Nearly half of landlords and letting agents likely to bow out of market

Nearly half (46%) of landlords and letting agents are more likely to remove their investment – some or all of it –  in the private rented sector as a result of the Government’s plans to end so-called ‘no fault’ evictions by the abolition of Section 21.

The findings come from a new survey by the Residential Landlords Association of almost 6,500 landlords and letting agents, its biggest ever response.

The research also found that over 40% of landlords are waiting for other planned changes by the Government to become clearer before they make decisions on their ability to provide homes to rent.

In April, the Government announced plans to end Section 21, alongside proposals on improving the Section 8 process, under which landlords can repossess properties on grounds such as rent arrears or anti-social behaviour.

This process requires landlords to apply and be granted permission to repossess via the courts. The RLA says that official data shows that it takes over five months on average from application to repossession.

According to the survey, of those landlords and agents with experience of such repossessions, 79% did not consider the courts to be reliable. Almost 91% supported the establishment of a special housing court, bringing together all housing disputes under a single body.

With concerns that landlords selling property will usually require tenants to be evicted, the RLA’s survey found that 48% of respondents would be encouraged to purchase a property to rent with a tenant in situ if they could reclaim the 3% Stamp Duty levy on the condition that the tenants can remain in the property for a year or more.

The survey also found widespread support for new grounds to be established upon which landlords can regain possession of a property. This included to sell a property and to ensure tenancies can best meet the needs of certain groups such as students, who do not require the indefinite style tenancies being proposed by the Government.

David Smith, the RLA’s policy director, said: “Security of tenure means nothing unless the homes to rent are there in the first place.

“With the demand for private rented housing showing no signs of slowing down, it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances.

“Whilst the system should clearly be fair to tenants, it needs also to support and encourage good landlords.

“Our survey shows how complex it will be to ensure that the grounds on which landlords can repossess properties are both clear and comprehensive.

“This needs to be underpinned by a court system that is fit for purpose and properly resourced. At present it is neither.”

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37 Comments

  1. David Clark

    But that’s the plan! Reduce the number of landlords, reduce the number of letting agents. Let big business run it all and enable easy regulation by government. Simples!

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    1. ArthurHouse02

      And when this is done, re-introduce some sort of “admin” charge before a tenant can move in

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      1. Eyereaderturnedposter12

        Because of course, when “big business” take over…everyone is so much better off…
         
        industrialisation of food production by “big business”= increase in chemical usage, reduction in quality, ever increasing rates of cancer, diabetes…
         
        or when “big business” took over the prison service= escapees, riots, uncontrolled drug distribution, inability to effectively rehabilitate inmates…
         
        or when “big business” took over the UKs rail network= they’re never on bl*ody time!
         
        guess what Mr Clark, your “big business” doesn’t care for anything other than lining its own pockets to the fullest degree irrespective of the net consequences to the consumer (Tenants)…simples  

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      2. PossessionFriendUK39

        Its amazing how good ‘ Re-inventing the wheel ‘ becomes when the consequences of actions become so clear there is over whelming pressure to actually Reverse the damage done ( Although casualties cannot be brought back from the dead )

        Of course the dishonest politicians proclaim it as the next new master-plan, of their making – hoping history will be forgotten.

        Landlords need to remember ‘history’ at the next elections.

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    2. Realitycheck97

      Except Build-to-Rent supply chain, while exciting for some, is mathematically almost irrelevant; a tiny sector dwarfed by the BTL stock. No way even a small scale exit of landlords will be matched by BTR supply. Politicians who dream of an institutional PRS any decade soon are in cloud cuckoo land.

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      1. JMK

        And BTR are focused on the upper end of the market for those that want to live in communities with gyms and coffee shops.  Great if that’s what you want but if you don’t then you’re stuffed.

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        1. Gromit

          ….and leave the dregs for what’s left of the PRS (BTR wouldn’t want to dirty their hands).

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  2. Will2

    This is a case of government forcing the prs into social housing due to the influence of faux charities like shelter.   The costs of removing rogue tenants will rocket as lawyers make hay defending cases. The government should emigrate to Greece as they have also clearly lost their marbles

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    1. Realitycheck97

      What social housing? Where, at scale, is the new stock?

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      1. Will2

        I am suggesting that by granting unlimited security of tenure for tenants by removal of s21 and later controlling rents a confirmed labour policy they will be removing landlord control and putting control in the hands of other such as councils. PRS is no longer a sound investment.

