Economics

Why it’s time to abolish no-fault eviction, for good

Renters as well as homeowners need protection in uncertain economic times

May 11, 2021
Generation rent. Richard Johnson / Alamy Stock Photo
Generation rent. Richard Johnson / Alamy Stock Photo

“One of the biggest divides in our country has been between those who can afford their own home and those who cannot,” said secretary of state for housing Robert Jenrick on 19th April, as he launched a government-backed scheme for affordable mortgages requiring a deposit of just five per cent. He is right: a person’s housing often defines their position in society and ability to live a secure and decent life. Yet a home is far out of reach for those without their parents’ capital to help, or very high wages. To make the situation worse, the poorest spend proportionally the most on their housing costs.

It is a particularly difficult time to be one of the 13m people in the UK who rent from a private landlord; the pandemic has only magnified the issues of insecurity and unaffordability that plague the market. The government’s new mortgage scheme is a welcome intervention that may help a significant number of “hard-working” families to achieve home ownership—the national shorthand for having made it. But many others won’t be able to drum up a five per cent deposit—which on average in London is approximately £25,000­—nor be eligible for the dwindling stock of social housing. The private rented sector will remain their only option.

Currently, half a million renters are believed to be in rent arrears due to loss of income during the pandemic and many have only managed to remain in their homes thanks to emergency measures implemented over the previous year—such as extending notice periods and issuing blanket stays on eviction. At a time of crisis, the laissez-faire principles that govern our current housing arrangements were abandoned to ensure that as the country locked down—in the short term at least—renters would have a place to live. In the post-pandemic future, a decent home should still be deemed a necessity. Urgent and ambitious reform of the private rented sector is needed—reform which a Conservative government first promised to deliver more than two years ago.

The proposal, first made by the prime minister Theresa May in April 2019, was to abolish so-called “no-fault” eviction, which allows landlords to evict tenants with two months’ notice, regardless of the tenants’ conduct or circumstances. Introduced by Margaret Thatcher’s government in the Housing Act 1988, no-fault eviction—formally known as section 21—deregulated the private rented sector. Where previously, tenants could only be evicted for specific, prescribed reasons and were entitled to “fair rent,” now tenants can be served with notice at any time, with no restrictions on rent increases.

Coupled with the “right to buy” policy, Thatcher’s tenancy reform dramatically changed the housing landscape in England: the proportion of households stuck in the private rented sector doubled between 1996 and 2016. There was also a demographic shift, with increasing numbers of older people and families living in rented properties without security of tenure, meaning the constant threat of eviction hovered over those who most needed stability. Today, renters grapple with an affordability crisis. Research from Shelter found that in 2019 the average renter spent 41 per cent of their income on housing. As highlighted by the Renters’ Reform Coalition—a group of 21 charities and think tanks including Shelter—for housing to be affordable, the rental cost should not amount to more than a third of a tenant’s income. (Full disclosure: I worked for Safer Renting, part of the Renters’ Reform Coalition, until April 2021, but am writing here in my own capacity.)

After 27 years the government decided that enough was enough—a promised Renters Reform Bill would abolish no-fault eviction once and for all. A general election manifesto and Queen’s speech later, the Bill is still nowhere to be seen, despite repeated assurances from Boris Johnson’s government that it would make good on May’s promise. In September, the minister for housing Christopher Pincher warned of further delays, saying that reform would come only “when there is a sensible and stable economic and social terrain on which to do it.”

Renters cannot afford to wait for “stable economic terrain”—as current conditions are exacerbating the very issues that precipitated the need for reform. Research from Generation Rent and Survation found that almost 700,000 renters have been served with eviction notices during the pandemic. For now, the ban on eviction by bailiffs, which has been extended until the end of May, offers protection, but when lifted, the growing backlog of cases will create a chaotic and uncertain landscape for both tenants and landlords.

The Bill is an opportunity to restore clarity and must be prompt and ambitious. The government’s current proposals include the abolition of section 21 and the creation of “deposit passporting,” which will allow tenants to transfer their deposit automatically when they move home, resolving the cash-flow problem that many encounter when relocating. It also promises a significant strengthening of the rogue landlord database, which currently has just 39 entries for the entire country. While these proposals are encouraging, the Bill must also ensure that unfair evictions cannot continue through the backdoor, with tactics such as unaffordable rent rises used to price tenants out.

Additionally, the Bill must tackle the shadow private rented sector where, according to research from housing charity Safer Renting, some low-income tenants are renting from landlords who ignore the law altogether. Rates of illegal eviction soared during the first lockdown, suggesting that when legal avenues to regain possession are curtailed, unscrupulous landlords take matters into their own hands. The Bill must include stronger measures to address this behaviour or the abolition of no-fault evictions could have the unintended consequence of driving up illegal ones.

Amid the fanfare about the launch of 95 per cent mortgages, money saving expert Martin Lewis views the scheme as another of the government’s continuing efforts to boost the “overheating housing market.” Writing in his newsletter, he warns that the government-backed mortgages have been “hyped-up” and do not automatically represent the best deals for borrowers. Efforts to get renters onto the property ladder are welcome, but if the government is serious about “levelling up” the housing sector, delivering the Renters Reform Bill would be a good place to start. Rather than looking for new schemes to grab headlines, perhaps the government should begin by honouring its existing promises?