A leading ‘free-market’ economic commentator has questioned the government’s latest push to abolish Section 21 ‘no fault’ eviction notices.

Ryan Bourne, who is a regular TV pundit and Daily Telegraph columnist but also a member of the US-based thinktank the Cato Institute, doubts that abolishing Secton 21 would be a ‘win for tenants as campaign groups imply’.

“What we have here is an example of [tenants] wanting more of something – security – without being willing to pay for it,” he writes.

His comments follow Michael Gove’s decision to roll-up his department’s rental reforms, including abolishing Section 21, into the government’s ‘levelling up’ plans.

“In these scenarios, basic economics tells us that mandating benefits will lead to a waterbed effect of other margins adjusting, as landlords seek to protect themselves against the new higher risks of lock-in that such tenancies entail.”

Unintended consequences

Bourne, who is a long-standing opponent of rent controls, goes on to outline the unintended consequences of abolishing Section 21 including tougher referencing for tenants as landlords seek to weed out high-risk candidates, making it harder for those on benefits to access the PRS, higher rents as some landlords use rent hikes to force out tenants.

But, most worrying of all, he predicts fewer people will be willing to become private landlords and more will choose Airbnb not the traditional route.

He also slams the government’s plans to beef up Section 8 eviction notices to enable landlords to evict tenants under some circumstances such as needing to move back in or sell the property. Bourne claims, as many landlords commentators have, that this route will make it more difficult and expensive for landlords to evict tenants.

“Those harmed most by limited rental options will be the poorest, those without deposits for owner-occupied housing, and those for whom accessing new private rental accommodation is a route to a better job or life,” he adds.

“The beneficiaries will be those who want to stay in a property for years and years.

“This really highlights why fiddling with landlord-tenant relations is no alternative to major planning reform.”

Read the original blog on the ConservativeHome website.

15 COMMENTS

  1. STOP pandering to Shelter and Generation Rent who have an absolute hatred for the PRS and do NOTHING for low income families needing accommodation.

    • Generation Rent represent rich middle class kids with trust funds.

      They don’t care if a landlord sell up. They don’t care if a tenant is made homeless, because of their campaigning. It is fine for rich middle class kids, with a big deposit, but not everyone is in that position.

      Renting is a choice for many, such as those who move for jobs, young couple who want to live together, students, those on welfare etc….

      What happens when there are zero landlords?

  2. At last some common sense comments. However our politicians are owned by shelter and those they pander to for their votes. True property professionals know what the impact of banning section 21 will be. Bad and high risk tenants will be weeded out as landlords remaining will have more careful screening of tenants. Social and low income tenants will be the biggest losers. As they say none so blind as those who do not see.

    • Lets not pretend that they don’t already do that and those groups would be denied whether s21 was banned or not. It really makes no difference.

    • Precisely right. There will also be less rental properties available due to less investment in the PRS which will put up rents further.
      Generation rent & their ilk are just pretending to care about tenants where as in reality it seems that they just want attention grabbing headlines so that it looks like they are doing something useful & so keep their funding coming in to pay their salaries.
      Higher quality housing & onerous tenant rights all costs money – which ultimately has to come from the tenants – all money in the PRS comes from the tenants because they are the customers. No one tells the tenants this though.

  3. This gentleman should also be addressing his comments to those in the Welsh government who are responsible for the soon to be introduced housing legislation in Wales

  4. Abolishing s21 is one of the best things for tenants and the only people who oppose it are those with a vested interest in tenants having no rights at all and being able to kick them out whenever they feel like it.
    Other grounds for removing a tenant will still exist and still work so it really is about denying tenants any rights.

    • Wrong. Why do you think the ASTs were introduced by the Housing Act 1988? Answer: because the system that was in place made investment in the PRS a waste of time & so more private money was desperately required to invest in new & renovating old properties.
      When we go back to those same rules with the abolition of sec 21 etc, then the same thing will obviously happen. Except it’ll be far worse as the population has & still is increasing massively & successive have sold of for cheap most of the council houses that they had back in 1988. Tenants will suffer as there will be less supply & so higher rents. It is so sad but inevitable.
      It will happen – wait & see & I will say I told you so. It’s what you want though so please don’t complain if you struggle in future.

    • No, abolishing S21 doesnt mean Tenants have no rights at all, although I do think 2 months notice is quite short. I would be happy making S21 a 3 month notice period, reverting to 1 month if Tenant stops paying rent during that 3 month period. And Landlords don’t just ‘kick them out whenever they feel like it’. There is ALWAYS a reason why a Landlord ends the tenancy, and although it’s called a no fault eviction, there is often a lot of fault involved caused by the tenant.

  5. Rents are going to massively increase and soon will be unaffordable to anyone on benefits or low income/zero contract hours. LLs will just choose professionals with first class degrees/Masters in a long held position. There will be no prs for any other type of tenant. When will Government realise more affordable social housing has to be provided by Government instead of trying to force these low income tenants on the PRS?
    Just like Rishi’s stamp duty holiday making housing even more unaffordable for first time buyers, all this anti landlord legislation is going to do the same for PRS.

  6. Gove would support any policy he thinks will get more votes. We saw from the way he backstabbed Johnson prior to May being appointed that he has little or no integrity. Of course S21 should be retained. An AST is a contract between two parties and both agree the terms, one being that the landlord can take back the property following contractual notice. Tenants have no right to whinge about losing their house when a landlord invokes this agreed legal right. I have never evicted a tenant. It’s not something any landlord would do lightly, without good reasons. Ultimately though it’s the landlord’s property so he or she should have the right to decide whether to rent, to whom and on what conditions within the law, and the courts should support this, not get in the way.

  7. Simple fact of life is that no one will accept losing control over their assets. If landlords can’t reclaim a property when they wish with a reasonable timescale, be that 2 or 3 months then that won’t make investing in property viable.

    Landlords don’t evict tenants without good reason and the pressure exerted by the likes if Shelter will simply lead to initially higher rents and eventually greater levels of homelessness.

  8. The government will, at some point , have to decide who is able to house the considerable number of PRS tenants . Local authorities don’t have the capacity, new houses aren’t being built in sufficient numbers and finally Shelter, Generation Rent etc don’t actually house anyone.

    The government continue to pander to organisations with no ability to fix the problem whilst demonising those that can .

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