As part of the Government’s bid to further crack down on rogue landlords and letting agents, they have promised that the removal of Section 21 will be helpful to vulnerable tenants and make renting fairer. But will it?
The removal of Section 21 has naturally caused concern amongst a whole host of compliant and thorough landlords. By removing Section 21 from the industry, a vital life line is being cut off in the event of damage to a landlord’s property or a continuous amassing stream of rent arrears.
The Government has promised however that by slicing Section 21 from the industry, the more vulnerable members of society will be far better off and renting will become much fairer. With the Government currently in the middle of a leadership contest however, we suspect that housing and the impacts the removal of Section 21 will have is far from the top of their agenda.
Of course the largest consequences from the move would be a reduction in the supply of desperately needed private renting homes; made greater by the increase of risk averse landlords. With landlords tightening their requirements, this means tenants on Universal Credits or benefits are likely to struggle even more; alongside tenants with bad credit records, CCJs as well as pets.
Research conducted for the Residential Landlord’s Association (RLA) reveals that in a large majority of cases where tenants are asked to leave their properties under Section 21 notices, there is a clear reason. Half of the notices are used where tenants have rent arrears, are committing anti-social behaviour or damage to the property. Other common reasons include the landlord needing to take back possession of a property for sale or refurbishment.
By ignoring these reasons, the Government is very much on a path to causing further chaos in the property market. In severing a vital lifeline for landlords, the Government are only continuing on their path to discouraging compliant and thorough landlords from helping to prop up the housing demand with their own assets. By doing this, the number of rental properties in theory will decline as some landlord’s seek to sell their investments off for prices unaffordable on the property market for many. This will increase demand on the rental properties that remain and further drive competition for tenancies. With no net to fall back on for landlords in the event of needing to take back control of their property, their criteria for selecting their tenants will clamp down further, just as much as the Government are doing.
In such a time when the demand for rental homes is outstripping supply, especially among vulnerable tenants, the Government risks exacerbating the problem if it does not ensure that landlords have complete confidence that they can repossess properties swiftly for legitimate reasons.
The Government’s own data shows that it takes over five months from a private landlord applying to the courts for a property to be repossessed to it actually happening. It is therefore vital that a reformed and improved court system is able to bed in and the grounds to repossess properties are properly improved before making changes to Section 21. This would follow the lead set in Scotland, benefiting both tenants and landlords.
If you are a landlord or property investor concerned by the removal of Section 21, whilst looking for methods of securing the best tenants to ensure healthy and sustained tenancies, we will be happy to discuss the options with you and put your mind at ease.