Agents need ‘clarity’ after government commits to scrapping Section 21

Boris Johnson
Boris Johnson

Boris Johnson’s government has once again pledged to reform renters’ rights by scrapping no-fault evictions in England.

Proposals designed to overturn Section 21 of the 1988 Housing Act, which permits landlords to evict tenants without reason and with two months’ notice, were initially proposed by Theresa May back in April 2019.

The Conservative manifesto pledged “private landlords will no longer be able to evict tenants from their homes at short notice and without a good reason”.

The long-awaited protections for tenants against so-called “no fault” evictions appeared in yesterday’s Queen’s Speech, with Section 21 evictions likely be abolished later this year.

Tom Mundy, COO at rental experts Goodlord, commented: “After so many delays, the Queen’s Speech has put the Renters’ Reform Bill back on the table. Although the Bill is set to introduce policies which divide opinion in the sector, the ongoing uncertainty around when these proposals would come into law weren’t helping anyone. Now that it’s clearly back on the agenda, the government must provide letting agents, landlords and tenants the clarity they need to move forward with confidence.

“Uncertainty is no good for the market, especially one that’s grappling with an ever changing set of regulations and new requirements. The industry now needs clear timelines so they can prepare accordingly. We hope this is a decisive step forward that will end the years of dithering, but the proof will be in what happens next.”

Daniel Evans, chair of the AIIC, believes that while it is “a positive” that a timetable for the White Paper and the Renters Reform Bill has now been set out, agrees greater clarity is required.

He commented: “I don’t think anyone in the lettings industry will be jumping for joy until these plans start to see the light of the day.

“Will the government – distracted by everything from partygate to war in Ukraine, the cost-of-living crisis and its own internal strife, worsened by the recent poor showing at the local elections – be able to keep its eye on the ball with something as major as widespread rental reform?

“We’ve heard for many years the plans to scrap Section 21, introduce a compulsory landlord register [as is already the case in Scotland] and implement lifetime deposits, but we’ve never really got any further than that.

“This latest announcement is a step in the right direction, but as we’ll remember from previous Queen Speeches, this isn’t the first time rental reform has been promised. Equally, pledges made in the Queen Speech aren’t always adhered to, so I think it’s important the industry doesn’t get too far ahead of itself.

“We all need a bit more clarity and certainty, and hopefully now we know the direction of travel with regards to rental reform, the momentum behind it will no longer falter.”

Neil Cobbold, PayProp UK managing director, has welcomed the remarks in the Queen’s Speech on the timetable for rental reform, but says that there remain a number of question marks over how it will be implemented.

He commented: “The changes to Section 21, and a beefed-up Section 8, have been on the agenda for some time, but they continue to strongly divide opinion. The government will need to manage them carefully to ensure the interests of landlords, agents and tenants alike are catered for.”

Also responding to confirmation in the Queen’s Speech that the government will bring forward its planned Renters Reform Bill to abolish Section 21 repossessions, Ben Beadle, chief executive of the National Residential Landlords Association, said: “We welcome the Government’s acceptance that reforms to the rented sector need to strengthen the ability of landlords to tackle anti-social tenants and those with repeated rent arrears. We will continue to work to ensure that these and other grounds for possession are fair and workable.

“Whilst we support proposals for an Ombudsman to cut the number of possession cases needing to go the court, this cannot be a substitute for proper court reform as well. At present it can take almost a year for a private landlord to repossess a property through the courts where they have a legitimate reason to do so. This is simply not good enough.”

 

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7 Comments

  1. KByfield04

    A white paper is due out later today from DLUHC which will give much greater detail and insights to the plans ahead.

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  2. GeorgeHammond78

    The unintended consequences of removing S21 are going to be huge and will re-shape the PRS completely and for the most part, not for the better. However, its going to happen, so just get it done and allow the industry to adapt to the new world order.

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    1. AcornsRNuts

      “However, its going to happen, so just get it done and allow the industry to adapt to the new world order.” The equivalent of turkeys being told Christmas is coming, accept it and eat up.

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  3. Woodentop

    The scrapping of Section 21 in England …. is it lawful? Is it a breach of Business Protection Regulations where government is not permitted to step?

