As part of the suggested changes for Section 21, the Government has proposed to remove Assured Shorthand Tenancies (ASTs) from the Housing Act 1988. This will mean that assured tenancies will be the only tenancy available to landlords.
The Guild of Property Professionals has explained that tenants will be given the option of agreeing to a fixed-term assured tenancy. This will result in both parties committing to a predetermined time or a periodic assured tenancy.
If a tenant does not terminate their fixed-term tenancy or the landlord uses a Section 8 notice, it is possible that the tenancy will be renewed to a new fixed term. Otherwise, it will automatically become an assured periodic tenancy.
If these changes are indeed put through by the Government, there will be a six month transitional period before they become law.
How this might affect current tenancies?
Iain McKenzie, CEO of The Guild of Property Professionals, has highlighted that there has been confirmation from the Government that this plan for changes will not be retrospective.
“What this means is that should the law come into place, it will not impact tenancies that are already in place at the time it is passed. So, landlords in these agreements will still be able to use Section 21 until the tenancy comes to an end. Any new agreement thereafter will then become an assured tenancy,” he adds.
What about landlords and tenants looking to end the tenancy agreement?
A landlord looking to terminate an assured tenancy will have to give a Section 8 eviction notice to the tenant, based on our of the grounds specified in Schedule 2 of the Housing Act 1988.
McKenzie explains: “In the instance where the tenant decides to end the tenancy, they would have to give one month’s notice, but only at the end of a fixed-term tenancy or during a periodic tenancy unless their agreement includes a break clause.”
Will we see changes to Section 8 eviction notices?
With Section 21 gone, it has been speculated that Section 8 will not be enough to fill the gap and protect both landlords and tenants sufficiently, as it currently stands.
McKenzie says: “There are several other changes that the Government will be looking to make to Section 8 to mitigate the loss of Section 21, such as adding a new ground into Section 8 for when a landlord wishes to sell the property or widening the current grounds to cover a landlord, their spouse, partner, or family member, should they wish to move into the property.”
How will changes affect who landlords will let to?
“If landlords feel they have less protection the likelihood is that they will become far more risk-averse and less likely to want to rent out their property. This could mean the supply of rental properties would decrease, which in the long term could push up rental prices.
“Landlords will also be far more stringent in their tenant selection process, meaning some tenants may find it far more difficult to find a place to live,” says McKenzie.
What should landlords do to prepare?
The Guild’s inhouse Compliance Officer, Paul Offley, says: “It is important that landlords have a workable process for obtaining possession where there is a justified need for them to do so. Any process which helps execute this process, whilst being fair to the tenant, has got to be seen as a positive move.
“Any change brings concern but providing MHCLG is working with organisations like The Guild and that they listen to the feedback they receive, then hopefully this will benefit all parties concerned.”