Author : Mary-Anne Bowring
We have written several blogs lately about the proposed abolition of Section 21 – the so-called ‘no fault’ eviction process. At Ringley we don’t believe that scrapping this system is good for landlords – or ultimately for tenants. Here’s why.
1) Section 21 works. The system is widely understood by both landlords and tenants as it has been in place since the Housing Act 1988 was enacted.
2) Many landlords find it cheaper and quicker to use Section 21 to get their property back rather than opting for a Section 8 eviction or breach action. Because the Section 8 route is so adversarial, as soon as they are served with a Section 8 notice (which may not be for rent arrears) the tenants simply stop paying rent. And because Section 8 procedures are adversarial the landlord ends up facing thousands in costs and huge voids, with cases sitting backed up in the court queues for months.
3) There are already provisions to stop landlords using Section 21 wrongly. Before a landlord can even get as far as serving a Section 21 Notice, s/he must have complied with certain legal requirements for all tenancies entered into since 2015, including for example provision of:
Landlords are also required to provide a valid gas safety certificate, not only before a Section 21 Notice, but before occupation. This was confirmed in the recent case of Caridon Property Limited v Shooltz (2018). So if a landlord has not provided a gas safety record at the start of the tenancy, s/he will not be able to rely on the no-fault basis for termination during that particular tenancy. Instead, s/he will have to rely on another ground for possession, such as rent arrears, where the process is longer and therefore more costly.
4) Under the Housing Act 1988, a BTL landlord worried that he might need his property back can already protect himself if, not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on the basis of Ground 1 specified in Schedule 2 of the 1988 Act, or, if the court is of the opinion that it is just and equitable to dispense with the requirement of notice because:
(a) at some time before the beginning of the tenancy, the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them occupied the dwelling house as his only principle home; or
(b) the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them requires the dwelling house as his or his spouse’s only principal home and neither the landlord (or, in the case of joint landlords, any one of them) nor any other person who gave the notice mentioned above acquired the reversion on the tenancy for money or money’s worth.
The government has claimed landlords’ use of Section 21 eviction notices is the leading cause of homelessness in the UK. The National Landlords Association (NLA) completely rejects this idea. Referring to data provided by the government that of 33,020 households assessed by local authorities between October and December 2018, the NLA points out that just 11.8% (3,890) faced homelessness as a result of being served with a Section 21 notice. Nor does the NLA think that the Government has considered the impact of these new policies on the most vulnerable members of society. We agree that the proposals are likely to deliver a whole range of unintended consequences. These include a lower supply of private rented housing alongside more risk-averse landlords.
The NLA tells us landlords are now exiting the market at a faster rate. This further damages the already fragile supply of properties in the areas where they are desperately needed. Tenants on Universal Credit or benefits and anyone with a bad credit record, CCJs or pets will lose out, they say. We agree. And the removal of Section 21 will make more landlords more susceptible to rogue tenants – they are out there and they cause endless heartache and a lot of money. Above all, landlords must be able to evict bad tenants. If they can’t, we will end up coming full circle: needing new legislation to encourage landlords into the rental market as we did all the way back in 1988.
The institutions are coming into the market and may cover the towns and cities but a healthy market needs a range of accommodation types across the spectrum. Continually trying to push buy-to-let landlords out of the market is nonsensical. We badly need our rental market to work – for everyone. Scrapping Section 21 isn’t the way forward. So we are calling on anyone who agrees with us to use the four points we outline above to respond to the government consultation here before 12 October. Please join us and make our voices heard.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
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