Fixed Term Tenancies

Currently, most private rented properties are let on a Fixed Term Tenancy basis, usually as 6 or 12 months. Once tenants have reached the end of the fixed term, the tenancy agreement goes onto a rolling contract. At this point, tenants can give their required notice (as detailed in their tenancy agreement) to end the tenancy.

Organisations such as Generation Rent and Acorn say Fixed Term tenancies are wholly inflexible, locking tenants into an agreement for a considerable length of time with no ‘get out clause’ if their circumstances drastically change. For example, if a relationship breaks down, if they lose their job or have to move for work shortly after starting a Fixed Term tenancy.

What’s changing?

The changes will bring an end to Fixed Term tenancies. Instead, all tenancies will be Periodic from the outset, meaning tenants can give notice at any point from the start of the agreement. What’s more, notice periods of greater than two months will be banned.

Although many landlords fear the move to periodic tenancies will result in greater uncertainty for them (for example, a tenant can sign an agreement and move in, then immediately give their 2 months’ notice), their fears should be assuaged by a comparison with similar changes introduced in Scotland in 2017. Research by Shelter conducted 18 months after legislation to end fixed term tenancies in Scotland concluded there was: no impact on the size of private rental sector in Scotland or the buoyancy of the private rental market. What’s more, the 2020-21 English Housing Survey found the average tenancy lasts 4.2 years; whilst some tenants will leave after only a short while, in reality it isn’t the norm and needn’t be feared.  

Section 8

Currently, there are two routes for a landlord to evict a tenant in England.

Section 8 of the Housing Act (1988) allows landlords to apply to the courts to evict a tenant if they have breached the terms of the tenancy agreement. The notice period is determined by the nature of the breach, in some cases it can be as little as 14 days’ notice. A comprehensive guide on these grounds is available from Legal4Landlords, however as a summary:

Mandatory grounds

These grounds can include: the landlord making the property their main residence again; behaviour breaching Antisocial Behaviour Injunctions or Criminal Behaviour Orders; mass rent arrears; the need for substantial maintenance works on the property; redevelopment. Some mandatory grounds, such as mass rent arrears, have a 14-day notice period if granted.

Discretionary grounds mean the judge deciding on the case may or may not issue the eviction order, depending on whether they think it is reasonable to do so. These grounds include such things as: damage to furniture or the property itself; persistent late payment of rent; using the property for criminal activity.

Landlords often try to avoid issuing Section 8 Notices, particularly on discretionary grounds, as they would go to the expense of court proceedings without a guarantee that the judge will grant the order. Even in the case of mandatory grounds, Legal4Landlords say the evidence presented by both landlord and tenant will be scrutinised and extenuating circumstances will be taken into consideration. A common gripe amongst landlords is the mandatory ground of mass rent arrears: currently, renters can keep their arrears just below the threshold that would allow landlords to serve a Section 8 Notice, ‘playing the system’.

Section 8: What’s Changing?

Although the changes coming into effect will abolish Section 21 (see below), Section 8 will also be strengthened. The significant changes to bolster Section 8 include:

• More grounds will become mandatory, meaning landlords can have greater certainty of success when they go to court. 
• Although details are scant at this stage, the government is proposing a variety of “court reforms”, working alongside the Ministry of Justice and HM Courts and Tribunal. These will target areas of proceedings that commonly hold up repossession, such prioritising cases and  digitisation of paperwork, amongst others. 
• Evidence for eviction on the grounds of mass rent arrears will be easier to gather, as the criteria will change from a threshold amount to the frequency of episodes of rent arrears. Tenants will need to have been in arrears of two months or more on at least three occasions over three years. This should help landlords evict tenants who were ‘wilfully’ not paying rent, or ‘playing the system’.
• Grounds for repossession because the landlord wishes to occupy the property themselves will extend to their family, not just the landlord themselves.
• There will be a ground for repossession if a landlord wishes to sell their property
• Notice periods for rent arrears breaches will be increased to 4 weeks (from two weeks)
• Notice periods on grounds of antisocial or criminal behaviour will be lowered.

Section 21

Under Section 21 of the Housing Act (1988), landlords can serve tenants with two months’ notice to vacate a property with a periodic tenancy, or after a fixed term tenancy has ended (so long as there is a written tenancy agreement). Landlords do not need a reason to issue a Section 21 notice, so these have been dubbed ‘no fault’ Evictions. They are also referred to as ‘accelerated repossession’ notices in some cases.

According to Shelter, ‘no fault’ evictions are one of the leading causes of homelessness in the UK. The charity claims that between October-December 2021 5260 households were threatened with homelessness as a result of being served a Section 21 notice. Furthermore, they claim that between January-March 2022 ‘ No Fault’ evictions resulted in a 17% rise in homelessness.

It is no wonder, then, that Section 21 can be feared by tenants, and it is a powerful tool for landlords to gain repossession of their property. This is concordant with the latest English Housing Survey (2020-21), which flagged that private renters and social renters were more anxious than owner-occupiers.

Section 21: What’s Changing?

Section 21 will be abolished (specifically, it will be repealed).

Whilst many landlords worry that this change will resign them to the protracted and uncertain procedures involved in serving a Section 8 Notice instead, similar changes that were introduced in Scotland in 2017 (Private Residential Tenancy agreements) have not been as problematic as feared. According to Letting Agent Today, despite predictions of doom and gloom, “the world has not collapsed, the market remains buoyant, and there is evidence that a landlords’ right to evict has, if anything, been strengthened by these legislative changes”.

Rent Increases

For fixed-term tenancies, landlords can increase rent if the tenant agrees. If the tenant does not agree, the landlord can only increase rent once the fixed period ends. Fixed period tenancies usually run for 6 or 12 months, after which time the tenancy is a rolling contract, on a weekly or (most commonly) monthly basis.

For periodic/rolling tenancies, the landlord should only be able to increase rent once per year, and only by an amount that was previously agreed with the tenant (or less). Any increase must be reasonable and concordant with local averages. The landlord must give at least one months’ notice (if rent is charged monthly or weekly), or 6 months’ notice if rent is charged annually.

Rent increases: what will change?

After the reform, landlords will still only be able to increase rent once per year. They will have to give a minimum of two months’ notice; this increase was designed, the government said, to help households cope with the cost-of-living crisis.

Summary

Although the raft of legislative changes heralded by the Renters Reform Bill may worry some private landlords, in reality the experience of similar changes in Scotland suggests there is nothing to fear. Where Section 21 of the Housing Act (1988) will be abolished, Section 8 will be strengthened, so landlords will still be able to evict tenants where need be, but the timeframe and procedures for these changes will be slightly different. Changes in notice periods required for increasing rents will be a lifeline for many households struggling with the cost-of-living crisis, a pressure that is unlikely to subside in the near future.