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Last week saw the Government unveil its flagship Levelling Up White Paper (Paper) which included tranches of the previously proposed Renters’ Reform Bill; the Government has committed to publish its specific Paper on the private rented sector this spring.

Several welcome initiatives to improve letting practices have been included within the Paper, such as setting a national minimum property standard and a national register of landlords. However, the Paper also re-announced proposals that have the potential to cause major headaches for landlords and letting agents seeking to recover possession of property from tenants following non-payment of rent.

It’s highly anticipated that notice to regain property possession under Section 21 of the Housing Act 1988 (also known as a Notice to Quit) will no longer be available. The Section 21 notice allows landlords and letting agents to issue an incontestable notice of eviction once a tenant comes to the end of their tenancy agreement. Without this, the only way to recover possession of property is to rely on a breach of the tenancy agreement by the tenant – which of course can then be defended. These reforms will therefore make it much harder for landlords and letting agents to legally evict tenants that know how to ‘play the system’ to remain in the property, without paying rent, for as long as possible.

Landlords have already endured immense pressure throughout the pandemic, because of the suspension of eviction hearings and lack of bailiff appointments, along with the backlog of cases still waiting to be heard by the courts due to the suspension; it’s likely to continue beyond this spring.

We discussed previously how Legal Expenses and Rent Guarantee insurance (LERG) was the unsung insurance hero of the pandemic, honouring previously sold rent guarantee policies by paying out rent, despite no prospect in the short term of regaining possession of the property for the landlord or letting agent.

Whilst the LERG market is starting to get back on its feet and reinstating pre-COVID levels of cover where it can, these proposed reforms present yet another challenge that has the potential to continue protracted eviction times which directly impacts the average claim costs. The longevity of providers reinstating cover levels and going beyond pre-pandemic limits should be considered with caution – as it’s unlikely the market will ever see a return to pre-pandemic claims patterns.

Richard Finan, Director of Strategic Development, Arc Legal Assistance

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