With the new Renter's Reform Bill changes, what's a Section 21 now called and can I still use it to evict a tenant in an assured shorthold tenancy if I plan to sell the property myself after they leave?
Quick Answer
The Renters' Rights Bill will abolish Section 21 evictions. There will be new, legally defined grounds for possession, including a ground for selling, but these will be subject to strict conditions and a new process, not a simple 'no fault' notice.
## Understanding Eviction Changes for UK Landlords: New Possession Grounds for Property Sale
From 2025, with the expected implementation of the Renters' Rights Bill, the Section 21 'no fault' eviction process will be abolished. This will fundamentally change how landlords regain possession of their properties, even for sale. Investors need to understand the new system of legally binding possession grounds.
* **Section 21 Abolition**: The Renters' Rights Bill, expected in 2025, will remove Section 21, meaning landlords can no longer issue 'no fault' eviction notices. This marks a shift from periodic tenancies to a single system of assured tenancies.
* **New Mandatory Grounds**: Instead of Section 21, landlords will rely on new, legally defined **mandatory grounds for possession**. These grounds will require landlords to prove specific circumstances to the court to regain possession.
* **Grounds for Sale**: A new mandatory ground for possession will be introduced specifically for landlords who wish to sell the property. This means you will need to demonstrate a genuine intention to sell the property. This is a significant change from the current Section 21, where intent to sell did not need to be proven. The process will require evidence that the landlord genuinely intends to market and sell the property, and there will be specific timeframes before this ground can be invoked.
* **Tenant Protections**: The new grounds for possession are designed to offer greater security for tenants. This requires landlords to be more proactive in property management and maintenance, adhering to standards like Awaab's Law for damp and mould.
* **Streamlined Court Process**: Alongside the new grounds, the government aims to develop a more efficient court process for possession claims, although details are still being finalised. This is intended to balance tenant protections with landlords' legitimate reasons for repossession. A possession claim may take up to 6 months through the courts, so this must be factored into any property sale timeline.
## Can I still evict a tenant if I plan to sell the property after Section 21 is abolished?
Yes, you will still be able to regain possession if you genuinely intend to sell the property, but the process will be different and more prescriptive than using Section 21. It will no longer be a 'no fault' process. Instead, you will need to rely on a *new mandatory ground for possession* specifically for property sales, requiring you to evidence your intent.
Historically, under Section 21, a landlord could serve two months' notice without giving a reason, regardless of their intention to sell. The new framework will require you to demonstrate a genuine intention to sell to a third party. This ground is expected to have stipulations, such as a minimum tenancy period before it can be used, ensuring it’s not deployed prematurely after a tenancy begins. For instance, you might only be able to use the ground after the tenants have resided in the property for a minimum of six months. This new approach means potential buyers of tenanted properties may need to purchase with existing tenants, or wait for the lengthy process to complete.
## What are the implications for selling a tenanted property?
Selling a property with tenants in situ becomes a more complex proposition once Section 21 is abolished. Buyers will either need to be informed they are purchasing with a tenant, or sellers will need to trigger the new 'sale' ground for possession.
**Scenario 1: Selling with Vacant Possession**
If you need vacant possession for the sale, you will have to serve a notice based on the new 'sale' ground. This process will inevitably take longer than a Section 21 notice did previously, as it requires court approval and verification of your intent to sell. This could mean a sale process that typically takes 3-4 months could extend to 9-12 months from notice to vacant possession. For example, if your property is on the market for £250,000, and is vacant, an investor buyer might complete in 8-12 weeks. If it needs vacant possession based on the new ground, the 6-month court process could delay completion, increasing holding costs and potentially eroding returns.
**Scenario 2: Selling with Tenant in Situ**
Alternatively, you could sell with the tenant in situ. This often restricts your buyer pool to other investors, not owner-occupiers. While this avoids the possession process, it usually means accepting a lower sale price (often 5-15% below market value for vacant possession), as investors factor in the ongoing tenancy and associated management. For example, selling a £250,000 property with a tenant could reduce the sale price by £12,500 to £37,500, negatively impacting your overall return on investment.
