The End of No-Fault Evictions: Implications for Landlords and Tenants

The recent third reading of the Renters’ Rights Bill marks a significant shift in the rental property landscape, with far-reaching consequences for landlords and tenants alike. Here are the key points to understand about the impact of this legislation:

Key Changes in the Renters’ Rights Bill

Section 21 “No-Fault” Evictions Abolished:

Landlords can no longer terminate tenancies without providing a specific reason.
The reform addresses exploitative practices by a minority of landlords and whilst many individuals agree with the Bill’s good intentions, it will have a significant impact on all property owners. The key driver of a Section 21 notice being used by landlords to regain possession of their property was because the process was quicker and minimised the amount of court time.

Financial and Operational Challenges for Landlords

Increased Burden of Proof:

Landlords must now prove grounds for possession, such as non-payment of rent or the need to sell the property.
This change will demand more court and judicial time, extending the eviction process.

Court Delays and Backlogs:

According to The Times (https://www.thetimes.com Jan 2025) county courts are already overstretched, with severe delays in processing possession claims.
In some regions, evicting non-paying tenants could take over a year, and contested cases can take up to 18 months or longer

Bailiff System Delays:

After a possession order is granted, appointing bailiffs can take several months, further delaying repossession, which will only be compounded by when the changes come into force.

Financial Risks:

Extended eviction timelines could lead to significant financial strain on landlords, especially those with mortgages or those relying on rental income for retirement.

Risks to the Rental Market:

Reduced Property Supply: Frustrated landlords may exit the rental market, reducing the availability of rental properties.
This could lead to increased rents as remaining landlords adjust to cover risks and costs.

Unaddressed Court Capacity Issues:

The government has not provided sufficient funding to address the current backlog in courts and tribunals.
Without investment in digital processes or improved infrastructure, delays are likely to worsen as a result if the implementation of those reforms.

Broader Implications for Tenants

Potential for Higher Rents:

While the bill aims to protect tenants, reduced rental supply and increased costs could lead to higher rents, pricing poorer households out of the private rental sector and increasing the burden on local councils and the supply of social housing.

Prolonged Disputes:

Lengthier legal processes due to court capacity may also deter tenants (the very cohort that the new law is trying to protect) from efficiently pursuing claims or resolving disputes.

Conclusion:

While well-intentioned, the Renters’ Rights Bill has significant shortcomings that may undermine its goals. Without addressing court delays and providing adequate resources, the legislation risks harming landlords and tenants, with fewer rental properties available and higher rents likely to follow. This is a critical moment for the rental sector, and landlords must prepare for the operational and financial challenges ahead.

Opportunities from an Auction Perspective:

While the legislation introduces challenges, it also presents opportunities for the property auction sector. An increase in landlords choosing to sell their properties due to the longer eviction process could lead to higher property supply at auctions. Auctions can simplify the process for selling properties with low leases and create more investment opportunities, attracting buyers to the market.

Are you a landlord facing such challenges and want to know more, please read our Renters Rights Blog https://auctionhouselondon.co.uk/blog/renters-rights-bill. If there is a desire to divest your property portfolio because of these changes, please call the team on 020 7625 9007 Or click here for a free valuation.