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  3. Jay2Oh61

    There are ways to get Landlords on board and create a positive move to longer Tenancies, but not by draconian political bullying of hardworking and financially prudent public, many who have moved in to PRS to secure their retirement given the pension’s debacle of the last 20 years. Government intervention to the detriment of the decent tax paying public is wearing extremely thin right now. I have muted on this forum over the last couple of weeks that tax breaks for longer term Tenancies that have no provision for Section 21 is the way forward, not the abolition of S21 altogether. Those Landlords that choose to have a S21 provision in their Tenancy could lose further tax benefits perhaps? Consideration for a new accelerated possession procedure for mandatory grounds of Section 8 may also be a way forward. The procedure for APP needs streamlining as it is currently taking far, far too long to secure possession, even though a court hearing is not required. But hey… what do I know…. I have only been in my Lettings for 30 years. I must bow to Mr Brockenshire, our current Housing Minister……. with all his 16 months experience.

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    1. JMK

      But don’t forget that Mr Brokenshire experienced a homeless man at a shelter at Christmas, or so he says.  I think I’m right in saying the poor chap’s name was TIny TIm.

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      1. ArthurHouse02

        Dont forget the dog, the homeless chap had a dog as well!

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    2. RosBeck73

      Which tax benefits do landlords get that you are referring to?

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      1. Jay2Oh61

        Sorry if it wasn’t clear. Tax benefits should be created for Landlord’s who commit to longer term Tenancies with no provision for S21.

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        1. Will2

          I am not sure how many landlords would be silly enough to compromise the value of their investments for very short term gain unless such gain was major.

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        2. PossessionFriendUK39

          You mean the tax allowed to EVERY business that this Government selectively stripped Landlords of.

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  4. MarkJ

    Ive always thought that MP’s should get their ‘hands dirty’ and have first hand experience of an area before making decisions… and I dont mean photo opportunity tours around buildings
     
    I think we all know that S21 very often does not give a private landlord possession of the rented property after 2 months. With the increase in rents over the past few years more and more tenants cant afford to stay in the private sector and are turning to the council for help
     
    Mr Brokenshire also needs to see the Council in action advising the tenant to ignore the S21 and stay put until the bailiffs arrive. Until the tenant has the notice of eviction from the bailiffs the Council arent interested in helping the tenant.  Ive always questioned the legalities of the Councils methods  ….
     
    As stated in the article …S21 can be 2 months but in many cases its 4-5 months ton a good day to gain vacant possession….depending on court dates.
     
    As rents rise this situation gets worse…more cant rent privately The Court system isnt working as it is…. even under the present system demands on the council/courts will increase.  
     
     
    My local council is already screwed financially….it cant afford more housing benefits claims etc
     
    Dabbling in an eco system you dont understand will have a negative income on all parties ….landlords, tenants (longer term) and the local councils . Scary.   

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    1. JMK

      I believe that in Canada someone must have experience in the field before becoming a Minister in said area.  If only…

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    2. Will2

      Brokenshire is AWARE of the behaviour of Local Councils and knows council’s insite tenants to be in contempt of court by not vacating on the date set by the court in the court possession order. The story you get is it is up to the court to decide if any action is taken for contempt of court; which of course is too much effort on an already hard pressed service.  It is a fact that ROGUE councils play the system as has been described and then wonder why savvy landlords don’t want anything to do with people taking advice from Councils, this includes people on benefits.   The thing I find very worrying is these CROOKED ROGUE COUNCILS are the ones enforcing the laws in many instances.  The system is corrupt and Councils no longer have credibility.  You can’t insite contempt of court and then morally be an enforcing authority.

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    3. PossessionFriendUK39

      Section 21 is 2 months Notice   BEFORE,  the claim, which takes  the MoJ quoted figures of 5 months to obtain. That’s ‘ 7 ‘ MONTHS,  which is hardly being turfed out with just 2 months Notice,  as Tenant support groups and now the Govt, taking their side, – claim.

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  5. GeorgeHammond78

    OK, Survey says……. and while we all know that surveys never lie, I do think this one is a little spurious. c.50% of all private landlords use an agent; ergo, c.50% don’t. Of the 50% who do, how many actually belong to the RLA? If our portfolio of landlords is anything to go by then the answer is zero. So, of the remaining 50% what percentage are members?  I would argue that as the RLA’s overall membership represents only a small proportion of the total number of private landlords (their website says they have ‘over’ 35,000 members) while 6,500 survey respondents may be high for them, its the square root of diddly in the overall scheme of things.

    Most letting agents intuitively know that non- letting agent using landlords do so because they either have weaker properties, higher appetites for risk, don’t see the value of an agent (i.e. tight-fisted) Or, all three. We also know that a fair proportion of those should never be allowed to be landlords in the first place and they’ll be the ones making all the noise about S21 being abolished.

    In my opinion, no decent landlord wants to get rid of a decent tenant for no good reason; provided the Government do as they say regarding S8 and the ability for a landlord to sell if needs be, then I don’t see why anyone should be worried by S21 going……..unless of course, they’ve relied on it for the wrong reasons?

