11 Key Learnings From Our Webinar – Your Questions Answered!
Last week we ran a webinar on the changes coming for Section 21 and Section 8 – but in case you missed it, we’ve brought together our key learnings so you don’t have to!
Section 8 and Section 21:
Section 21 is still in use – for now
At the moment, you can still use Section 21 – many landlords prefer the guarantee of it (when served correctly!)
However, the government has recently pledged to abolish no-fault Section 21, as part of the Renters’ Reform Bill.
We can’t be sure what the future will look like, but we expect there will be a move to a model more like the format currently used in Scotland, with only Section 8 notices available. Section 8 grounds are likely to be strengthened and extended, especially when a landlord needs their property for their own (or family) use, or they wish to sell. The response to the initial consultation paper is due later this year, so for the meantime Section 21 is still in use, but it may not be for much longer.
We’ll definitely be sharing as and when that change happens – so check in with us if you’re not sure!
Section 21 notices are only valid for a fixed term and can only be served after the tenancy starts!
If you completed and signed Section 21 at the beginning of a tenancy that started several years ago – it’s likely that it has expired, as it was probably signed with a standard 12-month Assured Shorthold Tenancy (AST).
You would have needed to sign a new one on the first day of the new tenancy term for it to be valid.
And don’t forget, the the notice can also only be served after the tenancy starts, so if this document was signed as part of your pre-tenancy paperwork (when you were signing tenancy agreements, for example) it would not be valid. If you have entered the date as the day the tenancy starts, a technical judge could argue that the signing could have taken place hours before keys were handed over, which could be all it takes to render your notice invalid.
You can’t always use eviction notices to deal with rogue tenants
We’re sure you’ve had your fair share of rogue tenants, from anti-social behaviour to late payment of rent. So here’s a breakdown of if – and how – you can use Section 21 and Section 8 to deal with them.
- Late payment of rent: If your tenant eventually pays their rent and there is no outstanding owed, you could issue a Section 8 using ground 11 – persistent late payment of rent.It is always good idea to keep detailed notes of when and how late rent is paid, and copies of any correspondence you have with your tenant about this. A solid paper trail can be helpful to prove that you have worked with your tenant to try and rectify the problem, before issuing a Section 8.
- Rent arrears: You have a few options here, depending on the result you’re after.If you wish to regain possession of the property and the unpaid rent, you could issue a Section 8, under ground 8. This is a mandatory ground, used when there are serious rent arrears. As of August 1st, the notice period is two months, and you should recover the funds.If you use want to regain possession of the property, you could issue a Section 21. This wouldn’t leave the tenant liable for repaying the rent, however you would regain possession of your property.It is worth noting that Section 21 has no ability to recover any funds. However, your tenant cannot defend against this action and you should recover your property without a potentially expensive court hearing. You do have the option of making a separate court claim for recovering debt, and you have up to six years to do this. This may be a simpler option than issuing a Section 8 as well, although there is nothing preventing you from doing so.
- Anti-social behaviour: This really depends on how that anti-social behaviour was reported and dealt with. If the neighbours have made reports to the police, they would have a crime number, which should be strong evidence for a section 8, issued under ground 14. This is used if the tenant, or anyone living in or visiting the property is guilty of behaviour that causes or is likely to cause a nuisance or annoyance to anyone living in, visiting or carrying out a lawful activity in the locality – this would include the neighbours. Similarly, if the neighbours have contacted you (and you have evidence of this contact, emails are great – we love a paper trail!) making complaints, these would also be helpful. Ground 14 is a discretionary ground, so it is up to the judge to decide if the request holds water, but if they grant possession, the notice period is immediate. Alternatively, if there is no evidence which you feel would help a judge make this decision, you may be better issuing a Section 21, which although a lengthier process, requires no such grounds.
- Tenant in need of support: One of our webinar attendees enquired about serving a Section 21 to one of their tenants who is a functioning alcoholic. This is a tricky one, as unless they’re causing undue suffering or nuisance to person living in or around the property, causing damage to the property, failing to pay rent or otherwise breaching the tenancy agreement, their lifestyle is not enough to issue a possession notice. However, if you have concerns about their ability to manage the property safely, a maintenance visit may be a wise idea, to check if there are any areas of concern that may be a risk for either the tenant’s ability to safeguard themselves, or your property. If you have any concerns for the tenant’s safety, please do not hesitate to contact a local support agency.
You may need to consider serving a section 21 or section 8 when selling your property
If you want to sell your property, a section 21 notice is the best option – section 21 is the ‘no-fault’ option, your tenant hasn’t breached the tenancy agreement in any way, so this would be the most appropriate option.
Your tenant will be entitled to four months’ notice. The ‘pre-Covid’ standard of two months was extended during the pandemic (initially to six months, later reduced to four) to ease the pressure on tenants, and this is still in place. Don’t worry – if this ever changes, we’ll definitely be posting about it!
