This article provides an update on the options available to landlords in recovering possession of a residential property following the implementation of the Renters Rights Act.
Changes to the Renters’ Rights Act
In the second part of this series looking at the grounds for possession that may replace the previously used s21 notice, we are looking at a newly incorporated ground for possession used by landlords who are intending to put the property on the market for sale and as such need vacant possession of the property.
Intended sale of the property: Ground 1A
One of the more common uses of a section 21 notice was if a landlord wanted to sell their property. The reality is that unless selling to in institutional landlord and therefore has no objection to the current tenant remaining, the likelihood is that in order to facilitate the sale, vacant possession is going to be required. Absent a procedure for ‘no fault’ notice enabling a landlord to recover possession of their property when needed, sale of houses which had been tenanted, would be all the more difficult. As such with the implementation of the Act, new grounds were added to Schedule 2 Housing Act 1988 to enable recovery of the property in the event that a sale is required. Even if the tenant is not in breach, landlords will be able to use this new ground subject to following the necessary conditions.
Along with private landlord, this new ground will be relevant and important to consider for property developers purchasing or selling a tenanted property as well. Whereas in the past vacant possession may not have been of the upmost concern initially because there would have been various steps needed before development was ready to begin and so having an income in the meantime from the rental would be useful, those of you who readour previous blog on re-development grounds will note that in order to rely on the re-development grounds, you need to be the person who granted the lease in the first place. If you are buying a property with a tenant in situ, these grounds are therefore no longer be useable. If a developer is buying a property for development purposes, they will therefore most likely want vacant possession as a key part of terms of sale. This will make the new ground all the more prevalent for selling parties as well.
This new ground for possession requires 4 months notice and notice cannot be served in the first 12 months of the tenancy. Given the longer notice period than the previous section 21 notices, this therefore means that there is a premium on forward planning when trying to facilitate a sale dependant on vacant possession.
Restrictions after serving a Ground 1A notice
When relying and having served a notice on Ground 1A, a Landlord is then blocked from granting a further tenancy or permit any person to occupy under licence; or even market the property on the above basis for 12 months from the date of the expiry of the notice. This is essentially to stop landlords falsely claiming an intention to sell, to recover vacant possession from a particular tenant in place of the previous 21 procedure. This restriction is even if there are genuine reasons for example if the plan had been for a sale, but the market took a downturn or there was not the demand which had been anticipated and so the landlord’s plans had changed.
Whilst this restriction is sensible when read in those terms, this does mean that landlords will need to be confident of their intentions and both seller and buyer, flexible with likely timeframes. Either a sale has already been agreed, in which case patience will be required to wait for the notice period to expire and potentially any court proceedings needed due to non-compliance on the part of the tenant, or the property will need to be put on the market for sale in which case, if a suitable buyer is not found or a proposed deal falls through, the property cannot just be re-tenanted. A sale is never a guaranteed until contracts are completed (save for exceptional circumstances which fall well outside the scope of this blog) and so any landlord looking to use these grounds needs to be committed to the process.
It is important to note that there are significant financial penalties of up to £40,000 and/or a Rent Repayment Order award for up to 2 years worth of rent if a person commits an offence under the Act.
What landlords need to consider when selling
As and when landlords are considering using this route, it is important to give all factors mentioned above, proper consideration. Is the prospective sale a speculative attempt to assess the market or is this a definitive need to sell? Either way, it is important not only to understand your entitlement to possession but also consider tactically when the best time to serve notice will be. The threshold for providing evidence of the intent to sell may be easier than those discussed in the aforementioned recent re-development blog, however they are no less serious and will need to be thought through properly otherwise an improperly timed notice, can result in a significant amount of time with a vacant property.
How Boyes Turner can help with property disputes
There is clearly plenty to unpack with the new Act with anyone that has a tenanted property needing to now consider decisions in the context of the new rules. Whether this is to help facilitate a sale or as part of a wider long term development project, this is all work and advice that can be provided by our Property Disputes and Development teams at Boyes Turner.
If any guidance is required, we would be happy to help. You can contact our dispute resolution team or Development team, or alternatively, read further on the Development and Property Disputes services at Boyes Turner.
Written by
Richard Pulford
Richard is a Senior Associate - Solicitor in the Property Disputes team. He specialises in commercial and residential disputes covering areas including statutory commercial lease extensions, dilapidation disputes/negotiations, complex defended possession matters, high value deposit disputes, HMO licensing and enforcement and disrepair claims.
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