How might the scrapping of Section 21 affect Rent Guarantee claims?

Since the Renters (Reform) Bill was first introduced to parliament in May 2023, the Conservative government has repeatedly promised to uphold its 2019 manifesto pledge to abolish Section 21 notices. 

Michael Gove, Secretary of State for Levelling Up, Housing and Communities, has stated on numerous occasions that a ban would be in place by the time of an expected autumn General Election. However, he recently conceded that this was now more a “hope” than a guarantee at this stage of proceedings.

With the Bill only just receiving a third reading in the House of Commons before it now passes through the House of Lords, not to mention delays at the hands of court reforms, the likelihood of a pre-election resolution to the situation seems increasingly unlikely.

All of which begs the question: if Section 21 notices are eventually banned, how would this affect landlords, and would it affect their rights to claim for eviction support costs through a Rent Guarantee Insurance policy?

A Section 21 notice, also known as a "no-fault eviction notice," is a legal document that enables landlords in England to repossess a property from tenants with an assured shorthold tenancy (AST) agreement.

This type of notice gives tenants two months to leave the property once their fixed-term contract expires.

However, landlords currently don't need to provide a reason for eviction when using a Section 21 notice. Hence the “no fault” moniker.

This is in contrast to a Section 8 notice, which requires a landlord to prove that the tenant breached the tenancy agreement, such as by missing rent payments or by damaging the property.

Section 21 notices could be phased out in England. The Renters (Reform) Bill proposes a shift towards a "fault-based" system under a strengthened Section 8, requiring landlords to have a valid reason for eviction. 

Another eye-catching element of the Bill is the proposed abolition of AST agreements. If passed, fixed tenancies would become a thing of the past, with rolling monthly agreements becoming the norm.

Under these proposals, tenants would be required to give two months’ notice. This could happen at any point during the tenancy and the tenants would only be obliged to pay rent until the end of the notice period. 

Landlords would only be able to evict a tenant if they had reasonable grounds under Section 8. Permissible reasons would include selling up, redeveloping, or letting the property to a close family member. 

The Bill also sets out greater powers for landlords to regain their property sooner in the event of criminal or serious antisocial behaviour.

Mandatory evictions would also come into play for tenants who have been in rent arrears for at least two months on three occasions over three years.

The exact date for scrapping Section 21 notices is unknown because it is currently passing through Parliament. 

Having passed through the House of Commons, the Bill now needs to be ratified by the House of Lords before it can receive Royal Assent.

In October 2023, the government announced that any abolition would be delayed further by the need to reform the court system to enable it to handle the expected increase in eviction cases. 

During the third and final reading, ministers again voted in favour of an indefinite delay to the abolition of Section 21 notices until the court system had been properly assessed.

They also voted down a Labour amendment to bring the abolition into force with immediate effect on receiving Royal Assent. 

At the time of writing, there is no confirmed date for scrapping of Section 21. It is a case of “watch this space.”

Rent Guarantee Insurance with legal expense cover can be a valuable tool for landlords navigating eviction procedures. The following are just some of the ways it can help if you are facing this situation:

Financial backing for legal fees

Evicting a tenant, especially if they contest the eviction, can involve court appearances, solicitor fees, and other legal costs.

Landlord Rent Guarantee Insurance from HomeLet helps shoulder this financial burden. It enables you to pursue eviction with up to £50,000 of financial support to cover legal and claim costs.

Access to legal expertise

With a HomeLet policy, landlords in England and Wales gain access to on-site legal support to help manage the eviction of tenants.

In Scotland and Northern Ireland, we provide access to a panel of solicitors who specialise in landlord-tenant law.

Either way, you will be guided through the complexities of the eviction process, ensuring you follow the correct procedures and maximise your chances of a successful outcome.

Streamlined claims process

Backed by an experienced in-house Claims team, HomeLet provides a clear and streamlined process for making claims related to legal expenses during the eviction process.

Our advisers go the extra mile to ensure your claims experience runs as smoothly as possible.

Reduced stress and time commitment

Eviction proceedings can be stressful and time-consuming. When you have legal expense cover as part of your Rent Guarantee policy it can alleviate some of this pressure.

Knowing that the important legal aspects are being handled by professionals enables you to focus on simply finding a new tenant and minimising the vacancy period.

If Section 21 were to be scrapped, it probably wouldn't directly affect your ability to claim on your Rent Guarantee Insurance for evictions. However, it could potentially make the claims process more complex.

With Section 21 notices abolished, landlords would need a valid reason to evict a tenant. Valid reasons would include falling into rent arrears or causing malicious damage to the property.

Rent Guarantee specifically addresses lost rent due to tenant issues, and eviction is often a necessary step to recover possession and lost income.

As long as you have a valid reason for eviction under the new rules, you will still be able to claim on your insurance policy.

However, with the onus on landlords to provide a valid reason for eviction, claims reviews could become more stringent.

More documentation and proof may be required to ensure the eviction aligns with the terms of the policy and the new legal landscape.

Again, this is very much a case of “what ifs” and “buts” at this stage. Rest assured that we will keep you fully up to date with any potential changes that could affect the claims process.

Although far from a foregone conclusion, the scrapping of Section 21 notices could have far-reaching consequences for landlords. Therefore, some planning and preparation at this stage could stand you in good stead later on. 

Firstly, look for a policy with clear terms regarding eviction coverage, such as HomeLet’s. Secondly, familiarise yourself with the legalities of eviction under the Renters' (Reform) Bill, specifically, the valid reasons for eviction.

Finally, keep meticulous records of rent payments, communication with tenants, and any documented breaches of the tenancy agreement. This will help to ensure you have a body of evidence should you need it later.

Scrapping Section 21 won’t block insurance claims for evictions. However, it might make the process more complex and require stricter adherence to valid eviction grounds.

Landlords should be prepared to adapt and collaborate with legal and insurance professionals to navigate evictions and maximise the chances of a successful claim.

Rent Guarantee Insurance from HomeLet offers significant benefits for landlords navigating eviction procedures.

This type of specialised policy provides financial assistance, access to legal expertise, and a streamlined claims process. All of which can contribute towards a smoother, less stressful eviction experience.

HomeLet is a well-established and trusted name in the UK lettings industry. We are well-known for our expertise in providing specialised insurance solutions for landlords.

We cater specifically to the needs of landlords, which means our policies are always tailored to address the most pressing landlord concerns. 

We offer a user-friendly claims process in case of rent arrears or the need to evict, which can save you considerable time and hassle in the long run.

Plus, we can assist with the eviction process by providing on-site legal support and up to £50,000 for professional and claim costs included as standard with all our Rent Guarantee policies.

For more information about our Landlord Rent Guarantee Insurance, contact us on 0800 035 8258 or request a callback. Our offices are open 8:30 to 17:30 Monday to Friday and 9:30 to 13:00 Saturdays.