Section 21:

After nearly 30 years of landlords’ protection under the assured shorthold tenancy (AST), landlords’ assurance – that a property can be easily repossessed if things go wrong – is to be lost.

The Queen’s Speech yesterday, at the state opening of Parliament, set out Boris Johnson’s government’s plans under a “Renters’ Reform Bill” that is now slated to abolish the ‘no fault’ Section 21 evictions process so favoured by residential landlords. Details of the proposals are contained in a 151-page government briefing document and referred to as a Renters’ Reform Bill:

Abolishing the use of ‘no fault’ evictions by removing section 21 of the Housing Act 1988 and reforming the grounds for possession…[and]…Giving landlords more rights to gain possession of their property through the courts where there is a legitimate need for them to do so by reforming current legislation. In addition to this we will also work to improve the court process for landlords to make it quicker and easier for them to get their property back sooner.”

- Advertisement -

Landlord Action founder Paul Shamplina said:

“If you ban Section 21, you’ll need more investment in the court system, more judges, more bailiffs and more resource online for Landlords and Tenants with Admin support. Employing judges at present is very difficult. There will be double the amount of hearings, Landlords need confidence they can get their property back without court delays.  We see court delays all the time at Landlord Action.  You must have market confidence as we don’t want lots of landlords exiting the PRS. Landlords will look at referencing more methodically too. We have got to get this right”

The National Landlords Association has described Johnson’s plans as “ruinous” and likely to lead to an exodus of responsible landlords from the private rented sector.

The NLA thinks the plans will “dramatically increase the risk faced by private landlords and lead to the loss of thousands of homes in the private rented sector.”

The NLA, which represents 42,000 members, is urging the Government to re-think its strategy on residential evictions to “avoid creating an unnecessary crisis in the private rented sector by ensuring that reform of the court process is implemented alongside any change to tenancy legislation.”

The NLA cites research by Capital Economics, an independent consultancy, showing that if Section 21 is abolished without any accompanying reform of the law courts, the supply of private rented houses in England could fall by 20 percent (960,000 dwellings) when landlord decide to sell-up.

The research also argues there would be a 59 percent reduction in the number of private rented dwellings available to households in receipt of local housing allowance or universal credit (770,000 fewer dwellings) when landlords become more choosy about who they rent to.

Richard Lambert, Chief Executive Officer of the NLA, said:

“Landlords need certainty of their ability to end failing tenancies. If this cannot be provided by Section 21 then the Government must reform the courts. Strengthening landlords’ rights will make no difference if the court process is seen as simply delaying or obstructing possession.

“The NLA is deeply concerned that the Government will precipitate a housing emergency, deepening the crisis of supply and affordability faced by many households. Landlords will stop letting to tenants who are perceived as higher risk and ultimately sell properties which would otherwise provide much needed homes for those who cannot afford to buy.

“If ministers do not address the problems of capacity within the Courts Service before removing landlords’ ability to use the no-fault procedure, the dramatic increase in cases that will be brought before it will bring the system to its knees.”

The Residential Landlords’ Association (RLA) warns that any change needs to have the support of landlords who provide the much needed and necessary housing, otherwise there could be a mass sell-off of properties.

The association is advising the government that given that demand for rental housing is currently outstripping supply, any re-possession process that removes Section 21 needs to be replaced with “a system that ensures landlords have the confidence that they can swiftly and effectively re-possess properties in legitimate circumstances.” Without such reassurance, the supply crisis in the market will only get worse says the RLA.

David Smith, Policy Director for the RLA, has said:

“We accept the need to protect tenants from abuse but it is crucial that plans to reform the way re-possessions can take place are got right if the Government is to avoid a rental housing crisis. Unless the new system is fair to good landlords as well as tenants, those same landlords who we need to support simply will not have the confidence to provide the rented homes that are needed to meet the demand.”

David Cox, Chief Executive of ARLA Propertymark, the letting agents association has said:

“In the absence of any meaningful plan to boost the level of social housing in this country, the announcement confirming the abolition of Section 21 in today’s Queen’s speech is another attack against the landlords who actually house the nation.

“If Section 21 is scrapped, Section 8 must be reformed, and a new specialist housing tribunal created. Without this, supply will almost certainly fall which will have the consequential effect of raising rents and will further discourage new landlords from investing in the sector.

“ARLA Propertymark will be engaging with the Government to ensure they fully understand the consequences of any changes, and we will be scrutinising the legislation, to ensure landlords have the ability to regain their properties if needed.’

