Have your say on the future of Section 21 before 12 October
On 22 July 2019, The Ministry for Housing, Communities and Local Government (MHCLG) launched its consultation on abolishing so called ‘no-fault’ Section 21 evictions and improving Section 8 grounds. The consultation, which will run for 12 weeks, closes on 12 October 2019.
Founder of Landlord Action and brand ambassador for Hamilton Fraser, Paul Shamplina, has grave concerns over the prospect of abolishing Section 21. The proposed reforms will have a major impact on the future of the private rented sector. Paul is urging as many landlords and letting agents as possible to complete this survey and have their say now, before it is too late. And here are his reasons why …
Despite a raft of new legislation put on landlords in recent years, including additional stamp duty for second homes, Section 24 mortgage interest relief and most recently the introduction of the Tenant Fee Act, this is by far the greatest threat to the future of landlords. Be it a landlord with one property, a professional landlord with a large portfolio or a big institutional investor in the build-to-rent sector, all landlords want the confidence to be able to repossess properties quickly when there are legitimate reasons for doing so, such as rent arrears, anti-social behaviour or if they decide to sell up. Without Section 21, many landlords may feel they have no control over their own property and consequently may decide to exit the sector.
Supply and demand
The idea behind the abolition of Section 21 is to give tenants greater security and somewhere they can call “home” without fear of being evicted. I can completely sympathise with this and understand the importance, particularly for families, of being able to put down roots. However, if changes to legislation do not balance the needs of landlords alongside those of tenants, then landlords will exit the market. With fewer homes to rent, tenants will be fighting over those that remain, which will inevitably push the cost of rent up and reduce their choice of property and location.
In addition, landlords will be even more cautious about renting to tenants often believed to be ‘higher risk’, such as those on housing benefits, meaning some of the most vulnerable tenants will find it even more difficult to access private rented properties.
Investment in future possessions process
The government has suggested several improvements to the Section 8 process, which would effectively replace Section 21. The Fair Possessions Coalition, which Landlord Action is part of alongside other bodies such as ARLA Propertymark, Safe Agent, the Residential Landlords Association, and the National Landlords Association, has filed a response statement to the government with ideas on what Section 8 should look like. This includes clear grounds for repossession that would be unable to be exploited by criminal landlords or unreliable tenants.
However, one of the major flaws I can foresee in “simplifying evictions” by replacing Section 21 with Section 8, where the landlord must apply to a court, is the incredible amount of investment that will be required to ensure that the possession process works efficiently.
The reason being that with no Section 21, the number of Section 8 hearings will double. This will then require double the amount of court time and double the amount of judges.
Lack of understanding of current challenges
My many years’ experience in the industry have taught me that the vast majority of evictions are for legitimate reasons, principally rent arrears. One major issue which I repeatedly talk about is those evictions which are forced as a result of councils encouraging tenants to stay put until they are evicted because of the chronic shortage of social housing.
This puts the burden back on the landlord, incurring lost time, rent arrears and stress for both the landlord and tenant. There are many complex scenarios like this which need to be considered collectively alongside banning Section 21, longer-term tenancies and the introduction of a Housing Court.
Last week, we invited MHCLG to attend our offices and shadow our Landlord Action solicitors, case workers, paralegals and support staff. We hope that we provided them with a greater understanding of the challenges faced under the current system and offered clear direction when it comes to the changes that we feel need to be implemented for an efficient possessions process which supports everyone involved.
As a group we (The Fair Possessions Coalition) have one clear message for the government, which is “Don’t ban Section 21 until we have a thorough understanding of the court system or new housing courts, which have sufficient investment to cope with the extra hearings, judges, administration and portals.
We need better education tools for tenants and an overhaul of the bailiff system so that landlords are confident they can gain possession if required.”
As a landlord or letting agent, it is important that you have your say on the ‘New deal for renting: resetting the balance of rights and responsibilities between landlords and tenants’ consultation before the deadline of 12 October. You can access the consultation document, which seeks views on implementing the government’s decision to remove Section 21 of the Housing Act 1988 and improving section 8 eviction grounds, here.