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    1. Realitycheck97

      Err, ever tried to extract a bad tenant? Reckon on several months of process following several months of failing tenancy.  Plus legal costs. Plus stitching your house back together again.  Total loss around 20 years profit on today’s margins. No small landlord can survive that. Only big landlords who can amortise the risk can deal with this sort of wipe-out.

      Those who preach the theory of an improved s8 process fail to recognise the small landlord’s appetite for and ability to cope with risk. Doesn’t matter a hoot how improved s8 gets. If landlords feel it is too risky for them, they’ll be out. It’s their judgement, not theories that will dictate supply of PRS housing.

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    2. Will2

      Wow, GeorgeHammond78; having been in the property profession all my life as a Chartered Surveyor I would not want you as my managing agent if you do not understand why s21 is so important.  Look back at the Rent Act 1977 and if you are too young to remember it chat to someone practisng in property managment in the late 1970’s and 1980’s.   I agree most, if not all landlords, don’t want to get rid of good tenants but s21 is like a guarantee. It is totally false to believe s21 is used for evil purposes or causing homelessness. Such suggestions shows the ignorance of policiians and charities alike supported by media only interested in hype and sensationalism.    S8 can be defended and smart and expensive lawyers acting for tenants will make it difficult and potentially grossly expensive by defending against any landlord wanting or NEEDING possession.  The recent increase is use of s21 is probably Government generated where s24 would have forced a number of landlords to sell due to tax implications. s21 is of pivotal importance to landlords who might, at some point, want to sell their investment at a full open market price.  OK the 1970’s and 1980’s may be too long ago for many to understand but it is an important period in housing history and loss of s21 should worry anyone be they landlords or agents. History is repeating itself so understand what is happening. The RLA & NLA reach people who are generally professional about letting and many perhaps do not trust letting agents or perhaps want to have a better understanding of what their agent might or might not be doing.  Of course we are all entitled to our own opinions which make forums an interesting place and sometimea an educational place. No offence is intended to any of my property colleauges.

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      1. GeorgeHammond78

        Sorry to have offended Will2 but I can only think you’ve got a lot of **** landlords/properties/tenants you work with that you’re relying on S21. We’ve several hundred clients and in the last 3 years, we’ve only issued four S21’s and then only because a sale or move in was required.

        As I say, if you believe the Govt, there will be easy ways to repossess in cases of genuine need without needing a s21 catch-all.

         

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        1. Will2

          GeorgeHammond78 you have not offended me at all and I think you have missed the point I was trying to making.  The point being s21 gives an almost absolute right for  a landlord to recover their property and liquidise their investment. Whilst they have that right the majority do not excercise it but it gives confidence/a guarantee.  Even then we have seen the current case at appeal where a S21 did not grant possession because a Gas Safety had not been served before the start of the tenancy despite it being in existance. This petty interference was a sign of the thin edge of the wedge.  (This shows WHY S21 should be retained in a landlord’s (your clients) best interest. It is like having a powerful car; you don’t use that power all the time but its is good to have it their if you need it to get you out of trouble.)  This illustrates how lawyers manipulate the law. Putting the S21 into s8 and it will significantly widen the range of excuses or loop holes lawyers will find to prevent possession when a landlord wants to sell his property.  It will leave it  to others to decide if your landlord can have his property back to sell. Otherwise he will only be able to sell to another investor and the restricted market will significantly reduce capital values.

          Fact is I also have not used S21 often but it needs to be there as a guarantee of possession without ambulance chasing lawyers prolonging cases to prevent landlords getting their property back. Once lawyers have loopholes boy do they make hay! and your clients will be penalised.  Will all due respect I believe it is niaeve to think that their will be easy ways to recover property after the proposals. In your last paragraph; do I believe government the simple answer is NO.  James Brokenshire advised me that there would not be any criminal actions on right to rent checks and it would be a “light touch” legislation.  Why would I believe what any politician tells me as history shows they cannot be trusted particularly when they are trying to buy their votes; which is what the current proposals are all about. Do you trust policians?  I hope I have not offended you as this  would never be my intention. Kind regards

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    3. CountryLass

      I generally issue a S21 on the basis of a Tenant always paying late or constantly in arrears, or ASB. Then I will issue a S8 notice a short while later and hopefully they will have either left by the end of the S21 before the court date, in which case I cancel the court date and the LL just has to bear the £355 court cost, or we hopefully have a court date for just after the end of S21 date in which case we can also argue that as well as the discretionary grounds, they have also refused to comply with a legally served notice to leave.
       
