The Big Lie of 'No Fault Evictions'
How politicians and the media are speaking a parallel language to obscure the truth.
This morning the BBC had a big scoop. Radio 4’s Today Programme told the nation:
“The BBC has seen a series of draft government amendments to an upcoming bill which aims to ban no-fault evictions, where tenants can be made to leave without being given a reason.”
Indeed, more detail was ‘explained’ by political correspondent Harry Farley:
“A bill to outlaw no-fault evictions was introduced last year, but it hasn't yet passed through the Commons, and around 50 Conservative MPs, many of whom are landlords, have tabled changes seeking to increase protections for landlords.”
The casual listener to this report would surely be appalled. This benevolent proposed law, seeking to prevent the horror of a tenant being ripped from their property part way through the term for which they agreed to rent it, is nothing short of horrific. How is this ‘no fault eviction’ practice even allowed?
The BBC explains to us that a ‘no fault eviction’ is “where tenants can be made to leave without being given a reason”.
This sounds truly horrible. The BBC are clearly implying here that people are being made to leave their homes part way through the fixed term they agreed to rent said property in their contracts.
Except that’s not what’s happening. At all.
I don’t know about you, but I feel that explaining what is really being proposed is a fairly important element of reporting the news. But the BBC didn’t bother. They never do. So let me break it down.
Current law allows a landlord to reclaim their property after the end of the fixed term agreed with their tenant.
The Renters Reform Bill proposes to make illegal the signing of fixed terms at all.
This would forbid the signing of a contract including a mutually agreed date at which point the tenant would leave a property.
This is, in short, mental.
The incredibly normal practice of someone leaving a property at the end of the term for which they agreed to rent it isn’t a horror story. I have rented four properties in my adult life. Never have I referred to the end of my lease as anything other than the end of my lease. Yet apparently now I must call it a ‘no fault eviction’.
The landlord may of course choose to keep a tenant on, on month by month rolling terms, or agree a new fixed term lease at the end of the previously agreed fixed term lease. Most people, however, would say if someone agreed a 24 month lease, the lease ends after 24 months. As this is the time that they may be asked to leave. This is a truth I had assumed universal. But not so.
In our Alice Through the Looking Glass world, a tenant leaving a property at the end of a fixed term lease is now in a situation politicians and the media almost universally refer to as a ‘no fault eviction.’
As Daniel Hannan raised in the Lords last week “how have we reached a point where the expiry of a contract at the end of its term, a contract freely entered into by two parties, is now widely referred to as an ‘eviction’, let alone a ‘no fault eviction’?”
Concerningly, the response from DLUHC Minister Baroness Penn raised more questions than answers. In it she seemed to justify the abolition of mutually agreed end dates within contracts with this sentence:
“A small minority of landlords use the threat of Section 21 evictions to hike up rents”
To put that into plain English, some landlords raise rents as a condition of contract renewal. This is being given as a reason to abolish fixed term contracts at all.
The proposed legislation would forbid rent raises as they occur today. As the Institute of Economic Affairs’ Matthew Lesh explains, the proposed legislation would leave it up to “a tribunal to decide whether a rent increase is too extreme. This body may end up introducing de facto rent control.”
Rent control, of course, never works. It locks in those who happen to have flats - never to leave, whist those struggling to find a place to live face sometimes decade long waiting lists.
As Swedish social democratic economist Assar Lindbeck famously once said, "In many cases rent control appears to be the most efficient technique presently known to destroy a city, except for bombing."
Attempting to fix the price of something without a corresponding increase in supply or drop in demand is economically foolhardy. A price is just a signal influenced by the quantity of availability of something relative to the number who want that thing.
The only way you can lower the price of something is by adjusting those fundamentals. Fiddling with the signal rather than the fundamentals distorts the market in ever more damaging ways. The dilapidation of stock, the exiting of suppliers from the market, the rise of black markets and shady workarounds.
When Berlin enacted rent control, the number of units available crashed. Three years ago Bloomberg explored what they described as “a disaster” policy.
Bloomberg concluded:
“Rent caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by shutting them out of the market.”
Price fixing meant that supply fell by 41%, while demand rose by 172%. This is what the UK housing market may be about to be whacked by, albeit in a milder form, for now.
You don’t have to be the most observant person on the planet to know how many people apply for each new home that comes on the rental market in our most productive cities. To see the way renters are screwed by the power imbalance that is born out of one fact and one fact alone - the supply of homes.
The only way in which that imbalance is corrected is a building bonanza. To construct so many homes that landlords are begging renters to rent their properties rather than the other way around.
This is one of the many reasons why the Renters Reform Bill is a disaster for renters. As I once told the BBC Question Time audience, I rent. On a housing question back in 2022, I explained how huge the housing crisis is to everyone under the age of about 45, and how there is only one solution. How fluff about 95% mortgages or controls on renting only serve to distract from the point. It’s supply.
Everything else is window dressing at best, and demand-subsidising inflationary policy at worst.
And this gets us back to the fatal conceit of the Renters Reform Bill. It pretends to fight for those in my position, good tenants renting in competitive markets. But in reality it does precisely the opposite.
As Christopher Snowdon wrote at the start of this month, there are good reasons why fixed term rental contracts are useful, predictable for both parties, avoid a gummed up or dwindling housing sector, and clogged up courts.
“Even in London’s overheated housing market, replacing a tenant costs money. It is possible that landlords are irrational actors who like replacing good tenants every 18 months just for the fun of it, but it seems more likely that they are using ‘no fault evictions’ to get rid of bad tenants without the legal hassle, time and expense of using a Section 8 notice.
If so, banning ‘no fault evictions’ will create more work for lawyers by increasing the number of ‘at fault evictions’ and will make it more difficult for evicted tenants to find a new house since a Section 8 notice will affect their rental history. It could also lead to landlords becoming even more fussy about who they allow to rent their properties.”
The extreme measure of forbidding fixed term contracts, even long term fixed term contracts, means that everyone is worse off. Less predictability, less supply, more lawyers.
And a final sentimental note for students. The proposed ban writing in an end date to any rental agreement is of course perhaps most obviously a nightmare for student lets, which are typically one year long. Fixed terms are most obviously beneficial in these instances. And the legislation recognises this - in a way:
If the tenants are students there will be a specific eviction ground for them. Suddenly being a student is a fault. Suddenly there’s no nice clear end date allowed in the rental contract, instead it’s a horrible eviction.
Ultimately this is yet another counterproductive distraction from the one thing the government should really be allowing but wants to avoid addressing at all costs. Letting us build more bloody houses.