**Scenario 3: Mortgage Implications**
Many residential mortgage products require vacant possession upon sale, so landlords might face restrictions from lenders if they cannot guarantee an empty property. It is important to remember that typical BTL mortgage rates are currently between 5.0-6.5% for 2-year fixed terms, so extended holding periods due to possession delays directly impact your profitability.
## What factors determine if I can use the new 'sale' ground for possession?
The new 'sale' ground for possession will likely have specific criteria that must be met. These are expected to include:
* **Genuine Intent to Sell**: You will need to provide evidence that you have genuinely (and not spuriously) marketed the property for sale. This might mean providing estate agent agreements, marketing materials, or communications with potential buyers. This is a higher threshold than just stating an intention to sell.
* **Time Restriction**: It is highly probable that the ground cannot be used for a certain period at the beginning of a tenancy, perhaps the first six months, to prevent immediate evictions after a tenant moves in. This is designed to protect tenants and encourage longer-term tenancies.
* **Notice Period**: A specific notice period will be prescribed for this ground, likely longer than the current two months under Section 21. This will provide tenants with more time to find alternative accommodation.
* **No Re-letting Period**: There will likely be a restriction on re-letting the property after using this ground for a certain period (e.g., six to twelve months) to prevent landlords from falsely claiming intent to sell simply to remove a tenant and then re-letting at a higher rent. This provision, if enacted, is a critical consideration for investors.
## How does the proposed Renters' Rights Bill impact my overall property strategy?
The Renters' Rights Bill fundamentally shifts the balance between landlords and tenants, making long-term strategic planning more essential for investors. The removal of Section 21 and the introduction of new mandatory grounds mean that tenant selection, property maintenance, and adherence to regulations become even more critical to avoid protracted possession claims.
Landlords must ensure properties meet all regulatory standards, including EPC minimums (currently E, proposed C by 2030), and respond promptly to maintenance issues like damp and mould as per Awaab's Law. Neglecting these areas could weaken a possession claim should it arise. With corporation tax at 25% for profits over £250k and mortgage interest no longer fully deductible for individual landlords under Section 24, long-term tenancy management and void avoidance are crucial for maintaining profitability. The increased security for tenants, while beneficial for them, requires landlords to adopt a more hands-on and compliant approach to property management. This impacts 'landlord profit margins' and requires a more detailed 'rental yield calculation' considering potentially longer void periods or reduced sale values.
Steven's Take
The abolition of Section 21 is one of the most significant changes to landlord-tenant law in decades. As a property investor, you must understand that the 'no fault' eviction is disappearing. While there will be a new ground for sale, it will involve proving your genuine intent and navigating a court process. This means your timelines for selling will likely extend, and strategic planning becomes even more critical. Selling with tenants in situ will become a more common consideration, though often at a discount. My advice is to focus on maintaining excellent tenant relationships and ensuring your properties are fully compliant, as this will minimise your risk of needing to use complex possession grounds in the first place.
What You Can Do Next
Review the latest government guidance on the Renters' Rights Bill: Regularly check gov.uk/guidance/guide-for-landlords-renting-out-your-property for updates on the Bill's progress and specific details on new possession grounds.
Assess your current portfolio strategy: Consider how the longer possession process might impact your exit strategies, particularly if you rely on vacant possession for sales. Plan for extended holding periods.
Consult with a property lawyer: Engage a specialist property lawyer (search 'property lawyer UK' on the Law Society's website) to understand the precise implications of the new grounds for possession and how to gather evidence for genuine sale intent.
Prepare for selling with tenants in situ: Understand the implications of selling a tenanted property, including potential valuation impacts and suitable buyer profiles. Research property agencies specialising in tenanted sales.
Prioritise property compliance and tenant relations: Ensure all maintenance, safety checks, and EPC requirements (minimum E, C by 2030) are up to date. Good tenant relationships can help prevent issues that lead to possession claims.
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