Labour wants to end no-fault evictions for tenants: but agents warn of landlord exodus without court reform

The Speech from the Throne confirmed that the Government will introduce a Tenants’ Rights Bill to end ‘no-fault’ evictions under Section 21.

These changes were considered by the Conservative government in what was previously called the Renters Reform Bill.

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

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In his speech to the House of Lords, King Charles said: ‘Legislation will be introduced to give people who rent their homes more rights and protections, including an end to no-fault evictions and reform of the grounds for eviction.’

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

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

This will introduce the same standard for decent housing as in the social housing sector. It will also ensure that landlords do not discriminate against tenants with housing benefit, pets or children.

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Ben Twomey, director 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 improvements at the end, tenants are understandably demoralised and wary of new commitments,” Twomey said.

‘These reforms must therefore go further than the previous government envisaged, with real support for tenants whose landlords want to sell or move back, to prevent homelessness.

‘This means we can enjoy our homes longer without fear of eviction, and we will receive more notice and financial support if this happens.

“Giving tenants the ability to challenge rent increases won’t work either if rents continue to rise faster than our revenues.”

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

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

While there is certainly no exodus, it does mean that there are not enough rental properties to meet the growing demand.

Some property commentators fear that if the new reforms mean that landlords can no longer evict problem tenants – tenants who display antisocial behaviour or are in serious rent arrears – landlords will find renting out their properties too risky and will sell them.

North London estate agent Jeremy Leaf argues that any reform should also include improvements to the legal system so landlords can more easily evict problem tenants.

According to the National Residential Landlords Association, it takes an average of nearly seven months to evict a problem tenant.

“One problem the sector faces is the backlog of cases and the time it takes for landlords to get their properties back from tenants who are in serious rent arrears or are behaving antisocially towards fellow residents,” Leaf said.

‘The previous government wanted to delay the implementation of the measures until they had made more resources available for the justice system so that the delays could be addressed.

‘We believe it is important to increase the capacity of the legal system, because some landlords will sell anyway and there is no point in increasing the backlog.

‘Please note that landlords are increasingly selling their properties, which reduces inventory and increases rental prices.’

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Greg Tsuman, lettings director at Martyn Gerrard Estate Agents, believes that abolishing ‘no-fault’ evictions under Section 21 should be widely accepted by landlords, provided landlords have certain safeguards in place.

He said: ‘In practice, landlords should have no problem with this change in the rules and I would support the abolition of no-fault evictions, as long as there are strong provisions in place to ensure that landlords can deal effectively with problem tenants who abuse the system.

‘For the vast majority of the private rental sector this is rarely an issue, but it is nevertheless a risk that landlords take and so they need to be protected. Otherwise there is a risk that some landlords will leave the market.

‘But stopping landlords from leaving the market cannot be the end goal. It is vital that the new government seeks to encourage more private investment in the rental market to increase the number of rental properties available in line with growing demand, which should include expanding the supply of affordable housing.’

End of temporary rental contracts?

Another measure previously mentioned for tenant reform is the abolition of temporary rental contracts.

This could lead to all tenants moving to one system of periodic leases. A periodic lease is often called a rolling lease without a fixed end date.

Most tenants currently have a guaranteed short-term lease (AST) contract, most of which convert to a month-to-month continuous lease after the lease term expires.

This change means that tenants can leave substandard housing without being held liable for rent until the end of their lease, and can more easily relocate if and when their circumstances change.

Realtor Greg Tsuman thinks this is a bad idea.

“If implemented, it will create more problems than it solves,” Tsuman added.

‘In general, both landlords and tenants want to enter into long-term contracts, where tenants pay a fair price for a good quality home and where they can trust that the rent will not increase unreasonably and that the landlord has committed not to sell their home during this period.’