Last updated: 2 December 2024
Section 21 notices allow landlords to quickly regain possession of their properties without dealing with the courts. They also reduce admin for agents, making them a popular mechanism for both parties.
It’s no surprise, then, that almost 70% of agents believe abolishing no-fault evictions will negatively affect the private rented sector (PRS).
This is one of the key things proposed by the Renters’ Rights Bill, which is expected to become law in the first half of next year.
So what are the permutations of the abolition of Section 21? And how can agencies future-proof themselves?
That’s exactly what we’ll cover in this blog.
Section 21 notices are documents that notify tenants of eviction. While landlords — or letting agents on behalf of landlords — have to give tenants two months’ notice of these evictions, they don’t have to specify a reason for them. Hence the term, “no-fault evictions”.
If a fixed-term tenancy ends and becomes periodic, landlords may need to give more than two months’ notice. The Government website says: "The amount of notice must be the same as the rental period, if this is more than two months. For example, if your tenant pays rent every three months, you must give three months’ notice".
If you want to evict a tenant during a fixed-term tenancy, you need to serve a Section 8 notice. Here, you must prove that the tenant has broken the terms of the tenancy agreement and specify the legal grounds for eviction, such as rent arrears.
To serve a Section 21 notice, you need to fill out Form 6A on the Government site. If you create your own Section 21 notice, it must include all the information on Form 6A. You can only serve the notice at the end of a fixed-term tenancy or during a periodic tenancy.
Depending on the terms you stipulated in the tenancy agreement, you can serve a Section 13 notice via:
Serving a notice via a method not included in the tenancy agreement could invalidate it, so check this beforehand.
The Government site says there are scenarios when a letting agent or landlord can't use a Section 21 notice. These include:
You also must provide the following to the tenant for the notice to be valid:
The Renters’ Rights Bill will abolish Section 21. Fixed-term tenancies will also be abolished, and all tenancies will become periodic overnight. In this new landscape, Section 8 will be the only notice landlords and letting agents can serve to evict tenants from a property.
According to its Guide to the Renters’ Rights Bill, the Government is “ending the threat of arbitrary Section 21 evictions, which uproot renters from their homes with little notice and minimal justification.”
It continues: “The new tenancy system will provide tenants with greater security and stability and empower them to challenge bad practice without fear of retaliatory eviction. Landlords will also benefit, with more straightforward regulation, and clearer and expanded possession grounds.”
These changes address concerns about high tenant churn rates.
For example, in April 2024, the housing charity Shelter published data estimating that 830,000 tenants had been evicted over the last 12 months, with around 190,000 likely being served a legal eviction notice, like a Section 21.
However, critics of the legislation say abolishing Section 21 without reforming the court system is naive.
For example, Conservative MP, Jerome Mayhew, said: “When we move to a Section 8 ground, that will require more resources and scrutiny, quite rightly, but without investment in the court system, we will not deliver what either renters or landlords need.”
With evictions delayed, tenants will be in rent arrears for longer, while landlords’ legal costs will skyrocket.
As uncertainty reigns in the PRS, the burden is on letting agents support and advise their clients through the turbulence. But this is easier said than done. You’ll need to navigate the following three challenges effectively to ensure you’re ready for the Renters’ Rights Bill:
Put simply, Section 8 notices are more complicated than Section 21 notices.
Landlords can cite eight mandatory grounds and 11 discretionary grounds to evict tenants from their property. In Form 3, the official documentation landlords must fill out to serve a Section 8, landlords need to both:
Assisting your clients with this process will mean your agents spend even more time on paperwork.
This is a significant concern, considering Goodlord’s State of the Lettings Industry Report revealed that 42% of agents already don’t have enough time to manage their workload.
Incorrectly citing grounds in a Section 8 notice is a big problem for a couple of reasons.
Firstly, your clients want an expert service. If you allow them to send notices that courts throw out, your reputation and customer relationships could be damaged.
Secondly, the eviction process is likely to be long and drawn out when the Renters’ Rights Bill becomes law. Delaying the process further will result in longer periods of tenant arrears, leaving landlords out of pocket.
