Agents and landlords braced for more upheaval as Section 21 is set for scrapheap

Letting agents and landlords have reacted with dismay as the Government unveiled plans to scrap Section 21 notices.

The Ministry of Housing, Communities and Local Government revealed yesterday that it plans to consult on new legislation to abolish Section 21 evictions and said it would work with landlords and tenants to create a system that would  amend the current eviction system under Section 8.

Under the proposals, landlords will have to provide a concrete, evidenced reason specified in law for bringing tenancies to an end.

The proposals came in response to a previous consultation on introducing three-year tenancies, which the Government now seems to have dropped, stating: “It is clear that a ‘one size’ approach to tenancy length will not meet the needs of the range of households and different types of landlord operating in the market today.”

For many agents and landlords, the scrapping of the Section 21 notice will now make tenancies effectively indefinite and there are warnings that there could be a spike in its use before it is abolished so buy-to-let investors can more easily exit the market or get their properties back.

Isobel Thompson, chief executive of the National Approved Lettings Scheme, said such a reaction from landlords could not be discounted.

She said: “What is worth remembering is that the vast majority of tenancies are ended by tenants, not landlords, so we hope this isn’t a case of the Government using a sledgehammer to crack a nut.

“We absolutely want a safer, fairer private rented sector for all, but that requires landlords to be operating in the sector to provide much-needed homes.

“What is the Government’s contingency plan if landlords decide to withdraw from the market following this latest announcement?

“NALS looks forward to engaging with the Government to ensure this legislation is fair to all.”

Her fears were echoed by the National Landlords Association.

Meera Chindooroy, policy and public affairs manager at the NLA, told EYE: “It won’t be retrospective so there may not be a spike immediately, but many landlords are going to be considering their options and how to exit the market when their current tenancies come to an end, or potentially earlier if they are concerned.”

The Residential Landlords Association (RLA) warned against “knee-jerk responses”.

David Smith, policy director for the RLA, said: “It is important to note that although the Government has announced it will consult on how to end Section 21 repossessions, this process, together with the consideration and implementation of legislation to achieve it, will take a long time.”

Letting agents were also fearful of the changes.

Emma Kerrywood, head of residential lettings at Dacre, Son & Hartley, which has 21 offices in North and West Yorkshire, said: “These changes appear to promote a move towards open-ended tenancies, but the timing is terrible considering that we are still to see how banning tenant fees will impact the industry.

“Demand for rental properties is increasing and yet this appears to be another piece of legislation that could deter landlords from continuing to operate.

“Making it potentially harder to regain possession of a property, in conjunction with the deposit cap, may also make landlords much more risk-averse and reluctant to rent to tenants with complex financial situations.”

Peter Hermon-Taylor, managing director of lettings at Maskells, warned: “The rental market is a delicate balance of supply and demand.

“We understand the premise of what the Government is trying to do, which is protect the more vulnerable against the 1% of landlords who would seek to abuse the rights that Section 21 affords.

“However, meddling with a system that already works for the overwhelming majority is a perilous undertaking and we are very wary of this process, which by its nature is designed to tip the balance of power towards the tenant.

“By doing so, however, they risk upsetting this stability of the whole sector which could have the effect of pushing droves of landlords out of the industry altogether, particularly when taking into account the additional tax burdens landlords are facing on both acquisition and income of their buy-to-let properties. The devil, however, and as always, will be in the detail.”

Supporters of the change include homeless charity Crisis.

Jon Sparkes, chief executive of Crisis, said: “We warmly welcome the news that private landlords will no longer be able to evict tenants at short notice with no reason.

“We know that the end of a private tenancy is the single leading cause of homelessness across England so this decision represents a monumental leap forward in helping prevent homelessness across the country.”

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16 Comments

  1. Will2

    So we know the single leading cause of reducing housing supply will be abolition of S21. Be very careful in what you wish for!

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    1. undercover agent

      Bet they still blame Brexit

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  2. elibh35

    Good Morning, reason why most landlords/agents give an AST of only 6 month is that they can serve a section 21, (even a so called retaliation eviction is usually due to rent arrears or a lifestyle that causes issues of damp etc). HTRG, CP12, EPC etc only make a difference when serving a section 21 Notice.