Mark Steggles, Partner at law firm Thomson Snell & Passmore LLP, says:

“The abolition of section 21 notices is likely to be greeted with dismay by landlords as it will make the task of recovering possession from tenants tougher, longer and even more expensive. By removing the “no fault” option to evict, it follows that the eviction process has the potential to become acrimonious when currently it need not be that way. The planned and overdue reforms to the court process may lessen the impact on landlords, but possibly not to a material degree. From a tenant’s viewpoint though, this change will be embraced because of the additional layer of security of tenure that it provides for tenants and their families who want to stay in a property long term.”

Natasha Rees, Partner and Head of Property Litigation, Forsters LLP, comments:

“Whilst greater security for tenants is welcomed there are fears that the abolition of Section 21 or ‘no fault evictions’ will have a significant impact on the private rented sector. This is because landlords will no longer be able to control the term date which in turn gives them an ability to set a new rent. It is essential that the enhanced system which the Government plans to put in its place reassures landlords and allows them to retain the control they need to repossess properties swiftly for legitimate reasons so that rent levels remain market driven. Likewise, the lifetime deposit is a promising concept but will require careful planning.”

Subscribe to LandlordZONE

8 COMMENTS

  1. Benefit claiming tenants MUST receive formal notice under sec 21 or sec 8: if they leave without this, they may be deemed to have made themselves homeless, and may forfeit benefits. With sec 21, repossession can be achieved without acrimony and apportioned blame, and the departing tenant retains benefits. Politicians and lobbyists seem to wish to export the acrimony and blame culture, which they seem happy to indulge in, across to the Private Rented Sector, clearly with greatly increased emotional and financial cost to all concerned. What a negative misguided policy!

  2. Well there we are, the Tories, like Labour are of course shamelessly chasing the youth vote. Most landlords tend to be old and most tenants tend to be young. The Tories know that landlords have nowhere to run so they know they can kick them with impunity. All the parties also know that it’s more profitable to cultivate the youth vote because old people will die sooner and thus their votes are not so valuable.

    It is also of course pure Boris Johnson who has never let principles stand in the way of opportunism.

  3. The tenor of legislation that would be beneficial is one that looks to discouraging the landlords’ hogging of the housing stock, and their consequent exploitation of people who cannot afford to buy a house/flat. The easy way to achieve that discouragement is to tax rental income heavily. That will encourage the landlords to divest themselves quick-smart of their rentable real estate, and hey presto! Housing is affordable again, for there is lots of it on the market. Fat chance that would appeal to Boris Johnson, though.

  4. I say to older LL sell up or deleverage to the extent where you have multiple residential properties.
    You can then have lodgers who aren’t tenants.
    So NO AST regulations.
    Live in your various houses 1 day a month.
    No S24 tax on residential mortgages.
    No tax on lodger rents as you have £7500 per residential property though HMRC might argue the Room for Rent Allowance for multiple residential properties.
    Difficult to argue if all bills etc are in the homeowner’s name.
    Have different addresses that you own for your various bank accounts etc.
    There is no requirement to stay overnight in one of your homes.
    Visit and stay once per month for a few hours preventing lodgers from claiming exclusive possession as tenants.
    Downsize portfolios becoming ideally mortgage free.
    Leverage is no longer worth it.
    Tenants are no longer worthwhile.
    Lodgers are the way to go.

  5. hi there,
    excuse my ignorance..
    so if no section 21 is possible then all other sections will have to be used..EG section 8 ( ? )where a renter could end up having to explain to the council why they accrued rent arrears,which in turn the council could say..you’ve made yourself homeless?

  6. About time they introduced this, I have been a hard working rent paying tenant, who has always paid my rent on time and been thoroughly abused by the landlords I’ve had. Paid my rent on time every month but as soon as you ask the landlord to fix something they abuse you and make you feel like you have no rights and to be quiet or they will evict you. Landlord left me without any heating in the coldest part of the year after six weeks of me begging and pleading, he still hadn’t fixed it, so I had no choice but to threaten to withhold my rent until he fix my heating and hot water, his response was a section 21, it is absolutely disgusting that landlords are allowed to treat you, like your worthless. My current landlord to whom I have paid over 36,000 in rent makes my life a misery if I ever dare to ask her to fix something!. Holding people to ransom because you can makes you a despicable human being, so bout time, these landlords had their Gestapo ways addressed!

  7. If this policy is brought forward a property owner would need to be a sandwich short of a picnic to consider letting even a room in their property never mind a flat or house. Having what is in effect a sitting tenant will reduce a property’s value by around 50% if not more. This idea is a revamped policy from Harold Wilsons late 1960s Labour government which caused private rentals to become as rare as rocking horse manure and hence the then housing crisis to get a whole lot worse. Surely 3 or even 5 year tenancies with guarantee of landlords getting property back is a more sensible approach.

LEAVE A REPLY

Please enter your comment!
Please enter your name here