However, it’s worth considering selling the property with a tenant-in-situ as many investors will be delighted with the idea of inheriting a model tenant! Bear in mind that most mortgage lenders will not lend on a property with a sitting tenant, so you are likely to be restricted to cash buyers only. Depending on the price of the property, you may want to consider how likely this is.
Alternatively, if your tenant has been in the property for some time, it may be worth approaching them with the question if they are interested in buying the property. If it has been their home for some time, they may just be the buyer you are looking for…
If your tenants are moving to council housing, they might request an eviction notice
If your tenants are applying for council housing, they may be advised to seek an eviction notice from their landlord. You could issue a Section 8, under ground 9 – alternative accommodation available, this currently has a notice period of four months. You could also issue a Section 21, which also has a notice period of four months.
Depending on the type of council housing they are applying for, they could also surrender their tenancy (formally ending the agreement in writing, both you and the tenant sign the document). This is instant. If they have bid on and are moving into social housing, this is likely to be a good option. If they are presenting to the council as homeless however, this would be seen as making themselves voluntarily homeless, and would restrict the help they were entitled to.
It would be wise to ascertain their future plans and offer a range of options to their Housing Officer, who would be able to advise on the best options moving forwards.
Use Section 21 if you’re increasing your rent, knowing your current tenant can’t afford it
If you were to increase the rent, knowing that your tenant cannot afford to pay, you would potentially be setting them (and you) up for difficulty with rent arrears. It may be more appropriate to serve a Section 21, which would give your tenant appropriate length of time to leave the property, and you can then advertise it at market value, and source a tenant who can comfortably afford the rent, and not get into any sticky financial situations.
Section 21 and Section 8 do not apply to commercial leases
The equivalent for commercial leases is a Section 25 which is used to terminate a lease when it ends, or not more than 12 months and not less than 6 months before the termination date specified in the notice or oppose a renewal. To terminate a lease, a landlord must serve the notice and specify at least one of seven grounds. They are:
- Premises are in disrepair
- Rent arrears
- Breaches of tenancy agreement
- Suitable alternative accommodation
- Tenancy was created by sib-letting
- Landlord intends to re-develop
- Landlord intends to occupy
You are probably liable – even if your managing agent made a mistake
Ultimately, unless you have signed a Transfer of Liability document, it is possible that the responsibility for the correct serving of documents may still lie with you. So even if your Section 21 notice is thrown out because of a mistake by your managing agent – the issue is likely to still sit with you.
We recommend that you document the issue in writing, so if you choose to terminate the relationship with the managing agent (wouldn’t advise doing this mid-Section 21, if they are handling this for you), you have evidence of the issue.
You cannot make contact about debt recovery if your tenant is in the Breathing Space Scheme
If your tenant is eligible for Breathing Space, they will be included on an electronic record and all of their creditors will automatically be contacted and notified. If you have not been notified, it’s possible that your tenant has not yet been approved for the scheme.
Don’t forget, whilst a tenant is in breathing space, you cannot make contact about any debt recovery, or outstanding funds. You can however still contact your tenant with any other enquiries/requests relating to the safety or maintenance of your property. If your tenant contacts you wanting to discuss repayment schemes or debt solutions, you can answer their questions, but may wish to do so via email – we highly recommend this as it keeps a paper trail for you.
Keeping a Paper Trail
Speaking of paper trails, here at Mashroom, we’re big fans of keeping your documentation in order – it makes life easier for you and your tenants and protects you both.
We had some questions about documentation at our most recent webinar, so here’s all the insight you need. If your documentation isn’t currently in order, we hope this inspires you to get organised!
It’s not just the eviction notices you need to have in order…
If you’re a landlord who routinely destroys previous certification when the new certification is issued – you could have a big problem on your hands.
When it comes to Gas Safety Certs, for example, in order to comply with the regulation 36(3)(c) of the Gas Safety (Installation and Use) Regulations 1998, you are required to keep gas safety records for at least two years.
It is wise to keep all documentation relating to your property for a minimum of five years, but we would recommend keeping a digital store (no need for reams of paperwork, an online storage option like Google Drive is absolutely fine) keeps everything safe, and accessible should you ever need to refer back to it.
If the rest of your paperwork is not in order, your tenant could argue that they were not provided with an up-to-date certification during the tenancy, and if you do not have proof of this (the certificate, or an email trail showing that it has been issued, for example) you may find it difficult to counter this claim.
Never accept ‘nil response’ as authorisation of receipt!
It is unwise not to have any form of receipt stating that your tenant has received the documents. In a court, it would be your word against theirs that the documents have made it to the tenant.
There are a few ways that you can serve documents that can give you this proof:
- Serving documents by email creates a digital paper trail
- Serving documents by hand directly to the tenant, and obtaining a signature of receipt
- Serving documents to the property, using the postal method used by Royal Mail (private postbox or letterbox only, not communal post tables!) in the company of a with a witness. Your witness should be over 18, have full mental capacity and not be under the influence of any substances, and willing to sign a Statement of Truth. This document should state that they witnessed you (your full name) delivering document (document name) to Property Address (in full). They should sign with their name, address, signature and the date. This is a legal document and could be used as evidence in court.