landlords: have you had your say on section 21? voting ends on 12th october

The government is currently consulting on big changes to landlords’ rights. They plan to stop landlords evicting tenants under section 21, usually known as no-fault evictions.


They also want to stop the creation of new assured shorthold tenancies (ASTs). 

The consultation on the abolition of section 21 began on 21st July and will continue until the 12th October. If the plans come into force, this is likely to happen in late 2020 or early 2021. Now is the time to have your say.

 

HOW IT WORKS NOW

At the moment, landlords have two options when they need to evict someone: they can use section 21 of the Housing Act, or section 8. 

Section 21 evictions allow landlords to end an assured shorthold tenancy (the most common kind of tenancy), without giving a reason, provided they give enough notice. Though landlords don’t need to give  reason for a section 21 eviction, there often is one. According to a survey on LandlordZone, 58% of section 21 evictions are due to rent arrears. 

These evictions could be made under section 8, but the section 21 process is easier and quicker. In an assured shorthold tenancy, a section 21 eviction can only happen after any initial fixed term is up.

Section 8 evictions can happen at any time during a tenancy, including during a fixed term. They can only be made if there are rent arrears, criminal or antisocial behaviour, or damage to the property.

In a recent report carried out by Goodlord,  87% of letting agents said they had served a section 21 notice in the past 12 months. 51% of agents said they’d served a section 8 notice in the same period of time.

 

WHAT THE GOVERNMENT SAYS

The government wants to repeal section 21 and end ASTs because they believe that tenants will have more security as a result. They say that “This will provide tenants with more stability, protecting them from having to make frequent moves at short notice, and enabling them to put down roots and plan for the future.”

While they’re getting rid of section 21, they’re also planning to make section 8 evictions simpler and more landlord-friendly. They plan to allow landlords to use a section 8 eviction when they want to sell or move in to their property. They want to make it easier and quicker for landlords to evict for rent arrears, refusing repairs and safety checks, and antisocial or criminal behaviour. 

The proposed removal of ASTs means that new tenancies will generally be assured tenancies which cannot be ended by a landlord without giving a reason under section 8. 

 

WHAT IT MEANS FOR LANDLORDS

Landlords are understandably nervous. 41 percent of landlords surveyed by Lyvly have admitted they are not ready for the proposed changes. The current system gives landlords a good degree of flexibility and allows them to remove tenants who don’t pay rent relatively easily.

The concern is that section 8 will not be strengthened enough to compensate for the loss of section 21.

Chris Norris, Director of Policy and Practice at the National Landlords’ Association, said

“The court system has been in dire need of reform for a long time, so we’re happy to see action on this. Any improvements to this system need to be in place, properly funded and fully functional before the government even contemplates changes to section 21. Landlords have been relying on section 21 to compensate for the many failings of the section 8 fault-based process, which has become too costly and time-consuming.”

 

WHAT IT MEANS FOR THE PRIVATE RENTAL INDUSTRY

A report published by the NLA suggests that the most likely response to the removal of Section 21 will be:

  • the private rented dwelling stock to rent in England would fall by 20 percent (960,000 dwellings)
  • there would be a 59 percent reduction in the private rented dwellings available to households which claim local housing allowance or universal credit (770,000 fewer dwellings)
  • around 600,000 homes could see rent increases (13 percent of the sector).

 

WHICH LANDLORDS ARE LIKELY TO BE MOST AFFECTED?

According to the report “Landlords with small portfolios are more likely to choose to leave the private rented sector (20 percent of landlords with one property, 12 percent of landlords with five or more properties). However, landlords with larger portfolios are, unsurprisingly, more likely to consider reducing the size of their existing portfolio (14 percent of landlords with five or more properties).”

 

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WHAT IT MEANS FOR TENANTS

The proposed changes are likely to give tenants more security as they will restrict evictions. Tenants are sometimes worried that asking for repairs to be made will lead to eviction, and these changes will remove that fear.

It’s not likely to be all good news for tenants, though. There is evidence that landlords will be more choosy about who they let to, with a Residential Landlords Association (RLA) survey of 6400 landlords suggesting that 84% would look to rent only to those on higher incomes if the changes come in. 

It may also mean that some landlords, especially in big cities or tourist centres, will move to short-term holiday lets as these types of lettings fall outside the new proposals. At the same time, longer-term, more secure lettings may become more common.

 

HAVE YOU HAD YOUR SAY? 

You can complete the survey until 12 October. Below we list some of the key questions of the survey:

  • Do you agree that the abolition of the assured shorthold regime (including the use of section 21 notices) should extent to all users of the Housing Act 1988?
  • Do you agree that a landlord should be able to gain possession if their family member wishes to use the property as their own home?
  • Should a landlord be able to gain possession of their property before the fixed-term period expires, if they or a family member want to move into it?
  • Should a landlord be able to gain possession of their property within the first two years of the first agreement being signed, if they or a family member want to move into it?
  • Should the courts be able to decide whether it is reasonable to lift the two year restriction on a landlord taking back a property, if they or a family member want to move in?
  • Should a landlord be able to apply to court if they wish to use [this new ground] in order to sell their property before two years from when the agreement was first signed?
  • Should the ground under Schedule 2 concerned with rent arrears be revised so: the landlord can serve a two week notice seeking possession once the tenant has accrued two months’ rent arrears. 

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Join the debate and tell us what you think about the proposed changes on Twitter @LyvlyLandlords 

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