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Why we need a specialist housing court as the private rented sector moves 'Beyond Section 21'

By John Stewart, National Residential Landlords Association (NRLA)

The Lettings Industry Council research report into the consequences of removing Section 21 possession claims from the statute book highlights a number of adverse consequences, where the government must take mitigating action, if the private rented sector is to continue to meet housing need.

One of the key areas is the courts. The justice system across the board is groaning, the weight of demand insufficiently supported by current resourcing levels. Housing justice is no different, satisfying no-one. Landlords have lost confidence in grounds-based possession, fearing long delays and an uncertain outcome. Tenants, meanwhile, simply don’t have the support or resources to pursue claims against their landlord.

Abolishing s21 will not magic away possession claims – the vast majority of s21 claims have an underlying reason, most commonly rent arrears, anti-social behaviour, damage to property, or the landlord needing to return to live in their home or to sell. An often ignored, but significant number of claims are tenant driven, seeking a s21 notice in order to qualify for rehousing in the social sector. All of these claims will simply be transferred to the grounds-based s8 process, where they will require a hearing, and where possession for the landlord will be much less certain.

Our report estimates that removal of s21 will result in a tripling of the possession caseload, alone. Even this may be an underestimate. When Scotland moved to open-ended tenancies and grounds-based possession, it took three years of planning, and the moving of possession cases from the first-tier tribunal was an integral part. The Scottish Government spent some £13 million to increase the number of tribunal members (both legal and lay) and administrative staff – the equivalent of over £150 million for England, given the larger relative size of the PRS and population. It wasn’t enough. The Scottish Government grossly underestimated the number of claims, and while more administrative staff have been recruited, backlogs and delays remain.

It is clear Westminster must, at the very least, commit to substantial investment in the housing justice system before removing s21. The best way to make that investment is through the creation of a specialist housing court. And let’s be clear – this isn’t a set of special-purpose buildings around the country – although there must be investment in the court estate.

The specialist element of a new housing court should come, principally, through legal expertise. The PRS is governed by more than 150 pieces of primary legislation comprising over 400 regulations, spread across seven government departments, not including the Treasury. Much of that legislation has been rushed through in recent years, badly drafted and tacked on, Heath-Robinson style, to existing legislation or any convenient passing bill. No wonder we see constant challenge, interpretation and reinterpretation by the courts demonstrated by cases including deposit protection and gas safety.

Nor is the process of serving notice or applying to court for a claim any less complex. Correct forms, correct dates, correct service of documents and information, correct grounds, correct language – any slip, stumble or deviation can see a claim rejected.

Having a rota of judges whose area of legal expertise is landlord and tenant law, supported by equally experienced administrators and advisors would make a huge difference to the smooth operation of the housing justice system, and must form the core of a new housing court.

Physical capacity is an issue – over 200 court buildings across the country have closed over the last 25 years. Our report estimates a need for at least nine new or refurbished court buildings. In fact, the government has already gone beyond this, in its response to the coronavirus outbreak, opening 16 so-called ‘Nightingale courts’. It would be perverse to waste that investment, by closing these facilities when things return to whatever the new ‘normal’ will be, post-pandemic, when we know courts are already over-burdened and face massive demand for new hearings.

Capacity issues can also be tackled through modernisation. It seems incredible that, in a pandemic where hygiene and social distancing are key to public health, the judiciary have insisted on hearings in person as default for possession cases. Other cases are being heard, successfully, using technology. Why not possession cases? Use of technology and the introduction of remote hearings would help overcome some of the problems of access that the closure of over 200 court buildings over the last 25 years has created. Online claims systems could improve, and document checking become an automatic part of the submission process, reducing the chances of being rejected due to administrative technicalities.

There’s a financial consideration for the government too, beyond the cost of investment. Landlords’ legal costs are simply a business expense and can be offset against tax. Likewise, unpaid rent is unrealised income, with a fall in landlord profits meaning a reduced tax take for government. There is a clear incentive for the government to improve the efficiency and effectiveness of the housing justice system.

But a housing court is not just about speeding up the possession process for landlords. Tenants, too, are left short-changed by the system. Research suggests that around half of tenants are put off taking a disrepair claim to court because of time, cost or complexity, despite new legislation such as the Homes (Fitness for Human Habitation) Act allowing tenants to make a claim direct, rather than relying on under-resourced, ineffective or unwilling local authorities.

Another reason cited by tenant campaign groups is that of insecurity of tenure. The abolition of s21 is supposed to address that issue. If tenant groups are right, then as well as a massive increase in landlord possession claims requiring a hearing, we can expect a surge in tenant claims against landlords for disrepair.

The bottom line is that a well-functioning private rented sector requires an effective and efficient court system as a backstop, where either the tenant or landlord is failing to keep to the terms of their tenancy.

Tenants who don’t pay rent, indulge in anti-social or criminal behaviour, or commit other serious breaches of their tenancy agreement must expect there to be sanctions, and for them to be imposed in a reasonably quick timescale. They are effectively keeping another tenant or family, who may be in desperate need, from accessing that home.

Landlords who fail to maintain their property, keep tenants safe or threaten and harass must be held to account, forced to put things right face a financial penalty, or in the most serious cases a custodial sentence. They are undercutting law abiding landlords who provide safe, legal, and secure homes at best providing unfair competition, and at worst endangering lives.

Calls for a well-resourced specialist housing court, embracing modern systems, and offering fair access to justice for landlords and tenants alike cannot be dismissed.

The Lettings Industry Council (TLIC) November 2020

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