The Government has announced its intention to abolish Section 21 – the so-called no fault eviction, by which landlords can claim possession of their property without having to give a reason.
But could this mean a return to the bad old days? And what were they like?
I should know – because I was there.
Aged 24, I was the youngest rent officer in the country, covering Tyne & Wear.
More of rent officers in a minute, but let’s start with Section 21 notices which were introduced by the Housing Act 1988.
It proved to be a ground-breaking piece of Conservative legislation, designed to improve the rights of landlords and stimulate the development of the modern private rented sector that we see today.
Importantly it gave landlords confidence to invest, simply because they knew they could get their properties back.
The picture was pretty miserable, with landlords unable to remove a tenant in occupation (a “sitting” tenant) and the controlled rent meant that the capital value would be typically half what it would be if the property could be sold with vacant possession.
Therefore, letting a property was a reluctant and risky choice.
There were grounds to remove a sitting tenant if the landlord could show that the property was needed by him or herself for their own occupation.
However, this ground failed if the landlord had another residence.
The landlord could use another ground – and propose that the property was required as part of a redevelopment scheme.
But in this case the tenant had the right to demand that the landlord find them suitable alternative accommodation.
The current Labour Party wants to see rent controls in place, and both Labour and the Conservatives want to strengthen the rights of tenants in terms of longer tenancies.
So, what does history tell us?
Before 1998, the private rented sector contained just 9% of UK housing stock and the percentage was falling.
Most private tenancies fell under the Rent Act 1977 which granted to a tenant of unfurnished, self-contained (so not rooms) accommodation the right to remain in occupation provided that they adhered to the terms of the tenancy.
In effect, a tenancy for life.
To ensure that this protection could not be circumvented by the landlord increasing the rent so as to make the property unaffordable, the rent was controlled by a Government agency, the Rent Officer Service.
Its officers – including myself – set Fair Rents under a formula contained in the Rent Act.
Rent officers had regard to the age, character, location, size and state of repair of a property in order to set the Fair Rent.
However, and critically, the officer had to imagine that the supply of such properties was equal to the demand, and determine a Fair Rent which had no scarcity value attached to it.
We would inspect the premises and consider comparable evidence of other Fair Rents.
We never considered market rents in part because the market was dysfunctional, with very little evidence other than a small number of fully furnished lettings by ex-pats, army officers, policemen and vicars of the family home while they were working away, and the furnished student letting market.
The other reason was that if such “unregulated” rents were higher than a Fair Rent, this was probably because of their scarcity value, which under the Act we were obliged to ignore.
Rents could be reviewed every two years unless in between there had been carried out significant works of improvement by the landlord.
The Fair Rent was the maximum that the landlord could legally charge and overpaid rent could be recovered through the courts.
Any attempt to coerce the tenant into leaving or indeed bribe them to move along were actions punishable by criminal penalties under the Protection from Eviction Act.
Then . . . and now
There was a reluctance by landlords to invest and the stock that I saw was generally in a poor state of repair with elderly tenants paying a low rent but unhappy with their lot.
There was hardly any accommodation available to let.
If you have grown up with the PRS that has developed in the last 20 years, then the picture in the late 1980s would be totally unrecognisable to you.
* This is a two-part article by Ian Wilson, chief executive of The Property Franchise Group. In the second part tomorrow he argues for the Section 21 mechanism to be retained