     

    It is a fundamental right of the owner of a property (any possessions) to retain the rights of ownership by common law. Therefore the property owner may do with it as they please and to dictate you cannot have your property back when a termed contract expiries is morally wrong and unlawful! What other industry permits a contract that has expired to not be enforceable as ended?

     

    Will we now see ‘fixed term’ tenancies expire on the last day of the contract which will not require a notice to end as they will have ceased? Will we see Landlords asking for properties back, to sell ….. government cannot take that right of ownership away. The exclusion of Sec 21 (stop using the ‘no fault’ stigma) is going to backfire massively on government if anyone goes to court to challenge their right of property ownership and a contract has ended.

     

    The scrapping of Sec 21 has no other purpose but to make it as difficult as possible and they wonder why landlords are leaving in droves and it will get worse.

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  4. Anonymous Coward

    I do find it entertaining that just as the “no fault” divorce is brought into being for marriages, the equivalent in the PRS is being removed.

    Being able to politely extricate yourself from a long(ish) term relationship without having to point the finger of blame is VERY sensible.

    And the irony is that it’s a Tory government doing both – the mind boggles.

    Now we seem to be entering the realms of landlords being able to evict tenants only at high cost through the courts.  That means that rents will have to increase to cover it.  All tenants lose.

    And, what it will do is remove landlords who only have one or two rental properties by getting them to sell because they either are frightened of the prospect of having a bad experience or because they actually have a bad experience.

    But, these properties release to the market, will almost certainly not be bought up by other landlords which will reduce the stock available and rents will naturally increase.  Again, all tenants lose.

    Perhaps worse still, because of “affirmative action” by the government, landlords will appear to be even more grasping because rental prices have gone up, even though the causes of the rent increase are beyond their control.  This is The Law of Unintended Consequences.

    Thinking about it, perhaps a sensible solution to the issue might be to simply rebrand the S21 Notice.  Instead of being called a “No Fault Eviction Notice” it might be called an “Early End of Tenancy Notice”…  With a couple of tweaks to other wording it might make the situation much more palatable.

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  5. KByfield04

    The reality is that the removal of S21 actually won’t change much. Tenants end over 90% of tenancies- this won’t change. With S8 grounds being strengthened (for Landlords) these will be better/easier to enforce and S21’s used as a ‘simpler’ way to remove a rogue/troublesome tenant- landlords/agents will simply use the intended S8 grounds. The right to occupy & sell will (almost certainly) be protected/enshrined within the new regs as well as the right for banks to repossess (with caveats to avoid abuse). As such, this will likely impact roughly 2% of tenancies (which is still around 80k). Please read Ben Beadle’s recent open letter on behalf of NRLA to Shelter for greater statistical insight- it’s a long(ish) but brilliant read!

    However, this will likely make landlords and agents be far more cautious about ‘questionable’ tenancies. Where there are concerns over a pet being a nuisance or where the affordability is at the threshold (worsened by rising living costs)- these tenants will likely be shunned for fear of being stuck with them unless they formally breach the contract actionable under S8. Therefore, this will likely impact the very people the likes of Shelter are (supposedly) trying to help & protect.

    S21 are likely to go until the latter part of this year and it is not unreasonable to think this may only apply to new tenancies going forwards. Rent increases in line with fair market conditions are likely to still be actionable- so concerns over being stuck with a tenant who, after several; years, is paying way below market rate is also likely to be unfounded.

    As such, this is likely a storm in a teacup and better S8 grounds/framework could actually lead to a better-structured landscape for agents & landlords alike.

    The white paper will obviously set out more detail, so we are all largely speculating until then, but let’s see…..

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  6. Will2

    As some landlords leave the rental market and rental property supply reduces rents will increase for landlords that are prepared to stay in the market. Selection of tenants will toughen accordingly to reduce risks of poor tenants and those needing social housing will suffer the most. Well done Shelter, well done politicians. Better income for those prepared to stay. Shelter  and its supporting politicians etc will injure the very people to say they want to help. Eventually the penny might drop? but there again none so blind as they who will not see!

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