Renting Homes: The Final Report - Law Commission

1.42 In shaping our recommendations, however, we have had to adjust aspects of the
existing law to create a more coherent and sensible whole. There are two
particular issues where there is still controversy which we cannot duck, and which
we highlight here.
The recommended abolition of ground 8 in the social rented sector
1.43 At present, where an assured tenant gets into serious (two months’) rent arrears,
the landlord can seek possession on what is known as ground 8. This provides
that, if the relevant amount of arrears is established, a court is obliged to order
possession. There is no judicial discretion.
1.44 Registered social landlords let on assured tenancies. Many, as a matter of policy,
refuse to take advantage of ground 8 on the basis that use of ground 8 is not
appropriate for social landlords. Where registered social landlords have acquired
housing stock as the result of a large scale voluntary transfer, they undertake not
to use ground 8. But some do use ground 8 and have expressed considerable
concern about our recommendation to abolish it. They also draw attention to
current proposals for the reform of housing benefit, which are intended to place
much greater responsibility on renters for paying the rent themselves. 29 If housing
benefit is to be paid to tenants, rather than directly to landlords, registered social
landlords are worried that housing benefit payments may be diverted to other
items of household or personal expenditure. They are concerned that this could
lead to an increase in rent arrears. Some would therefore like to retain ground 8
as a deterrent to tenants who might otherwise divert housing benefit payments to
non-housing expenditure.
1.45 The Council of Mortgage Lenders, who represent the financial institutions that
have provided the bulk of loan capital for the expansion of the registered social
landlord sector, were also concerned. They argued that an inability to regain
possession of premises where tenants were in serious arrears might have an
adverse financial impact on the ability of registered social landlords to comply
with their loan covenants.
1.46 When we discussed the issue with those who put this point of view, we were told
that the principal reason why ground 8 should be retained was because of the
difficulties, actual or perceived, of getting judges to exercise their discretion to
make possession orders in serious rent arrears cases.
29 Recent press reports suggest that the Government may not proceed with these reforms at
least in relation to the social rented sector: see the article by Keith Cooper, "U-turn on
direct payment" (28 October 2005) Inside Housing p 1.
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