Government announces definite plans to abolish Section 21's, but what could this mean for our Private Rented Sector?

Today, following whispers for months, the government has announced plans to get rid of Section 21s and supposed ‘no fault evictions’ in a bid to provide more security to the 11 million private renters that we now have in England. The Government is selling this announcement as part of “a wider package of reforms aimed at rebalancing the relationship between tenants and landlords” which includes the Tenant Fees Act which is set to come into effect from 1 June.

A ‘Section 21’ notice can be served by a landlord or agent once a tenant is out of a fixed term tenancy, it must provide them with two months to vacate the property. It is this process that many charities, campaign groups such as Shelter and Acorn plus the government now think is weighted against tenants. Mrs May herself states these types of evictions are “unfair,” adding that renters have the right “to feel secure in their home, settled in their community and able to plan for the future with confidence”. She went on to say, “millions of responsible tenants could still be uprooted by their landlord with little notice, and often little justification”.

Now, I have served many Section 21 notices in my years working in lettings, for tenancies all over the country and I have never, I repeat, never been asked to serve a Section 21 notice for no reason on ‘responsible tenants’. Why would a landlord who has a good tenant, that is paying their rent on time, looking after the property and reporting maintenance promptly force them to leave? They know they would suffer a void period whilst they look for more tenants (who may not be as good as the original tenants) and also foot the bill for all the new upfront costs of a new tenancy. Its a ridiculous idea as a ‘good-paying-looks-after-the-property-tenant’ is every landlords DREAM.

In my experience, there are only three main reasons why landlords serve a Section 21 notice;

  1. They want to move back into the property themselves.
  2. They want to sell the property (however a lot will try to sell the property with a tenant in situ)
  3. The tenant is in horrendous arrears and won’t respond to a payment plan.

Its fundamentally flawed that the media and government consistently state this is an unfair system for the tenant when every day, I experience tenants who would rather spend their money on just about anything else other than pay their rent. Examples happen regularly such as tenants who either stop paying completely or miraculously change their standing order to decrease it by £250 a month and fail to call or contact their agent or landlord to let them know what the problem is. Landlords are consistently left out of pocket as even when they do get possession back, its often too difficult and expensive to pursue a money judgement order, which means they are forced to just write off the debt. Why is it so abhorrent that a landlord who has a tenant that is reneging on this main contractual obligation of residing in a rented property (to pay their rent) can take action to stop it from continuing?

Apparently, charities report that Section 21 has become a leading cause of homelessness and that it is being used regularly in revenge evictions – with Generation rent reporting that over 140,000 people have been victims of revenge evictions since 2015. Its strange then that the De-regulation Act brought in specific legislation which forbids landlords from serving a Section 21 notice when there is outstanding maintenance on a property. Furthermore, with landlords already exiting the sector due to lower yields from changes to tax and mortgage interest relief, plus the impending tenant fee ban meaning the profitability of owning buy to let is lessening, how will this go anyway to combating homelessness? With 1/5 of the population currently renting, which is set to rise to a quarter by 2039, where will everyone live if the government has scared off private landlords into putting their money into less risky options? We all know there isn't enough social housing as it is and all that will happen is MORE homelessness whilst supply continues to constrict and rents rocket sky-high.

If you are a landlord and you have any concerns about this news today, please get in touch. Its not all doom and gloom as the Scottish model shows (they abolished AST agreements and Section 21 notices in 2017) and we are hopeful there will be in built mechanisms into any new piece of legislation which will still allow a landlord who requires possession of their property for genuine reasons to proceed.

Angharad Trueman – Managing Director

 

 

 


Posted on Monday, 15 April, 2019