Landlords, it's happening, even the Queen has mentioned it now, very soon Section 21 will be on its way out and achieving possession of a rental property could become a lot more complicated.
The government has confirmed that reform of the private rental sector will be a priority for the coming session of Parliament and a reference to that commitment was made by the Queen when she opened the latest Parliamentary session. Her Majesty said that her government would help more people to own their own home while “enhancing the rights” of those who rent. Its thought a bill will be incoming in the Autumn and then will need to make its way through parliament.
But what could this mean for the average landlord?
Well, the Bill is expected to abolish a notice we currently serve to a tenant when they are out of a fixed term tenancy called a ‘Section 21 notice’, these notices are prescribed notices which can be downloaded from the gov site and served by a letting agent or even a landlord (although not advised you do it yourself due to the complexity involved).
Instead, it’s thought the government will strengthen the Section 8 eviction process and in order to remove a tenant from a property, you will need to prove certain grounds exist. These could be anti-social behaviour, rent arrears or that you would like to move back in. However, it seems being able to serve a notice with no clear reason will soon become a thing of the past.
Why could this be a problem?
At the moment, the backlog with the courts and the lack of working bailiffs in each area means not only do possession cases (both section 8 and accelerated possession used after a Section 21 notice has expired and the tenant has not moved out) take months and months to receive a court date. They also mean that should you need a bailiff warrant to remove a tenant upon the expiry of your possession notice, its unlikely you will have the use of a bailiff very swiftly at all. If this system is not revised and specialist ‘housing courts’ created to speed up this process, then landlords could find themselves stuck without being able to gain possession of their investments.
What else could these new rules mean?
This removal of Section 21 notices, plus the changing of various other pieces of legislation considered the ‘Rental Reforms Bill’ will also introduce the concept of 'lifetime deposits' which could allow deposit payments which have been made in relation to one property converted and ‘move with the tenant’ to another property. The aim of this is to speed up and reduce the cost of moving rental properties for tenants.
What could all of this mean for the rental industry?
If landlords are unable to gain possession back of their properties when they need to, it could put many off staying or becoming landlords in the first place and it could put significant pressure on what is already a straining housing market. Demand for rental stock is already considerably higher than supply and should more landlords exit the market than they already recently have due to tax changes and increased legislation, we could see a rise in homelessness as rents surge above affordable rates due to supply being so limited.
Angharad Trueman – Managing Director CGT Lettings Ltd
If you found this interesting, click HERE to read my recent blog on the change in tenants requirements due to the pandemic.