Abolishing Section 21 ‘will create sitting tenancies and rent controls’ – warning

One of the country’s leading newspaper columnists has laid into government plans to abolish Section 21 – the means landlords have of claiming back properties without having to give a reason.

Charles Moore, writing in the Telegraph under the headline ‘Why take a tenant if you cannot evict them’, says that abolishing Section 21 will create sitting tenants.

He says that along with sitting tenants, rent controls will have to be created, while the property itself could halve in value.

Moore, a former editor of the Telegraph, says that landlords let houses not so much for rental income – “The profits are not large because the costs are high” – but because the property is a “store of value and a hedge against inflation”.

If the opportunity for profit disappears, they will stop offering homes for rent, and new landlords will not come forward to replace them.

Moore warns that if Section 21 is abolished, the landlord will be stuck with the tenant and the prospect of lower returns.

He also warns: “If it is abolished, so that no notice to quit can ever be served, the incentive to let disappears.

“The value of the property thus encumbered drops, sometimes halves.

“Besides, sitting tenancies require rent controls to work.”

He concludes: “An unmovable tenant creates, over time, an unworkable business.” And while ministers might see the abolition of Section 21 as a “levelling up” of rights, Moore concludes: “Actually, it is more like closing down.”

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15 Comments

  1. JohnGell

    What nonsense.

    Does it not occur to Charles Moore that tenants will need to move on after a while as their circumstances change? They’re not going to dig in just to spite their landlord.  His comments are redolent of the “them and us” mentality which has hampered the private rented sector for years

    The Scottish equivalent of S21, S33, was removed just over a couple of years ago and the bottom hasn’t fallen out of our world  Tenants move on when they have a need to do so and our average tenancy length is still about 18 months, as it was before the change.

    Oh, and we’ve just completed a rent review.

     

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    1. Will2

      Look at history and the effects of the rent act 1977  landlord should be worried. Very worried. As for them and us look at shelter and generation rant.

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    2. Rent Rebel

      So clear that Moore hasn’t even read the brief either. “Sitting tenants”, as if.  I imagine the Tories will mess this reform up just as they mess up everything they touch. He probably has nothing to worry (panic) about. 

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  2. JamesB

    Seems to miss the proposal that along with this a new s8 enters allowing landlords to evict to sell

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    1. Will2

      It is not only when landlords want to sell that is the issue. Fact is using S8 will cost a hell of lot more with legal costs; it means the courts will place their interpretation on the legislation and change the whole landscape. It means doubtsand uncertainty!  It will means clever lawyers will drive unintented changes and alterations to these changes by manipulation the interpretation, where at present landlords have an absolute right to possession. Give tenants rights to stay a little longer to give them the reasonable opportunity to find alternative accommodation by all means. Abolition of s21 is a disaster for landlords. Lessons on how the Rent Act 1977 killed the rental market have not been learnt.  If you were not practising in the 1970’s and early 1980’s you will not understand to true impact.

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    2. Rent Rebel

      Can’t be letting facts get in the way of lazy journalism. Fact that most tenants never even challenge evictions and leave on expiry of notice happily glossed right over by ever-so-hard-done-by-bleating landlords aswell. 

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  3. Apropos- Renting Done Right

    Having had our equivalent of section 21 abolished 2.5 years ago in Scotland, and with a portfolio of over 4,000 residential properties under management across 2 cities, we have seen no such disastrous outcomes as predicted above.  Scottish leases now have no minimum initial fixed term, so tenants can leave with 28 days notice at any stage, meaning they can issue a 28 day notice to leave on the day they move in to a property.  Despite predictions that this would create a revolving door of tenants moving in and out of properties continually, our average lease length has actually risen to 30 months.  Only a small rise from 29 months 2 years ago, but still a sign that tenants want to find long term accommodation.  If landlords flout their responsibilities, tenants can vote with their feet and leave without being tied to a fixed term.  That seems only fair to me.

    We have 18 grounds under which a tenant can be evicted, and with a beefed up legal process for dealing with property disputes, not involving the Scottish Court system, we have seen no rise in so called “sitting tenants”.  If a tenant has breached their contract, there are robust means of evicting them.  If a landlord has valid reason to need the property back, then there’s a process which enables them to do so.

    Sensationalist headlines, based of un-grounded fears and doomsday predictions, do nothing to support the many positives of having a properly regulated rental sector with a far better balance of rights between landlords and their tenants.

