Where next for renting after Section 21?Posted: April 15, 2019
Blimey. If it plays out as billed, the government’s consultation on ending no-fault evictions and introducing open-ended tenancies for private renters represents the quickest change in housing policy that I can remember.
I say ‘if’ because this is still only a consultation, because ministers have form for claiming rather more in press releases than turns out to be the case when the detail is published and because Theresa May could be succeeded within weeks by a new, more right-wing prime minister who could dump the whole thing.
One more caveat is that I am only talking about England. The first minister of Wales, Mark Drakeford, pledged to end no-fault evictions on Saturday and so narrowly avoided the embarrassment of Welsh Labour lagging behind the English Tories on tenants’ rights.
Scotland has already abolished Section 33 (its version of 21) and introduced a new tenancy system in December 2017 that could become the model for the other UK nations.
In England, and taking it at face value, this announcement is a stunning victory for campaigners that takes May’s Conservatives to the left not just of where Ed Miliband was at the 2015 general election but also of what Jeremy Corbyn argued at the 2017 election. It was only later that year that the Labour leader committed to ending Section 21.
Last year the government consulted on its own plan for three-year tenancies but did not commit to making them mandatory – this was only one of three options alongside education and financial incentives for landlords.
All of this change has taken place against a backdrop of policy struggling to keep up with the growth of a sector that has moved far beyond its traditional role of a short-term, flexible option for young people before they settle down
It is now a long-term home to families with children, low-income households and older people as well.
Frequent moves mean moving costs for tenants and the loss of a private tenancy has become one of the biggest causes of homelessness, with huge knock-on costs for central and local government.
At the same time renter groups have become increasingly vocal, organised and sophisticated in campaigning that has focussed on the way that tenants can be evicted without doing anything wrong.
But this still begs the question of what has changed since last year and I’d suggest that this is about politics and practicalities.
The politics is about coming up with a way to appeal to young people, a growing obsession among Conservatives who see a Rentquake as a big factor in denying them a majority in 2017.
Only last week polling for the Tory think tank Onward revealed more about the generation gap in voting intentions. The penny seems to have dropped that Help to Buy and rhetoric about home ownership are not enough and Conservatives need to do more to help renters in the here and now.
However, if the Tories hope that matching Labour on ending Section 21 will be an end to this, I think they are mistaken. This dramatic move on tenancies will encourage campaigners to keep up the pressure and Labour to move further in the direction of rent regulation.
The practicalities may be a realisation in the wake of last year’s consultation that the Scottish system of private renting offers a more effective way forward.
Reading between the lines of the government press release, this seems to be what the government has in mind when it talks about making landlords provide ‘a concrete, evidenced reason already specified in law for bringing tenancies to an end’.
At the same time the Section 8 eviction process would be amended to give landlords the right to regain their property if they want to sell or move into it themselves.
Meanwhile court processes would be ‘expedited’ to make it easier to evict tenants who are in rent arrears or who damage the property and the government is also consulting the judiciary on a specialist housing court.
The Residential Landlords Association (RLA) has warned that ending Section 21 could hurt tenants by reducing the supply of homes for rent.
In Wales, the RLA met the first minister over the weekend and he confirmed that no-fault evictions will not be banned without reforming the rest of the system.
The Scottish system does offer indefinite tenancies to renters and it is no longer possible for landlords to carry out no-fault evictions.
However, there are still 18 grounds for possession that landlords can use to apply to a tribunal for a notice to leave. Mandatory grounds, where the tribunal has no discretion to refuse the eviction if they are proved, include not just rent arrears but also the landlord intending to sell, live in or refurbish the property or use it for non-residential purposes.
Discretionary grounds, where the tribunal can decide whether it is reasonable to grant an eviction order, include the landlord intending to let the property to a family member.
So far the sky has not fallen in over Edinburgh and Glasgow and landlords seem to have accepted a new system that offers them some advantages as well as tenants.
Some critics north of the border have warned that evictions will continue under the new system.
Against that, tenants can appeal to First Tier Tribunals if they feel that landlords are abusing the eviction grounds.
In England, plans announced by Labour in March envisaged German-style indefinite tenancies with eviction only possible on tightly defined grounds.
Under a Conservative government perhaps more willing to listen to the landlord lobby, there will be many devils lurking in these details.
The other big issue is rents, an issue on which the government press release is completely silent.
Clearly indefinite tenancies will not be worth the name if landlords can simply use huge rent increases as a way of getting tenants out (a point made by Labour’s John Healey).
In Scotland landlords can only increase the rent once a year and tenants can challenge unreasonable increases by referring them to the rent officer. There is also provision for local authorities in high-rent areas to apply for Rent Pressure Zones with limits on rent increases
If there is nothing inherently un-Conservative in indefinite tenancies, anything that smacks of rent control would be too much for many Tories.
Last year’s consultation paper favoured rents being increased once per ‘at whatever rate the landlord and tenant agree but the landlord must be absolutely clear about how rents will increase when advertising the property’.
It warned that capping rent increases at inflation could lead to default rent rises that might not otherwise have happened.
Another difference is that England (unlike Scotland and Wales) does not have landlord licensing and registration, which could be a big problem for tenants looking to enforce their rights.
Finally, what will these changes in the private rented sector mean for social landlords and tenants?
In yet another reminder of the speed of change on this issue, as recently as 2016 it looked as though the government was hellbent on making social housing more like private renting by abolishing secure tenancies for new council tenants.
Now, following last year’s u-turn on that, things are moving in the opposite direction.
The government press release says that ‘ministers will work with other housing providers outside of the private rented sector who use these powers and use the consultation to make sure the new system works effectively’.
That could mean that probationary tenancies will continue but can (and should) fixed-term tenancies have any place in social housing once open-ended tenancies become the norm in the private rented sector?