    We also cant take more than a 5 week deposit. The only way to rent out now is with a Homeowner guarantor.

    Cant serve a section 21 so might as well give them a 5 year tenancy, if the tenant doesn’t pay or moves out mid term they will be full responsible for the rent and council tax until the end of the fixed term which can be 5 years. This is another piece of legislation that has not been though through at all and the ramifications for renters is actually much much bigger than the risk of allowing a section 21.

    I have signed up well in excess of 1000 tenants and have never ever served a section 21 for no reason…..

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  3. Eyereaderturnedposter12

    “We know that the end of a private tenancy is the single leading cause of homelessness across England so this decision represents a monumental leap forward in helping prevent homelessness across the country.”  
     
    Attempting to link the subject of the proposed abolition of the Sec.21 , with this nonsense statement is at best, Ill-conceived, at worst a very deliberate attempt jump on the anti-Landlord bandwagon in a very distasteful way…  
     
    I dont believe this is correct…I would suggest that depression, violence, drug and alcohol abuse, family breakdowns are the leading causes of homelessness- and oh yes… poor social management by successive governments, non-payment of rent and trashing someone else’s property…    
     
    hang your head in shame Mr Sparkes…You’re part of a wider problem…Neo-liberalism in general

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    1. Will2

      Here here!

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  4. DASH94

    “We know that the end of a private tenancy is the single leading cause of homelessness across England so this decision represents a monumental leap forward in helping prevent homelessness across the country.”

    That’s like saying ‘the heart stopping beating is the leading cause of death among people’.    It’s the reason that the tenancy is ended that is the critical factor.

    Even if a landlord is evicting for ‘no reason’ (which doesn’t really  happen anyway), a good tenant has 2 months at least – and in reality, much longer if they play the game, in which to find another home, they should get their full deposit back if there is no reason for deductions.  Now that we can’t charge application fees – the costs of moving are reduced so homelessness is not the end result of the Section 21 at all.

    I’ve had tenants asking for a Section 21 notice so that they can get a leg-up the council house list.

    It’s all bonkers, but hopefully the ‘concrete and evidenced reasons’ that would justify evicting a tenant will cover most of the actual reasons that we issue Section 21’s.   If they also fast track and simplify the court process around eviction, it might work.   I can provide an untold amount of evidence on every Section 21 I’ve ever issued – that has been seen through to eviction

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  5. Gareth Styles MD Grants Independent

    The are so many concerning factors and ramifications that will follow with this. Making an announcement of the intentions to consider abolishing the section 21 is a classic strategy of the government first testing public opinion and you only need to listen to the radio a few minutes to see their thoughts.Trouble is most of the callers when you listen are responding to the headline only, which they hear as “government to scrap section 21”

    In the past I have been a tenant and rented with my family, I understand how it feels to have the owner request a property back when you were assured at the start they were long term landlords, but if you want security sign a tenancy for a longer period of time without a break clause. Breaks can be beneficial for both sides, maybe tenants should be stronger advised to take legal advice before signing a tenancy.

    My biggest concern now is how yesterday’s announcement has been miscommunicated and how many of our landlords have already called us in panic.

    In addition to the ones that have, there will be 100’s of potential landlords that may have bought this year that now won’t and will wait to see if this goes through. There will also be even more people thinking they might have rented out their home for 3,6 or 12 months whilst living else where knowing that the would need to come back to their home at some point.  Now they won’t! concerned that if this goes through they couldn’t get possession.

    So in the short term our government that says they want to provide more homes and have less empty ones have instantly created the reverse conditions. GREAT WORK!

     

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  6. IWONDER36

    Quite honestly, I’m sick of this drip feeding of vote winning ill-thought out policies.

    If politicians are hell-bent on changing the PRS just get on with it, legislate, issue the guidelines and the new rules and allow us time to adjust so that we can form business plans without the goalposts being moved every week.

    The fallout will be on you parliament, oh and please stop blaming Landlords and agents (those providing homes) for homelessness, grow a backbone and accept responsibility for your failings.

