was considering these changes in what was previously the Tenancy Reform Bill.

However, it was not passed before the general election, meaning the unfinished legislation passed to Labour.

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Speaking in the House of Lords, King Charles said: “Legislation will be introduced to give greater rights and protections to people who rent out their homes, including an end to no-fault evictions and reform of grounds for possession.”

The end to no-fault evictions is likely to be introduced alongside other parts of the previous government’s Tenancy Reform Bill.

This will likely include giving tenants the ability to challenge rent increases and ending bidding wars.

It will introduce the same decent housing standard that applies across the social housing sector and will also ensure that landlords do not discriminate against tenants who receive housing benefit or who have pets or children.

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Ben Twomey, chief executive of private renters’ campaign group Generation Rent, welcomed the new government’s plans to end no-fault evictions.

“After five years of promises from the previous government, with no improvement in the end, tenants are understandably demoralised and wary of further commitments,” Twomey said.

‘These reforms must therefore go beyond what was planned by the previous government, with real support for tenants whose landlord wants to sell or return to live in the same apartment to prevent them from becoming homeless.

‘This includes more time to enjoy our homes without fear of eviction, and more notice and financial support if this happens.

“Similarly, empowering tenants to challenge rent increases won’t work if we still end up with rents rising faster than our incomes.”

However, some argue that the new government must strike the right balance between protecting tenants’ rights and maintaining supply in the private rental sector.

Homeowners have sold about 300,000 more homes than they have bought since 2016, according to a Hamptons analysis.

While this is by no means an exodus, it does mean that there are not enough rental homes to meet the growing demand.

The fear expressed by some property commentators is that if the new reforms leave landlords unable to evict problem tenants (those who display antisocial behaviour or are seriously in arrears on rent), landlords will view renting out properties as too risky and sell up.

Jeremy Leaf, an estate agent in north London, argues that any reform should include an improvement in the court system to allow landlords to evict problem tenants more easily.

According to the National Homeowners Association, it currently takes an average of nearly seven months to evict problem tenants.

“One issue that has plagued the sector has been the backlog of cases and the length of time it takes for landlords to repossess their properties from tenants who are seriously in arrears with rent or displaying antisocial behaviour towards other residents,” Leaf said.

‘The previous government wanted to delay the implementation of the measures until there were more resources in the judicial system to be able to address these delays.

We believe it is important to increase the capacity of the court system, as some owners will sell anyway and there is no point in increasing the backlog.

‘It should be noted that landlords are selling more and more, which reduces stock and increases upward pressure on rents.’

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Greg Tsuman, lettings director at estate agency Martyn Gerrard, believes the abolition of section 21 “no-fault” evictions should be widely accepted by landlords, provided they have certain safeguards in place.

He said: ‘In practice, landlords should have no problems with this change to the rules, and I am also in favour of scrapping no-fault evictions as long as there are robust provisions in place to mean landlords can deal efficiently with problem tenants who abuse the system.

‘For the vast majority of the private rental sector this is rarely an issue, but it is still a risk that landlords take, so they need protection or we could see many of them exit the market.

“However, preventing landlords from leaving the market cannot be the ultimate goal. It is essential that the new Government aims to encourage greater private investment in the rental market to increase the number of homes available to rent in line with growing demand, which should include expanding the supply of affordable housing.”

End of fixed-term rental contracts?

Another measure that had previously been proposed for tenant reform is the abolition of fixed-term rentals.

This could lead to all tenants moving to a single system of periodic tenancies. A periodic tenancy is often referred to as a renewable tenancy with no fixed end date.

Currently, most tenants have a short-term guaranteed rental agreement (AST), most of which convert to monthly renewable contracts when their term ends.

This change will mean that tenants will be able to leave poor quality housing without having to pay rent until the end of their contract. They will also be able to move more easily if their circumstances change.

Real estate agent Greg Tsuman thinks this would be a bad idea.

“If it were introduced, it would create more problems than it would solve,” Tsuman added.

‘Generally speaking, both landlords and tenants want to sign long-term contracts where tenants pay a fair price to move into a good quality home, as well as having the peace of mind that their rent will not increase disproportionately and that the landlord has committed not to sell during this period.’