In the past weeks, we’ve seen some healthy discussions in the forums about how the 1988 Housing Act is outdated and no longer serves the needs of renters in 2017.
Tenants are calling for changes because assured shorthold tenancies, which were introduced by the act, work in favour of landlords and give them overwhelming power over tenants. Tenants claim that the law is not effective at protecting their rights and enforcing health and safety standards.
A large part of the claim is due to the notorious section 21 notice.
AST and Section 21 notice
With assured shorthold tenancies, landlords can easily regain possession of the property. Provided the tenant is not in the middle of their fixed term, the landlord can serve a section 21 notice and request the tenant to leave in two months of time.
Landlords are not required to provide a reason for this decision, they are entitled to it by law. This is also referred to as the “shorthold ground” in an assured shorthold tenancy, to which when properly (legally) used, the court cannot deny a possession order.
Of course, landlords must meet a handful of conditions before they can legally use the s21 notice, like protecting your deposit, serving valuable information, performing safety checks, etc.
However, if the landlord abides by all legal requirements, they have a really easy to use tool, which can get a tenant out of their property in just a couple of months.
Fixed terms rarely last for more than 12 months, and the landlord is entitled to used s21 notice in between each one. Periodic tenancies are even more vulnerable, as landlords can make use of section 21 freely. Of course, tenants who are looking for secure housing should realise periodic terms are the last thing they want to have..
One would think that a great landlord should be entitled to such a powerful tool and protection from bad tenants. And they are completely right…
Except, the above mentioned legal requirements don’t mean that you have a great landlord or a great property. They just mean that the landlord is in compliance with the law.
In reality, section 21 notice is such a powerful leverage that when negotiating new terms, tenants face an uphill struggle standing up to their landlords.
Some landlords, obviously not the most righteous, have gotten used to using section 21 so much, that they serve one 10 months into the fixed term, so that it expires at the same day it ends.
This gives the landlord the ability to drag the tenant in the court immediately after the fixed term ends. If that happens, the landlord can evict you in matter of months. Obviously, that is a huge tool and a huge threat to an average income household.
And before we invoke the wrath of all landlords, let us mention that some tenants deserve to be evicted, and as quickly as possible. Read the other side of the story, about a landlord who lost four months of rent because they didn’t serve a section 21 on time.
Getting back to our story here, landlords really have the higher ground when negotiating a new term, a renewal or pretty much everything else.
After 12 year after renting from the same landlord, the role passed onto another member of the family and problems started to avalanche.
During her tenancy, Suzanne’s landlord would increase the rent every 1 – 2 years, based on the market, with around £10 per month as they renewed the tenancy. She agreed happily so far, as the price and the property were decent. Over time, the property deteriorated somewhat, but no refreshments were introduced to maintain the condition which no longer matched the asking price.
Landlords changed and the new one decides to increase the rent again and lock Suzanne into a 2 or 3 year contract. Sounds like Suzanne got her hands on a secure property, but guess this:
They wants to combine all the future rent increases, that would have other wise occurred with annual fixed term renewals, but ignores all requests for refreshing the property and investing a little bit, so the price and conditions match again, as they have before.
Now Suzanne is left with three options:
- Agree to a rent increase of £30 per month, with zero investment and improvements done to the property.
- Leave the property in two months and relocate her entire family from the home they lived in for the last 12 years.
- Fight an uphill battle against a landlord who can legally evict her on the slight chance of success after prolonged court proceedings.
Why can’t Suzanne just move ?
She would very much like to, but her annual income of 26k is getting in the way. Just for reference, in 2015 the median annual income in the UK was £27,531.
Her letting agent refuses to show her properties of comparable size and condition, because she doesn’t meet the income criteria. The letting agent requires a 3:1 income to rent ratio to consider the tenant as viable, but on average tenants spend half their salary on rent only.
The English Housing Survey of 2013-2014 figures confirm that on average tenants spend 47% of their net income on rent in the UK. In London, this figure bloats to 60% on average and as much as 72% in some individual cases.
Obviously, most tenants would never meet the agent’s criteria, so how do these tenants get new properties ?
Why can’t Suzanne fight off her landlord ?
Sure, she can try and drag her landlord into the First Tier Tribunal and try to block the rent increase.
She wouldn’t get repairs, as this needs to be enforced by the Environmental Health Department. However, they really only look into health and safety situations, where there are potential hazards to human life, like faulty gas supply. They don’t deal with decoration, improving quality of life and so on.
However, what Suzanne can’t do is secure the property, as the landlord can simply not renew her term and serve her a Section 21 notice and demand that she moves, which gets us back to the previous section.
Provided her landlord protects her deposit, there is nothing that can block section 21 effectively and in the end, she and her family may get evicted. If income is not enough of a problem, add a CCJ for eviction on your background check and you will never get another property from a letting agent.
Of course, eviction is a game where everybody loses. No smart landlord would ever want to a tenant who has been paying rent every month for the last 12 years. Obviously Suzanne didn’t wreck the property as the landlord sees no problem with the condition.
So then why would you want to remove this secure tenant who pays on the dot and takes reasonable care with the property ?
Change of tenants is always a costly process for the landlord. There are agents to pay to; improvements you need to implement to be able to market the property; empty months when you get no rent.
Changing your good paying tenants on the expectations that somebody will pay a bit more is a risky decisions. You don’t know if the next tenant will be as good as your past one and keep your costs down.
However, greed can often be blind sighting and is the irony of the situation.
What is the conclusion
Section 21 is a tool that can be used for legal blackmail and coercion to accept terms that are only favourable for the landlord.
We’re not saying that everybody uses it this way. Not all tenants have Suzanne’s financial problems either.
Not all landlords are blood-suckers and not all tenants are innocent victims, however when you have the right combination of both, and a law which doesn’t provide a solution, you get Suzanne’s case.
That is why she’s looking to change the law and even the scales for tenants. If you want to support her, sign her petition here.