The government consultation on reforming Section 21 of the Housing Act 1988 closed on 12 October 2019. The proposals have received a mixed reaction from landlord and tenant interest groups alike.
I am regularly instructed by landlords where a tenant has moved into the property and very quickly stops paying rent, knowing that the landlord has two options: (i) wait until the fixed term expires (usually 12 months) and serve them with a s21 notice or (ii) serve a s8 notice and pursue costly litigation. The non-payment of rent is often combined with a complaint (whether legitimate or not) regarding the condition of the property.
Knowing that the tenant cannot be evicted until the end of the proceedings, and that s8 claims will incur significant legal fees, landlords often wait to obtain possession under s21, or settle with the tenant by waiving the arrears in return for possession being given.
I have been thinking whether, under the reformed possession regime, there is a way to give landlords protection from serial non-payers of rent, and give tenants who have genuine claims for disrepair protection.
One idea that came to mind was the introduction that upon expiry of a s8 notice, and the issue of possession proceedings which are defended on grounds of disrepair, the tenant is required to pay the usual rent into court, which will be paid to the landlord or tenant (or apportioned between the two) depending on the outcome of the claim. If a tenant failed to make payments into court then an immediate possession order would be granted.
This would give landlords comfort that if the counter-claims of disrepair are unsuccessful at trial, they will be paid the arrears. At the same time, tenants will have comfort that if the disrepair claim is genuine, they will receive a repayment from the monies held by the court.
The number of tenancies that end up being decided in court is relatively small, but the hardship that non-payment of rent can cause to landlords should not be underestimated.
The Government's reforms bring an opportunity to change the system so that it works for both landlords and tenants and ensures a fairer outcome.
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