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An end to Section 21?

An end to Section 21?

Yesterday, the Government made an announcement that Communities Secretary, Rt Hon James Brokenshire MP described as the biggest change to the private rental sector in a generation.

As part of a complete overhaul of the sector, the government outlined plans to consult on new legislation to abolish Section 21 evictions – so called ‘no-fault’ evictions.

This will bring an end to private landlords uprooting tenants from their homes with as little as eight weeks’ notice after the fixed-term contract has come to an end and will effectively create “open ended” tenancies.

Previously, landlords had typically gone down the Section 21 route for such issues as rent arrears, damage to the property, anti-social behaviour, tenant refusing to allow access for maintenance or compliance checks, and other such issues.

This line of repossession of the property is looking like it will now be closed down although there is still the consultation to take place, so nothing is set in stone.

However, it does show the direction of travel of the Government’s wish for the private rented sector … and that is to re-balance the relationship between landlords and tenants, by diluting the power landlords have over tenure.

Unsurprisingly, industry stake-holders, lettings agents, and landlords took to social media yesterday and made this a trending topic:

Adam Joseph, CEO of the Happy Tenant Company commented:

“My view is that this is just another reason to deter would be investors entering the buy to let market and encouraging existing landlords to exit.

Considering the shortage of homes in the UK which is constantly highlighted in the press, it seems totally counterproductive. Add this to the impending Tenant Fee Ban, we are clearly entering an unstable time for the sector.

Following the Deregulation Act 2015, it is already a minefield to try and gain possession and this will make it even more complicated.

Whilst I appreciate tenants need protection and security, Landlords should have the option to terminate a tenancy for relevant and justified reasons, especially if they intend to sell or perhaps not achieving a fair market rental value”.

David Smith, Policy Director for the Residential Landlords Association said:

“Whilst the RLA recognises the pressure being placed on Government for change, there are serious dangers of getting such reforms wrong.

“With the demand for private rented homes continuing to increase, we need the majority of good landlords to have confidence to invest in new homes. This means ensuring they can swiftly repossess properties for legitimate reasons such as rent arrears, tenant anti-social behaviour or wanting to sell them. This needs to happen before any moves are made to end Section 21.

“For all the talk of greater security for tenants, that will be nothing if the homes to rent are not there in the first place. We call on the government to act with caution.”

Richard Lambert, NLA chief executive, says:

“Landlords currently have little choice but to use Section 21. They have no confidence in the ability or the capacity of the courts to deal with possession claims quickly and surely, regardless of the strength of the landlord’s case.

England’s model of tenancy was always intended to operate in a sector where Section “21 exists. This change makes the fixed term meaningless, and so creates a new system of indefinite tenancies by the back door.

“The onus is on the government to get this right. It’s entirely dependent on the government’s ability to re-balance the system through Section 8 and court process so that it works for landlords and tenants alike. The government should look to Scotland, where they reformed the court system before thinking about changing how tenancies work. If the Government introduces yet another piece of badly thought-out legislation, we guarantee there will be chaos.”

David Cox, CEO of Association of Residential Lettings Agents commented:

“The effects of the Tenant Fees ban from September 1 have not yet been felt. Although in the majority of cases there is no need for Section 21 to be used, there are times when a landlord has to use the measures to regain possession of their property.

An end to Section 21 could be devastating for existing supply in the private rented sector and on new landlords considering investing in buy to let properties.”

The amount of legislation and regulation coming down the pipe for landlords (and currently in consultation) is significant.

Section 21 is one example, but there are numerous others.

With fines for non-compliance being up to £30K, landlords who do not think they can keep up with legislative changes should definitely consider letting their property through a professional agent or property manager.

At the Happy Tenant Company, we provide this service in London and for properties within the M25.

Please do not hesitate to contact the Happy Tenant Company to discuss our smart property management service.