The government is being urged not to outlaw the use of Section 21 to oust tenants, after a new report found that it would almost certainly lead to a fall in the number of properties available to rent, having the consequential effect of raising rents and further discouraging new landlords from investing in the buy-to-let sector.
The findings from The Lettings Industry Council’s (TLIC ) ‘Beyond Section 21’ report, which looks at the impacts of scrapping Section 21 and also provides recommendations, suggests that suddenly ending the so-called ‘no fault’ eviction process would have an adverse impact on the industry.
TLIC warns that the abolishment of Section 21 could result in a sharp reduction in the supply of rental properties of up 20%, increasing rents and piling more pressure on the justice system by tripling the court caseload with an additional 45,000 possession hearings, which would severely challenge court capacity.
It also believes that many concerned landlords would adopt a tougher screening process for tenants, impacting those on housing benefits, lower income families and insecure employment the most.
TLIC claims that the impact would fall heaviest on vulnerable tenants claiming benefits, as landlords seek to either leave the PRS or move towards other market segments, such as short-term lets.
Theresa Wallace, chair of TLIC, commented: “The PRS has doubled in size over the last 20 years, which means any changes to the current regulations will have a huge impact on the life of millions of citizens. It is vital to strike a balance between the needs of tenants for long-term security and legal certainty, restoring landlord confidence to ensure an adequate supply of private rented homes.
“The social cost of abolishing Section 21 lies in the economic effects it will release and how the market will react to it. That is why the government must not proceed with its proposal to do so without careful consideration of the impacts and implementation of measures to mitigate such negative consequences.”
In the ‘Beyond Section 21’ report, TLIC suggests that Section 21 should not be scrapped unless Section 8 is reformed and a new specialist housing tribunal is created.
It says that it would also like to see the introduction of meaningful mediation, resulting in a reducing in the number of disputes resulting in court proceedings before they commence, as well as bailiff reform to help speed up the evictions process.
Evictions specialist Paul Shamplina, founder of Landlord Action and head of property at Hamilton Fraser, believes that the implementation of these measures would not only prevent the negative impacts of the abolition of Section 21 on both landlords and tenants, but also help both parties to build greater trust in the PRS.
He said: “These four measures make sure that the tenants’ need for long-term security regarding their tenancies is met while at the same time respecting the landlords’ right to use their property economically and according to their needs.
“Some of the measures, such as the mediation process and the bailiff process reform can be introduced on relatively short-term planning. Whilst we acknowledge that court reform and a review of Section 8 requires longer-term preparation, if the government were to adopt the step-by-step implementation of measures outlined in this report, it would not only prevent a short peak increase in serving Section 21 notices, but also give all relevant parties enough time to adapt to the change in legislation.
“We are confident that with faster and easier access to justice, banning both criminal landlords and anti-social tenants from the PRS, as well as the improved communication between landlords and tenants through mediation, both parties trust in the PRS will increase.
“Providing greater legal certainty will lead to further growth within the PRS, as more private landlords will be willing to rent out their properties and tenants will be provided with a broader range of properties they can choose from.”
Comments (3)
20%v drop? That is on the very low side!
There is only one way to solve the problem of lack of rented accommodation and consequent high rents and that is to BUILD MORE SOCIAL HOUSING! Since quasi-Communist Labour introduced the various Housing Acts in the 1970s, rented property has become a party political football at the expense of those who desperately need it. Thatcher went to the other extreme and bribed people by encouraging them to buy their well built Parker-Morris standard homes at a huge discount without replacing them, so we see rural and other areas with good quality ex-council housing selling for hundreds of thousands to well heeled families while young local ones don’t have a hope of staying in their own communities. Housing associations were an excellent innovation, but even then we’re talking apart part-ownership in many cases which the poorest people in the most need simply can’t afford – and the rent on top of a mortgage with part-ownership often costs more in repayments than if the person had been able to afford to buy the property outright with a conventional loan.
The only way to solve this conundrum is to give responsibility back to local authorities who know the problems in their areas and build housing for rental again without the right to buy and leave the private sector alone. Everyone has a right to a roof over their head but none of us have a right to own our home. Home ownership is something which should be encouraged strongly for all the reasons that we know, but at the end of the day, not all of us are able to reach that rung on life’s ladder. Abolishing section 21 by this weird “Conservative” government is a guarantee of even higher rentals and more homelessness.
I have been saying this since the very disasterous Mrs May announced the proposal to abolish S21. A policy the Conservatives continue along the track of trying to buy tenant votes. A policy which is going to backfire in the fashion detailed in this article. As a landlord I have already significantly tightened up my policies on tenant selection. Tenant applications are now screened more thoroughly before viewings are offered and very thorough application forms have to be completed pre referencing since I have to meet referencing costs/fees. Post loss of S21 my porfolio will reduce and tenant selection tighten even further. Those who might have stood a chance a few years ago don’t even get near a property let alone view it. Many landlords have left the market. Even our stupid politicians must surely see that the market has changed? Not so many years ago when you drove around the majority of agents boards were Letting Boards and now the majority are Sale Board. Politicians historically always go too far until they wreck markets completely and years after have to correct matters. JUST STUDY THE EFFECTS OF THE THE RENT ACT 1977 which the Housing Act 1988 corrected following 10 years of almost NO rentals property being available (apart from the Council housing they have now sold and asset stripped). It is a Gov policy to ablolish S21 so it will happen whilst our cart horse policiticans continue to wear their Shelter provided blinkers. The article looks at ways to trying to mitigate the problems the abolition of S21 will introduce but even if introduced Landlord costs would rise significantly and make the whole market less attractive to investors – but far more profitable for lawyers.