Government warned that scrapping Section 21 could spark rise in homelessness

Letting agents and landlords are warning that scrapping Section 21 eviction notices could drive up homelessness.

The Government launched a consultation in July that set out plans to scrap Section 21 notices and improve Section 8 eviction grounds.

ARLA Propertymark and the Residential Landlords Association have been urging members to highlight the side-effects of the proposals before the consultation closes on October 12, and while the policy seems a foregone conclusion, critics warn it could lead to an increase in homelessness.

Eviction company Landlord Action says that half the Section 21 cases it handles are as a result of tenants wanting to be rehoused by the council, which may be harder under a reformed regime.

Paul Shamplina, founder of Landlord Action, said Section 21 is often used as an alternative to Section 8 to evict tenants for rent arrears as the process is faster and doesn’t require a county court judgement (CCJ).

If there is no Section 21 available, Landlord Action warns that tenants will be at greater risk of receiving a CCJ through Section 8 and ending up homeless as local councils will not be obliged to re-house those with rent arrears judgements.

A CCJ will also impact a tenant’s credit rating, making it harder to pass tenant referencing, Landlord Action warns.

Shamplina said: “If those tenants cannot get accommodation in the private rented sector and cannot be re-housed by the council, what will happen to them?”

Agents are also warning that the changes will deter landlords from the sector, which could limit supply and lead to rent rises.

Anton Frost, partner at Carter Jonas, said: “Whilst reforms to the court system surrounding tenancies and evictions is broadly welcomed, the abolition of Section 21 is another legislative move that would only deter landlords and potentially cause some to sell up, only enhancing the imbalance of supply and demand that exists today.

“Should a landlord need to end a tenancy – for reasons such as providing accommodation for a family member or needing to release equity for financial reasons – this would only create more roadblocks and deter them further. This, in turn, does not benefit tenants who would be left with less stock and higher rents.”

Mark Homer, co-founder of Progressive Property, also warned that the changes could lead landlords to favour tenants with the best credit scores.

He said: “It seems clear that the Government has decided that it is a forgone conclusion that landlords wishing to evict tenants will only be able to do so using the less certain Section 8 process in future.

“Such moves are likely to further reduce the amount of private rented properties available and encourage rent rises.

“Landlords are also likely to place an even greater emphasis on only offering properties to tenants who meet the highest credit score and affordability standards.”

https://www.gov.uk/government/consultations/a-new-deal-for-renting-resetting-the-balance-of-rights-and-responsibilities-between-landlords-and-tenants

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7 Comments

  1. Charlie Wright

    The government’s track record on homelessness as well as their record of misplaced legislation that worsens the prospects of tenants does not fill me with confidence that they understand how to achieve actual benefit to our industry or the homeless.

    I hope any deterioration in the prospects for the homeless can be avoided. In the absence of government success in reducing homelessness it falls to our industry next to try to help. Good luck to those in positions of influence on this matter.

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  2. JamesB

    Government are convinced it’s a vote winner so aren’t interested in anything else … incredible that such decisions are being made for political reasons than what’s best

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  3. Will2

    The tenant fee ban has already had a significant effect in so far as I now require 3x the detail BEFORE I will even reference a tenant. Despite taking things seriously as an accredited landlord I will be leaving the market.  I no longer trust the conservatives and labour’s Marxist shadow chancellor is as toxic as it comes for landlords. Time to invest in property abroad for me.

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  4. LetItGo

    Any tenant that needs a s21 to evict them probably would be best avoided in the future. So on that basis only the best tenants would get housed in the rapidly shrinking PRS. Maybe not a bad thing…and as for homeless tenants, they are probably the worst sort….

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  5. Mothers Ruin

    I’ve completed the survey and it does say that it won’t apply to existing tenancies. Those landlords with hit and miss tenants now will probably look to serve a S21 when they might not otherwise have done so. It’s a sorry state of affairs and can only end badly for tenants. They will end up with more landlords with less attractive properties who won’t care  whether they stay or go. I have suggested in my response to the survey that the criteria will tighten immediately and that the most vulnerable tenants will not even be considered. Lots of landlords are willing to give tenants a chance but I doubt they will be when this comes in. I suspect that first time renters without a history will struggle too. Having been a mortgage broker when we first set up on the Lettings side 20 years ago I felt safer doing my own referencing and we might go back to obtaining proof of income first. Post TFB we’re already asking prospective tenants to obtain their credit score where they’ve indicated they might have a problem. We can’t retain a holding fee if they’ve told the truth so if it fails then we’ll have to cover the cost. I’m charging landlords a nominal referencing fee but they won’t pay if it’s declined. In what World do people not protect their own interests? I have some lovely landlords but they are not a Housing Charity……..

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  6. Mothers Ruin

    Oh and I also predict that the incidence of raising a CCJ for arrears mid tenancy before any notice is even served will rise dramatically!

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  7. TOZ4

    In my humble opinion, this proposed legislation is a knee jerk reaction to reduce the ever increasing number of housing benefit tenants being evicted who subsequently struggle to find alernative accommodation in the private sector precisely because the local authority advise tenants to remain in occupation until they are in reciept of an eviction notice when the landlord wants his property back. Yes, there will be some immediate respite for local councils while the new extended procedure beds in, but the system will very quickly once again be overflowing with benefit claimants waiting to be re-housed.

    In my 35 years experience, the majority of private landlords, in London, want long term lets. However, with the exception of benefit claimants, the majority of tenancies run for 12-24 months; longer where sharers intermitently apply for a change of occupant.

     

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