      I don’t think I’ve actually had to go as far as attending Court, but we have cancelled a couple of dates and pulled the case before it gets that far… Having to pay the £355 is no joke, but we explain it is better to pay that and have a date for (hopefully) soon after the end date than to wait and hope they leave, then have to wait another couple of months to get a court date.  
       
      I think if there was a Housing Court that dealt with Possession Warrants in a timely fashion, even if it was within 2 months of sending in paperwork to Bailiffs attending then I think most Landlords would be happy. Yes, it’s slightly more hoops to jump through, but at least you KNOW that within 8-10 weeks you will have it back, rather than 2 months til you find out if they have left, then serving paperwork, then waiting for the Court to receive and process it, then waiting for a Court date, then waiting to see if the Warrant is granted, then waiting to get an appointment for the Bailiffs…
       
      I still think a reason should have to be provided and backed up during the process, wanting to get rid of a Tenant because they looked at you funny, complained about a dripping tap or whatever nonsense the Government like to accuse Landlords of is obviously unfair, but a Tenant who has been a general PITA all the way through their Tenancy should have that made clear to them when they are asked to leave. Vulnerable Tenants do need a chance to stand up to what may be an unfair eviction, but it should not drag on for months, and a perfectly fair and legal one certainly shouldn’t!

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      1. Dee39

        i couldn’t have said it better.

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    4. Gromit

      For s.8 there’s a significant burden of proof. For arrears its not too bad but for anti-social behaviour……..

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      1. Woodentop

        Agreed. Proving anti-social is not straightforward and often they are looking over a period of time, not a one off event.

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        1. CountryLass

          Tell me about it, the person over the road from me lives in social housing and we have had years of parties all night in summer, fights outside that led to one of them putting the other in hospital, an argument that spilled over to my side of the road where CountryLad had to step between the tenants brother and my neighbour as apparently being asked to stop revving the engine, you’ve been doing it all day (he literally had!) was worth trying to beat my neighbour up and calling his wife a C-word!

          We had 4 police cars there a couple of weeks ago… But the housing group aren’t doing anything!

          (Before anyone says it, I’m not having a go at social Tenants, 6 of the 9 houses in my little alcove of our road are social housing, and they are great. It’s like there is a line down the middle of the road where the dross gets put though…)

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  6. Woodentop

    It doesn’t matter what the stats are!  
     
    ……..  it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances.  
     
    Says it all really. No landlord evicts a good tenant and while pressure groups argue this is to stop no fault evictions …. well if that is the case then the tenant can argue it in court.  
     
    As to a smooth and quick process …. average 4 to 5 months to get to court, (I have one still after 6 months on-gong with legal aid and a barrister arranged by shelter with the biggest pack of lies you have ever heard and £13k and climbing rent arrears) during which time the landlord gets no rent, court costs, bailiffs costs, clean-up and decorating costs because these same pressure groups and council officers tell them to stay put.  
     
    It is a scandal that no-one is listening to the industry, the same industry that is helping out with the shortage of housing that government of all parties have neglected. If we neglect our duty, these same people are quick to issue fines and prohibition orders!  
     
    The market of PRS landlords are amateurs and will leave in their droves. You as a agent have a duty of care to advice landlords of the risks once SEC 21 disappears, if not before ????????????????

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    1. Will2

      I respectfully suggest as professioanl agents you all have a duty to understand and warn all of your client landlords and inparticular amateur landlords of the potential impact of abolition of S21. How this may impact on capital values once they can’t easily (or even possibly) gain possession to sell their investments. Moreover, thet fact that it will reduce capital values as investment in residential property falls and ability to liquidate investments is affected. If you fail in your duties it could be like PPI claims all over again for agents who do not give appropriate advise.  How can you trust any government that has bashed landlords constantly and progressively with a waiting labour party to cause even more havoc. Yes the party determined to nationalise industries which could include housing.

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      1. Woodentop

        I agree and thanks Will2, I was hoping someone would pick-up on the ????? Agents need to tread carefully and diplomatically. Think it through before actioning, I suspect many agents will be horrifiedd to find themselves in a postion of potentionally scaring off business. Another ignored thought process by government.

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        1. Will2

          Woodentop I tend to say it as I see it and I would never make a dipolmat!  The good point is these types of forum gives opportunites for collegues to widen their views. Clearly landlords also have a duty to keep up with things as best they can but not all will even understand what S21 is!. Did those flogging PPI think it would come back and bite them so hard?  Often these situation offer the choice of a rock or a hard place. Of course you don’t want to scare off business but your clients are probably relying on your business for  professional guidance.

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    2. PossessionFriendUK39

      Woodentop – post your story to PossessionFriend.uk
      you are not alone, or without support.

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      1. Woodentop

        You may cut and paste my posting, if you wish.

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