Living without Section 21 evictions – lessons from the Scottish market

The announcement of the Renters’ Reform Bill in the Queen’s speech last December caused a collective groan across the country from many landlords and agents as it stated that it would abolish the use of ‘no fault’ evictions by removing Section 21 of the Housing Act 1988 and reform the grounds for possession.

It also announced that it would give landlords more rights to gain possession of their property through the courts where there is legitimate cause by reforming current legislation. They would also work to improve the court process to make it quicker and easier for landlords to get their property back.

Predictions of a collapse in the private rented sector (PRS) and the exodus of landlords from the market followed. For us, in Scotland, this was old news.

In December 2017, the Scottish Government introduced Private Residential Tenancy (PRT) agreements which ended no-fault evictions in Scotland. There was some trepidation about how this would impact on the PRS as nervous landlords and agents felt that they would lose control of their properties under this new system.

However, almost three years later and 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. There is now a shorter period in gaining an eviction notice and the grounds for eviction remain strong and can be more rapidly enforced.

There remain strong grounds for eviction when it is necessary and there is evidence that the Scottish system is now faster in implementing this. Under the previous legislation, a tenant had to be three months in arrears before a notice to quit could be issued with the reality that this would take a further six months to get to court.

A notice to leave can now be issued at a much earlier stage and there are 18 mandatory and discretionary grounds for repossession under the new system. These include the landlord planning to sell or move into the property, breaches of the tenancy agreement, or anti-social behaviour.

With cases now being heard by the First Tier Tribunal for Scotland (Housing and Property Chamber) – effectively a housing court – which provides a free service with neither party requiring legal representation, we have a more efficient and effective system to deal with disputes.

The housing court covers all disputes from repossessions, repairs, and rent disputes for both landlords and tenants through an independent body which assesses each case and reports on the outcomes.

I do believe that part of the reform of the English system must include the establishment of a housing court. The concern of landlords and agents will be that if there is a dispute in the future without introducing an appropriate ‘property court’ similar to the Scottish Housing and Property Chamber, many landlords may find themselves in legal limbo with a property earning no income and with no resolution in sight.

It is, therefore, essential that the Westminster government introduce a similar system to the Scottish model which addresses the key issues which will arise from current and proposed legislative changes. Only by putting in place in advance of any problems arising from these changes will the UK government be able to pre-empt the potential negative views of many within the sector who see changes such as scrapping Section 21 as completely unacceptable.

Interestingly, there seems to have been no impact on length of tenure since these changes were introduced. Almost three years after the no fault eviction ban was introduced in Scotland, our average length of tenure across all 4,000 properties changed marginally from 29 to 30 months. Therefore, landlords were not forced into longer tenancies than they had previously been accustomed to.

In many respects, the Scottish market is several years ahead of England. In 2012 a ban was introduced on administration fees being charge to tenants. Dire warnings were given prior to the same ban being introduced through the Tenants Fees Bill in England, yet it is in place and the world did not end.

In Scotland, landlords can no longer set short-term tenancy agreements of six months and the Scottish government has already established indefinite tenancy agreements. These are quite radical changes, but people adapt, and the best will not only survive but thrive in this environment.

But more important than changing the legislation is the need to change the mindset of so many landlords and agents. Too often the relationship between landlords and tenants has been confrontational and divisive with each side pitted against the other.

Too often the Section 21 notice makes tenants feel insecure and vulnerable and unable to ask their landlord for basic standards due to a fear of a ‘revenge eviction’. This imbalance of power allows unscrupulous landlords to treat tenants as commodities rather than human beings.

The PRS now accounts for nearly a quarter of the entire adult population and this situation is completely untenable and is the driver of the current legislative programme.

Make no mistake, fairer rights and greater security for tenants is the future for the lettings sector. If existing landlords won’t meet these demands, there are many coming into the market whether through institutional investors’ involvement in Build to Rent or large-scale investors who understand that the private rented sector must change but is here to stay and will provide good returns for decades to come.

Adapting to the new way of renting through greater regulation and fairness for tenants is simply the latest stage in the evolution of the property market and is a development which is, I believe, long overdue. The abolition of Section 21 is not the end but is simply the beginning of major change.

*David Alexander is joint chief executive officer of apropos