Wednesday, 17 April 2019 10:09

Section 21 To End, What Comes Next?

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Section 21 To End, What Comes Next?

The government have been swayed by pressure from Shelter and others and have decided to stop landlords regaining possession of their property using Section 21 notices. What will replace it is unclear and there will be consultations before anything is finalised, but you can rest assured that the PDPLA will be articulating the impact upon its members of any of the proposed alternatives.

We received extensive coverage in The News when our Vice-Chair, Alwin Oliver focussed on the fact that currently, many mortgage lenders depend on the availability of the Section 21 when offering finance and one unexpected outcome could be that mortgage cover requirements could rise considerably, making funding much harder to acquire.

Have you ever used a Section 21 to get your property back? If you have, we'd like to know why as if the 'Shelter perspective' is inaccurate, we need to be able to show evidence of that.  Read on for member comments and our press release explaining more of our concerns

 PDPLA member, Anthony Athill commented, "I am a small scale landlord with two one bed flats. I have never had to evict a tenant and hope to keep it that way. I put this down to being fussy about who I let to. The use of a Section 21 would enable me to address the problems of tenants not paying rent, damaging my property or annoying the neighbours in a reasonably efficient and reliable manner, as opposed to the alternative Section 8 procedure. If the revised legislation removes my ability to regain possession when tenants renege on their obligations I will be forced to apply even stricter vetting criteria in my selection of tenants. This will make it harder for the poor and the vulnerable that councillors are most concerned about to find rented property. When I next have a vacancy I will take out rent guarantee and repossession costs insurance. This will not be available for half the tenants I have accepted in the past. They will not meet the criteria as they pose a higher risk. (Proven fact not my conjecture.) Those tenants will have to look elsewhere. Supply will be reduced as other landlords will follow suit. The poor and the vulnerable will be forced to take accommodation offered by landlords prepared to take risks both financial and with tenants lives.  

If the Government consultation bans Section 21 before addressing landlords concerns “going private” will certainly not be easier or safer."

Have you ever used a Section 21 to regain possession - if so, please let us know - did it work, why did you do it, anything else that may help.

PDPLA Press Release:  End of ‘No Fault’ Evictions  (issued 15/4/2019)

James Brokenshire, the Housing Minister, today announced that private landlords will no longer be able to repossess their property without good reason and then, only by going through the courts.

Whilst other landlord organisations are upset by this news, the PDPLA are more sanguine. 


We believe changes are needed – too many Letting Agents ‘churn’ tenants simply to generate fees and this needed to be stopped. However, in our view the Tenant Fees Ban Act which has just passed through Parliament will stop this practice as there will be no benefit for Letting Agents in evicting good tenants as the fees they used to earn when finding new tenants will no longer be charged. 

The impact of this and various other recent changes should be given a chance to settle in before making such a major change to legislation:

  • The Homelessness Reduction Bill that will change Local Authority behaviour when faced with those about to be evicted.
  • When the housing benefit of unreliable tenants is paid direct to their landlord less tenants will fall into arrears. 

(It should also be noted that local authorities have encouraged evictions as they refuse to rehouse the most vulnerable until and unless they have been evicted even though this practice is now illegal and all involved agree it would be easier and simpler for all to proceed without waiting for a formal eviction – no landlord goes to the expense unless they have to do so).

The issue, as is always the case, is in the implementation.  The courts system is overloaded and the ‘Section 8’ eviction process is slow, cumbersome and fraught with difficulty. 

Using the Section 21 process overcomes these issues and has been used for many years to allow landlords to regain control of their own properties when they need to do so – and in our experience that is only ever for a good reason, the tenant is not paying rent or is not looking after the property, the tenant is causing problems for neighbours, or the landlord wants to sell or refurbish the property. In all of these cases the Section 21 process worked well. Because no fault has to be proved in court it does not mean that the tenant has not defaulted on their obligations. 

 To remove this option without reforming the court system and replacing the archaic Section 8 process with something fit for purpose will be a disaster. Any new process needs to bed down and be proven before removing the current workaround. In Scotland, there is a process where a tenant can be evicted if any of 18 different situations occur (and these include all of the obvious candidates – rent arrears, anti-social behaviour, property to be sold or refurbished) so although ‘No Fault’ evictions have been outlawed there, we don’t see any major difference in the number or level of repossessions between England or Scotland, confirming our view that landlords don’t evict tenants without good reason.

We have seen no evidence of evictions as an excuse to raise rents or generate fees amongst our members. The average tenant stays in a property in the area for 4 years+ and the vast majority of tenancies are ended at the tenant request.

This change will frustrate / be a hinderance to good landlords. In this area there is a shortage of rented property suitable for the vulnerable and those on low incomes. Any obstacles placed in the way of landlords repossessing a property will further reduce supply to the poor and the vulnerable as they become more selective in efforts to reduce the risk to their investment. 

Facts & Figures: The private rented sector provides 1 in 4 homes in the Portsmouth area, more than council and social housing combined.  84% of tenants are happy with their homes and their landlord in the private sector compared to just 72% in social housing. The average tenancy is 4 years and 90% of tenancies are ended by the tenant.   The average landlord in the city has 1.2 houses and earns less than £15,000/year from their properties (before costs). Adults under 35 on benefits are only entitled to stay in shared accommodation, so we need HMO’s to house these people or alternatives otherwise the direct result is the increase in Homelessness witnessed in the area.

 

The article from The News can be seen here:  https://www.portsmouth.co.uk/news/politics/change-in-tenancy-law-splits-opinion-among-portsmouth-landlords-and-council-chief-1-8891625

Last modified on Wednesday, 17 April 2019 16:38

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