In April the Government announced plans to scrap Section 21 notices. In a widely ridiculed move that will see landlords lose the power to easily regain access to their own properties, a consultation is to be completed to explore the implications of the move and set the terms of the new law. That consultation won’t be a small task.
A Section 21 – Notice of Possession can be served after the first 4 months of a tenancy, without any reason, in order to regain possession of a let property. The tenant cannot defend against this notice, unless prescribed information wasn’t correctly served or it is classed as a ‘retaliatory eviction’, and as long as the application is valid, a court order for possession will be granted and the tenant will be ordered to leave.
A Section 21 is often used alongside the Section 8 – Notice to Quit, which is served when a tenant has breached their contract and therefore the landlord has grounds for regaining possession. The big difference being that a tenant can contest a Section 8 Notice in court, which means the process can be lengthy and very costly.
Of course, the most common reason for wanting to regain possession is rent arrears, although there are many other reasons a contract could also be breached. In many eviction cases, landlords will end up serving both Section 8 and then later a Section 21, as a result of lengthy delays and no progress with the Section 8. Some landlords and their solicitors have been known to issue both simultaneously and then decide which will give them quicker access to their property. In most cases, this will be the Section 21 because it cannot be contested. And that is exactly why the changes have come about, because it seems the government feel that tenants have no power. When actually, in my view it is just a clear attack on landlords.
In my opinion, the RLA have absolutely nailed it with their response to the announcement:
“The RLA is concerned about this proposal, because we understand how important Section 21 is for landlords confidence. Demand for private rented housing is expected to rise as more and more families and older people are renting in the private rented sector. Added to which, landlords have seen a lot of change to the sector in recent years. Our first concern is that should Section 21 go, some landlords will turn away from the sector, and some may look to change the way they let out their properties, for example they may choose to turn to short term holiday lets.
“We are also concerned that the change may mean that vulnerable tenants could struggle, and we might see a change in landlord behaviour, and tenant referencing is likely to become even more important. If a tenant has a poor credit history, for example, then the RLA is concerned that the private rented sector could become a difficult place to rent”.
Just to be clear, nothing has changed yet. The consultation is likely to last for an extended period and legislation change is never quick. Plus they’ve muddied the consultation with a pledge to include a justice system for housing, a housing court, if you will. Now that is long overdue and should help strengthen the current Section 8 process. But the big concern is that, in the face of such a big loss of control, many landlords will lose confidence, sell up and get out of the buy-to-let market. Those landlords that do stick it out, will need to review their tenancy contracts to make sure the grounds for eviction are clear, explicit and potentially wider. At Home-Share, we will be updating our evidencing procedures so that we have clear and explicit documentation and indisputable, factual evidence to support the removal of unsociable tenants under a Section 8 notice, as currently we use a Section 21.
It’s caused a furor and I think that – if passed – it will indeed result in many landlords selling up and leaving the buy-to-let market. That is a huge shame because demand has never been higher. It’s a very risky strategy by the government in my view. In a market where demand is already so high, this could send us into unchartered territory.
Landlords own their properties. In what world would it not be right for them to be able to gain lawful access to them by evicting less than desirable tenants? Of course the supporting process should ensure it is fair and legal, but there is no shared ownership in this discussion. We have reached the point where the balance of power has been tipped so heavily in favour of tenants, it is quite shocking really.
As a side note, I also read that the MPs are hearing evidence on the discriminatory nature of ‘No DSS’ adverts in the private rented sector. In late 2018 the media reported that some mortgage lenders were restricting buy-to-let landlords from letting their properties to tenants in receipt of housing benefits, so the Work and Pensions Select Committee undertook an inquiry into the allegations. You can read the full details here but the reviewing panel, made up of experts, consumers and mortgage providers, found that there were underlying issues with the benefits payment structure – particularly in relation to the new Universal Credit system – that needed addressing before a blanket ban on the use of the term ‘No DSS’ in property advertisements could be implemented. But I wonder how long we can keep the wolves from the door in terms of choosing our own tenants. It’s an interesting – and somewhat terrifying – thought, isn’t it?
Returning to the abolition of Section 21 notices, the RLA have launched a major survey of landlords to give them a voice in the battle to retain the right to repossess their properties. I would encourage all landlords to engage in this survey and make your thoughts known. And make your thoughts known on the subject in general – the bigger the voice, the less we can be ignored in my view.
I agree with it being crazy removing the section 21, especially without having a suitable replacement. The saddest part of all of this, is that in the last 6 months, I have become especially cautious as to who can rent properties from myself. Previously I worked closely in the past with the council housing homeless people, or people who had a bad experience and needed a second chance, however, this is something I have now stopped, its simply not worth taking a chance on. A bad tenant can cost fortunes in lost rent and damages to your property and without the facility to remove them quickly (i say quickly, your still talking a few months with a section 21), the risk is simply too high. I am at the stage where I would rather a property sit empty and pay the council tax myself than take a chance on a tenant who has no references or issues of being difficult with landlords/rent issues in the past. I feel for landlords with between 1 -5 properties, as this could be catastrophic, and its understandable why so many are now leaving the market. I am not sure when ‘hunting season’ on landlords will be over, as with both the government and media alike, nothing seems better than to be targeting landlords, with the blanket term rogue or scum landlords seemingly applied to all. I rarely see any media or government stories covering severe rent arrears or destroyed properties, yet the media is apparently balanced (yes BBC I am looking at you). Unfortunately, like you, I cannot see an end in sight at the moment, and I think the government, seem to forget, we are helping them by propping up a housing market that cannot meet demand with supply. That said we have both a conservative and labour party that are too focused on trying to win all voters and pleasing the masses rather than doing what is actually logical or right.
One thing from your article you forgot to mention in regards DSS tenants, is Insurance, whenever I renew my buildings insurance, I am repeatedly asked if any tenants are on DSS, so it appears okay for the insurance companies to ask this (and probably hike up the premium), yet landlords are being told they cannot?