ASTs and homelessness applications
Thursday, 23rd June 2016
We know from our work with private landlords over many years that many private rented sector (PRS) tenants who are evicted turn to local authorities for housing. The DCLG statistics support this; some 31% of homeless applications in the last quarter of 2015 came from PRS assured shorthold tenants - this figure rises to 40% in London. Many landlords are told by their tenants that they have been to apply for housing, armed with their section 21 Notice, but that they will only be offered accommodation by their local authority if more formal steps along the possession process are pursued. In some cases, local authorities will offer accommodation once the possession proceedings have commenced. Others may require an actual possession order to be made before an application for assistance can be actioned, whilst some authorities require a bailiff appointment date to be fixed before they will offer temporary accommodation whilst the assessment of the application is being undertaken.
For PRS landlords this approach can be frustrating. The ability to seek possession on the no-fault, s21 route is usually preferred by landlords who are keen to avoid the time and cost of standard possession proceedings, based on a s8 Notice Seeking Possession. However, s21 notices are very often served because of tenant default. A common reason is non-payment of rent. If a landlord has to go through a possession process, which could take as much as 6 months to conclude, the loss rental income combined with the costs of issuing proceedings (currently £355) plus the warrant of possession fee (£110) it can leave them significantly out of pocket - and for smaller landlords who rely on rental income to pay mortgages, this can be devastating.
However, we also know from our work with local authorities that the pressure on social housing has seemingly never been greater. It is understandable therefore that local authorities have adopted their own interpretation of when an AST PRS tenant is 'threatened with homelessness' to make the best use of scarce resources.
All parties involved in this process should therefore be aware of a Briefing Paper (number 068560) that the House of Commons Library has recently published. It has drawn attention to parts of the 2006 Homelessness Code of Guidance for Local Authorities. The Paper authors highlights the fact that the Guidance requires local authorities to consider if it is reasonable for tenants who have been served with s21 notices to continue to remain in a property until evicted.
The Paper draws particular attention to paragraphs 8.31 and 8.32, which sets out the factors that local authorities should consider when considering 'reasonableness.' In addition to considering the cost to the local authority and the position of landlord and tenant, the Guidance highlights that local authorities should also be considering "the burden on the courts of unnecessary proceedings where there is no defence to a possession claim." The Guidance goes on to say that local authorities should not adopt a general policy of how to treat tenants in receipt of valid s21 notices, making it clear that cases should be decided on a case by case basis and that decisions should be recorded in writing and sent to the applicant. Crucially, the author highlights that the Guidance does state that if the s21 notice is valid, if the authority is satisfied that the landlord will seek possession and if there is unlikely to be a defence, "then it is unlikely to be reasonable for the applicant to continue to occupy the accommodation beyond the date given in the s21 notice.."
The limited life-span of s21 notices that the Deregulation Act 2015 introduced means that it is increasingly unlikely that the historic practice of landlords serving 'just in case' s21 notices is likely to disappear - if a landlord serves a s21 notice, then it is likely he is doing so because he intends to issue proceedings. When this is combined with the alteration of the format of the s21 notice (and the fact that it is less likely that landlords will make mistakes with s21 notices), it is more and more likely that a landlord will serve a valid s21 notice and that possession proceedings will follow.
The Guidance highlighted by the Paper is not new and the temptation may be for local authorities to adopt a 'business as usual' approach. However, the DCLG have reminded all local authorities in a recently sent letter about the 2006 Guidance and about the Briefing Paper. Briefing Papers are prepared for use by MPs and so MPs are likely to be advising constituents of the contents and, in turn, MPs may soon be challenging local authorities to follow the 2006 Guidance. Local authorities would therefore be strongly urged to review and, if necessary, amend policies and procedures in this area.