The Renters (Reform) Bill: how secure would renters be?

The law in England currently recognises five distinct systems keeping non-agricultural residential tenants in their homes: Part I Landlord and Tenant Act 1954; the Rent Act 1977; the Housing Act 1985; the Housing Act 1988; and Schedule 10 Local Government and Housing Act 1989. Within these exist a cornucopia of statutory, protected, secure, assured (including assured shorthold), starter, introductory, and flexible tenancies. The list is not exhaustive, but only those within the Housing Acts of 1985 and 1988 are true tenancies. The others are a ‘status of irremovability’: Keeves v Dean [1924] 1 KB 685 (CA). They prevent orders for possession outside of certain conditions but they are not interests in land after the initial terms have expired.

The future of the private rented sector in England

In England, the government committed in 2019 to abolishing the procedure to seek possession from assured shorthold tenants using s21 of the Housing Act 1988. The result is the Renters (Reform) Bill currently in parliament, although ambiguously delayed in part until the courts have been reformed to deal with the changing pressures upon them. Separately, the Leasehold Reform (Ground Rent) Act 2022 has limited the scope for landlords under long leases to charge ground rents, and consequently limited the number of actions seeking forfeiture. Further changes are in the works for long leaseholders of houses in the Leasehold and Freehold Reform Bill.

This is the first post in a series on leasehold reform. It deals with the larger changes being proposed under the Renters (Reform) Bill when it comes to seeking possession.

The most reported change has been the end of the assured shorthold tenancy in England. This been widely heralded as an end to ‘no-fault evictions’. It isn’t quite so simple. Various changes to the grounds for possession under a s8 notice are being introduced which include:

• A new form of ground 1 which no longer requires a notice in writing prior to the tenancy to be used, and no longer requires the property to have been the landlord’s only or principal home in the past. It is a much broader mandatory ground and can be justified by saying that any of a large number of relatives require the property.
• In the new ground 1A, a mandatory ground where the landlord intends to sell the dwelling-house.
• A change in ground 2 so that the mortgagee’s power of sale does not have to stem from a grant pre-dating the tenancy.

These are not the only changes, but they illustrate the point that there will be no end to evictions of tenants who are not themselves at fault. What will change is that landlords will have to set out at least basic reasons for evictions.

There are three likely outcomes from these changes:

1. The courts can probably expect to see more possession claims based on substantive grounds. Some s21 claims are based on fact patterns which fit other grounds, such as anti-social behaviour or rent arrears, but it has been easier to date for the landlord to use the more certain mandatory ground available.
2. There is likely to be a lot of litigation about the intention of landlords under the new grounds 1 and 1A. Business tenancy renewals under Part II Landlord and Tenant Act 1954 will be a source for analogies under the intention to conduct substantial works ground in section 30(1)(f) of that Act. The basic position there is that the intention must be ‘firm and settled, not likely to be changed’: Fisher v Taylors Furnishings Stores [1956] 2 QB 78 (CA) per Denning LJ at (84).
3. The floodgates will be opened to private rented sector disrepair claims. Currently social landlords are subject to high volumes of disrepair claims from tenants. The corresponding number from the private sector is much smaller. However, the English Housing Survey in 2021 identified that 23% of private rented sector homes did not meet the decent homes standard as compared to 10% of social housing. Although many factors will affect whether someone brings a housing conditions claim, the removal of the landlord’s option of a retaliatory s21 notice will probably make them more likely.

In terms of evictions where there is some fault on the part of the tenant, the screws are also being tightened. The discretionary anti-social behaviour ground 14 is seeing a shift from the behaviour complained of being ‘likely to cause’ nuisance or annoyance to simply being ‘capable of causing’ it.

Rent arrears are seeing the introduction of a new ground 8A, designed to deal with tenants paying rent down to avoid possession under the current regime as well as being a more robust form of the existing ground 11 which deals with persistent late payment of rent. Ground 8A provides a mandatory ground if on three occasions over the past three years there were arrears over 2 months’ worth of rent. While there are some clear abuses which this tackles – I have previously seen someone pay to just below the mandatory eviction threshold while in the court waiting room – it does mean that if the ground is met in a relatively short period of time that a landlord would continue to have a mandatory ground even in the face of no further defaults. One silver lining for tenants receiving Universal Credit is that both mandatory rent arrear grounds will not be met when the arrears are only caused by delays in receiving benefits.

One downside for all parties of the new ground 8A is that calculating the level of arrears at separate occasions over a long period of time may well involve some complex and detailed findings where counterclaims are raised. For example the damages in a housing conditions claim may need to be specified at given points so that set-off can be calculated. Similarly, the result of a counterclaim may mean that ground 8A was still made out, but on different days, meaning that there may then be issues with the validity of the s8 notice.

Conclusion

While the end of the assured shorthold will protect most private renters from eviction, there are aspects of the Renters (Reform) Bill which are likely to lead to significant amounts of litigation. The new mandatory grounds 1 and 1A are likely to lead to more complicated pleaded cases and there is a greater likelihood of matters progressing to multi-day trials where costs will be significant, especially in the context of private renters generally lacking the assets for successful enforcement of large sums.

Ground 8A in particular is one which should be treated with caution. The presence of a counterclaim for housing conditions or an unprotected deposit may well mean that the ground will not be made out as presented in the s8 notice. The reasons for rent arrears must also be addressed as late payment of benefits will defeat a mandatory ground claim if that is the only reason. Although not binding authorities, landlords would also do well to remember that in county court cases tenants have succeeded in arguing that policies against letting to those on benefits amounted to indirect discrimination and were unlawful.