As a result, relying on manual data entry practices that are vulnerable to human error isn't sustainable.
Landlords and letting agents can serve Section 21 notices until the Renters’ Rights Bill becomes law, so it’s fair to expect a flurry of them in the next 6-12 months.
With more tenants being evicted from their homes, there’s a higher risk they’ll fall into arrears. Properties may also fall into disrepair if tenants no longer care about the property.
To stop your clients from leaving the sector for good, you need to protect them from these threats.
Lettings industry data emphasises how disenchanted landlords feel, with 30% having sold a property or put one on the market in the last year. A further 17.4% are considering reducing their portfolio in the coming year.
How can agencies prepare for the abolition of Section 21?
It’s fair to say that agencies are under the cosh right now. But none of the challenges facing you are insurmountable. Here are two solutions that’ll help you combat the abolition of Section 21 and position your business as a market leader.
Agencies have been calling on technology to automate manual admin and compliance processes for some time now. The Renters’ Rights Bill heightens this need for agencies that haven’t fully digitised. Here are the benefits you’ll get by investing:
One of the key promises of lettings software is to reduce admin and allow agencies to do more with the same or fewer resources. This capability has never been more important than it is right now. Vera Rogers, Head of Administration at South-West-based agency, Milburys, says:
“I had to do quite a lot of the admin plus some employees, like the actual negotiators, used to have to help with admin. Whereas after the integration of Goodlord, the admin tasks move mainly to me, so Milburys can manage and deal with a lot more properties with the same amount of people”.
Streamlining admin with Goodlord also helped Greg Tsuman, Lettings Director at South-East-based agency, Martyn Gerrard:
"From a team of 30 people progressing files, we've now got a team of three, with the rest focusing on business generation instead of administration."
Of course, the Renters’ Rights Bill adds further admin onto agents’ plates. But by removing existing tasks from agents’ plates, you can free up their time to support with Section 8 notices.
That’s why it’s important to think about this now, rather than after the Bill becomes law.
Saving time isn’t the only promise of lettings software, as Vera can attest to:
“When there's a change in legislation, we rely on Goodlord. They know about legislation and compliance because they've got the legal team. They will change the tenancy agreements. It's on the system the next day, and I’m sending contracts that are already compliant”.
When the Renters’ Rights Bill ushers in overnight changes, you can rest assured that Goodlord has you covered. Greg reinforces this point, stating:
"All agents are equally good, until things start going wrong - knowing that there is a paper trail helps us assure clients that they can have complete peace of mind."
By reducing admin and ensuring compliance, you can better navigate choppy waters and get ahead of your competition. Greg says:
"The fact that we now have more time to speak to our clients rather than being bogged down with the admin tasks means we can have more quality conversations. We can provide that human customer service that helps us stand out from our competitors."
Lettings software can do many things, but it doesn’t cover unpaid rent. That’s where insurance comes in. James Conway, Director at David Conway Estate and Letting Agents, says:
"We offer Goodlord's Rent Protection on 70% of our properties, through our four landlord packages,'' says James. "Rent Protection helps us sell our agency's services. The fact that we can protect the rent [...] now with payouts until vacant possession - that's really key.”
James also highlights the reality of eviction timelines and the need for comprehensive support:
"Other providers might pay out 12 months maximum, but evictions can take longer. We've had a couple of evictions recently which have unfortunately taken over a year, and some rent guarantee products would have stopped payouts by then Goodlord's product can now make sure that doesn't happen.”
He continues: "You can put a landlord's mind at rest knowing they're going to be covered, which really enhances our offering to our landlords."
Section 21 is a safety blanket landlords and letting agents would rather keep hold of. However, by combining lettings software and Rent Protection Insurance, you can still thrive in a world without it.
Making this decision proactively will further ease the transition to the reforms proposed by the Renters’ Rights Bill.
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This article is intended as a guide only and does not constitute legal advice. For more information, visit bills.parliament.uk.