Abolishing Section 21 ‘no fault’ evictions risks sounding the death knell for the current rent-to-rent model, a leading housing legal expert has claimed.

Anthony Gold solicitor Robin Stewart (pictured) believes that when residential tenancies in England become effectively indefinite in length, landlords are likely to be even more cautious about who they grant tenancies to.

Rent-to-rent businesses who grant assured shorthold tenancies won’t be able to claim they can guarantee things will go smoothly at the end of their tenancy and there will be no way to get the property vacant to return it to the landlord.

“This suggests to me that rent-to-rent will not survive as a popular business model in its current form after the abolition of Section 21 notices,” he says.

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However, Stewart adds that it’s unlikely rent-to-rent will disappear completely.

Some businesses will use ‘licence agreements’ rather than tenancy contracts, on the basis that a licence can be terminated by ‘notice to quit’ whenever required.

“This can be legitimate if the contracts really are licence agreements but using sham licence agreements when the circumstances really amount to a tenancy is well recognised as a scam, and this can be prosecuted as a criminal offence under consumer protection legislation,” he says.

Other rent-to-rent businesses will not attempt to evict their tenants, and when the agreement ends and they hand the property, the landlord will become the direct landlord.

 “This might be a good thing – after all, why should tenants have to leave a property just because there is a change of management,” says Stewart

“If the landlord does not want to have to deal with the tenants they have ‘inherited’, they can appoint a managing agent. This arrangement might become the norm, but I suspect that it will prove to be unattractive to landlords.”

Read Robin Stewart’s comments in full on the London Property Licensing website.

4 COMMENTS

  1. The vast majority of R2R is already FRAUDULENT.

    This is because most of the fraudulent R2R occurs with mortgaged properties.

    As far as I am aware no mortgage lender in the UK permits R2R.

    Therefore de facto LL are committing mortgage fraud.

    Only mortgage free properties may utilise the R2R business model and then only if the property insurer permits this.

    I know of no UK insurer that permits R2R occupation.

    Therefore that means that all R2R is fraudulent.

    There may be some insurers out there that will insure R2R businesses but I don’t know of any.

    So when S21 goes LL will be in an impossible position.

    Far better to end the R2R arrangement or even sell up.

  2. ” after all, why should tenants have to leave a property just because there is a change of management, says Stewart”.
    May be because the new management might have different criteria about who they are willing to let to?
    Some landlords are more responsible than others & might not want to rent to a tenant who can barely afford the rent ior is in debt .

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