    Having gone through the process of a full and grass roots reform of our PRS in Scotland, which is now fully regulated in every aspect, all I can do to ease the understandable anxieties felt south of the border is to confirm that the sky has not fallen down here.  It’s actually much brighter.

     

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  4. wilberforce80

    I’ve been in this 30 years and Moore is right. Yes tenants move on and good ones are not a problem but an asset. It is the bad ones that will not move so we are to be left with S8, and the “new” formula has not yet been revealed. But you can still use S8 now in order to sell, but the LL has to pay the tenant’s removal and moving costs, on top of lost rent and court costs. I used to use S8 until a couple of years ago when Shelter helped a tenant “Our Client” to sue me under disrepair: she smashed up her flat, moved in her drug dealing son with three pitbulls, flooded the place and Shelter and the Council told them not to let me in with builders to repair the place because they needed to retain the damage for the court case. They lost but at horrendous costs to me. Disrepair is the nuclear weapon of Shelter, you will not see it coming until the mushroom cloud hits you, and the you will wish we still had S21.

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  5. APE

    When there’s uncertainty it encourages people to do nothing. As with many policy announcements there’s a rush to produce a media soundbite leaving out far too much detail in the process. Landlords are selling. Investors are reluctant to buy. How’s that soundbite working? We’ve seen a 15% rise in rents recently. Available stock is at an all time low.

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  6. RosBeck73

    Charles Moore is right on many counts. Of course rent controls will be mooted next – otherwise tenants could be ‘constructively dismissed’ by raising the rents beyond what they can pay. It’s another example of how the Government interferes in one way and then because they can’t solve the new problem they’ve created, they bring in another terrible policy and so on.

    As for Scotland, for all those praising the new arrangement, can they give us the figures on how long it is now taking landlords to get possession through the courts? I have heard at least one Scottish landlord saying it is taking much longer now, meaning much higher losses. Incidentally, my brother has a second property in Scotland and my niece was considering renting out her flat in Edinburgh and I advised them both against, given the even more hostile environment for landlords in Scotland.

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    1. Rent Rebel

           can they give us the figures on how long it is now taking landlords to get possession through the courts?  I’ll give them to you if you can tell me how many private tenants evicted in Scotland (and England for that matter) never even see it to tribunal / court to challenge.

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  7. Will2

    Makes a change for a journalist to not be landlord bashing and telling it as it is instead of falling for the brain washing propagander put out by Government, Shelter, BBC etc.

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  8. ALOnline

    As with any industry, there is a balance between risk and reward.

    An influence in one side of the equation will have an effect on the remainder. An example would be that you could greatly increase your customer’s experience, usually at the expense of your business’s potential profits.

    Increasing the difficulty, cost and (arguably the likelihood) of having to remove bad tenants increases risk (Unreasonably, I think) to landlords. The two options are to increase reward, or mitigate risk.

    To increase reward, prices will increase – regulated only by market competition.

    To mitigate risk, landlords may simply not let to less fortunate tenants. Will you let to a single mother who is moving from her familial home to escape an abusive husband or will you let to the hardworking professional young couple, given the enormous risk to your livelihood?

    Typically when these policies are implemented to protect the most vulnerable in society, it has the opposite effect. We may see, sometime soon, a rental market in which the poorest rungs of society are charged the most or are unable to find housing. The issue is regulations are implemented reactively, often after significant events (just look at the financial regulations implemented after the 2007 financial crisis).

    Perpetual poverty is happening in the Energy industry already. The most expensive energy tariffs are segregated to prepayment meters, only installed as a punitive measure for those who already could not keep up with their bills or as standard in rental properties (Where people are not wealthy enough to purchase a home).

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  9. Mothers Ruin

    I must admit I’m torn on this issue and can see it very much from both sides. I did respond to the Government survey with my honest opinions. We only serve S21’s on about 2% of our stock each year and mostly for reluctant landlords coming out of negative equity and who want to sell. On the one hand I don’t think tenants should have such a low level of security at the whim of a landlord but I also see lovely landlords with complained about tenants by equally lovely neighbours and let’s face it who wants to go through the emotional stress and cost of the Courts in this situation of anti-social behaviour.

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    1. Will2

      Good landlords and good tenants don’t need the protection being proposed. Bad and difficult tenants are the one’s shelter and the government want to protect. Landlords rent to get a return on their investment and largely do not want to lose good tenants in the majority of instances. Most landlords improve their property to get best returns. Politicians are only interested in votes and shelter is a political left wing group with massive assets that are not used to actually house anyone.

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