Lettings experts have identified a crucial ‘loophole’ in the Renters (Reform) Bill relating to the abolition of Section 21.
Lettings experts have identified a crucial ‘loophole’ in the Renters (Reform) Bill which will create a patchwork system whereby some landlords will be able to continue serving Section 21 notices and others won’t.
After careful analysis of the current Renters (Reform) Bill by Goodlord’s Managing Director of Insurance, Oli Sherlock, and Solicitor at Dutton Gregory Solicitors, Ryan Heaven, a critical detail has been uncovered.
According to Sherlock and Heaven in a Goodlord recent webinar, despite a pledge from the Housing Secretary that Section 21 will have been banned by the time the country goes to the polls in a General Election, it seems highly unlikely that this will prove to be the case.
Listen to the webinar on-demand.
Heaven says: “A lot of people place emphasis on Michael Gove stating that section 21 would be 'outlawed' before the election, but when you examine the Bill closer this is not what will happen; whenever the election date is there will be some landlords in this country who will still be able to serve a section 21 notice even if it others are not able to.”
Instead, the Bill passing into law will usher in a new phase where three broad tenancy types exist, one of which will still allow for the enforcement of Section 21:
1. A new tenancy created after the Bill has been implemented.
That means you can't serve a Section 21 notice.
2. Tenancies that are periodic when the Bill is implemented.
For these tenancies, landlords will still be able to serve a Section 21 until the Government reviews the Court system, reports on it to parliament, and then sets an ‘extended implementation date’ at which date the new rules all apply to all tenancies.
As such, tenancies which fall into this category could be served a Section 21 notice after the election.
Goodlord’s Oli Sherlock continues; "As the Bill currently stands, it seems that the apparent promise to delay the scrapping of Section 21, to allow for court reform, is not what it seems. Instead, it appears that the market will instead be delivered a fragmented process which sees some tenancies permitting Section 21, some not, and others that could fall into either camp depending on how a tenancy renewal is handled.
“This would all be taking place alongside an investigation into the courts, which currently has no confirmed timeline or identifiable metrics for success. The deep irony here is that the very same courts will be managing more and more cases deriving from tenancies where section 21 has already been outlawed. Arguably this is the worst outcome for all parties.”