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    1. Covlets

      Perfectly put!

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  7. DarrelKwong43

    Trying to re write the Housing Act and associated pieces of legislation (too many to mention), will make the Brexit Discussion seem like a game of tiddly winks.

    If you think it took 3 years from the proposal, to the tenant fee ban coming into force, you could probably at least double that time scale for the removal of the Section 21 notice.

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  8. Itsallajoke

    Its only a guess but policies are being made by someone who has never been a letting agaent or landlord for that matter,…..no i would bet on that.! continual meddling.

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  9. TheLettingsGuy

    I have several fears for landlords and tenants: reducing amounts of rental stock and increasing rents due to the tenant fee ban, tax changes for landlords, reduced investment in BTLs (licencing / stamp duty / concerns over ability to re-gain vacant possession etc).

    This is not going to improve the Housing Crisis in any way shape or form. It baffles me that these so called charities / political lobbying groups can’t see the bigger picture. All of these measures are going to end up harming the worst off in our society plus generally increase the cost of renting for tenants.

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  10. Tcos

    It may just be me but I don’t get the argument that s21’s are the single highest cause of homelessness. Most Landlords only use a s21 if the tenant is in arrears in which case yes they may well become homeless through their own doing and lack of responsibility. The council tell these tenants to stay on until they are evicted and then move them round emergency houses until they can find somewhere permanent. If a landlord gives notice because they need or want to sell or need or want to move back in but the tenant has been a model one then they will have no problem finding a new home. Politicians and these charity groups need to get their heads out of the clouds and look at the bigger picture. All their meddling is just going to cause landlords to walk away. Then where will they be when thousands of tenants come to them when they cant find a home because there just aren’t any available?

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  11. lee10c

    People who do not have a clue about the industry meddling again.

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  12. claris

    It would really help if the government actually knew what it was doing. These ministers are not only stupid but dangerous! More reason that private landlords will pull out of the residential rental sector and more reason to have homelessness. Why do successive governments interfere in industries of which they have no understanding ? It is obvious that landlords will see this as a fruitless way forward and therefore pull out of the market in droves.

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  13. jeremy1960

    The headline was banning S21, the issue is not so much to do with S21 more to do with S8.
    Very few landlords use the S21 for a no fault eviction process, most use S21 for other reasons such as rent arrears breach of tenancy because the S8 process is not fit for purpose. S8 is rife with pitfalls, loopholes and opportunities for the tenants that know the system (& “charities”) to exploit. Delays cost landlords money and there is often no recourse on the offending tenants so landlords take a view that at least S21 gives them certainty; they write off any tenant debts just to get the property back.
    S21 & S8 do not need ‘tinkering with’, they need a total review! A landlord must be able to get the property back either when the landlord wants it (sale, move in, for relative etc) but also when tenant defaults. Any new S8 grounds must be able to be actioned quickly to prevent huge losses to the landlord, say within 14 days for rent arrears? From June, landlords become the cheapest lenders for tenants. A tenant with a rent of say £1000 pcm who fails to pay will only be able to be charged interest at 3% above base rate on the outstanding amount on a daily basis and then only after 14 days; effectively the landlord will be loaning the tenant £1,000 at a daily interest rate of just 10p!
    In addition, when the tenants owe the landlord money for rent, repairs etc. the tenant must immediately, without any further court action receive a County Court Judgement for the debt; if the tenant owes rent they must not be given Carte Blanc to go and do it again to another landlord. A central register which can be accessed by landlords and agents which shows all offending tenants must be produced.
    In my opinion, if a tenant discovers that he/she/they are going to get a CCJ, it will focus their minds and moderate their behaviour.
    So, this means radical changes to the court system with accessible court time for landlords and penalties on the system if it cannot perform; if the courts had to say, pay the landlords’ rent and costs for any delayed time then landlords might not mind waiting. At the moment the biggest issue with landlords taking tenants to court via S8 is the uncertainty and the time delay – RESOLVE THAT FIRST BEFORE EVEN TALKING ABOUT BANNING S21!

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