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9:52 AM, 20th March 2023, About A year ago 21
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The potential scrapping of section 21 worries a third of landlords and is a ‘driving force’ behind growing numbers selling up and leaving the private rented sector (PRS), a survey reveals.
The findings from Mortgages for Business highlights that the potential reform of section 21 as part of the Renters Reform Bill could have a devastating impact on the PRS.
Under the proposals, landlords will no longer be able to use section 21 of the 1988 Housing Act to evict renters after the end of a fixed term tenancy, with two months’ notice.
Instead, the specialist buy-to-let broker warns that the government’s plan will effectively create open-ended tenancies and landlords will have to give a reason for eviction — such as rent arrears or antisocial behaviour.
Gavin Richardson, the managing director of Mortgages for Business, said: “Fears surrounding the scrapping of section 21 are a driving force behind landlords not remortgaging and selling up instead.”
He says that with all tenancies being assured landlords will have to use one of the new section 8 grounds for possession.
These will include the landlord wanting to sell the property, move into it or if there has been a breach of the tenancy by the tenant.
However, Mr Richardson says landlords have less to fear from reform of section 21 than they realised.
He explains: “Section 21 notices have been abused for years. They have been used as a vehicle for ‘revenge evictions’, for instance, where renters who have complained about their property are evicted in retaliation.
“I don’t think the reforms will prove to be that bad.
“Tenants didn’t have to do anything wrong to justify a section 21 notice — they could have been paying the rent on time and taking good care of the property.
“Sensible landlords rarely turf out good tenants who pay their rent as they want them to stick around.”
He adds: “So this reform will disproportionately hit bad landlords abusing Section 21, rather than the reputable end of the market.”
Mr Richardson also says that tenancies can be ended if the tenant breaches the tenancy and the government’s plan or a new ombudsman to settle disputes between tenants and landlords without a court process should be welcomed.
He also says that landlords can still sell a property which the potential reforms had put at risk.
He said: “The loss of full tax relief on mortgage interest payments for individual landlords, the stamp duty surcharge on additional property purchases, and the need to ensure properties meet energy efficiency rules expected to apply from 2025 are all far more significant for landlords.”
Mr Richardson continued: “You’d never guess that from the government rhetoric though.
For instance, I don’t think for a moment that section 21 exacerbated homelessness as one Tory community secretary claimed.
“The politicians are irresponsibly trying to curry favour with tenants: the country will suffer as the private rented sector — with its efficient use of property stock — dries up.
“The government needs to stop trying to gain cheap brownie points by taking a pop at the private rented sector and needlessly spooking landlords.
“It is the reason the government has lost the confidence of responsible landlords.”
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northern landlord
15:50 PM, 20th March 2023, About A year ago
Currently wanting to sell up is not a mandatory ground for a Section 8 eviction and there is nothing in the current white paper that says that it will be. Currently if you want to sell you would just use Section 21 which of course is going to be abolished. The fear is that a court might not allow you to sell up when you want to. Many landlords are getting on a bit (myself included). We were bolstered by the fact that when we actually wanted to leave the worries of the PRS behind us and realise the value of our assets for whatever reason we would not have to justify it to anybody, we could just serve a Section 21 notice and that would be the end of it, one way or another we would eventually get our property back with vacant possession but not in the future it seems. Also lurking in the background is the threat of what might happen to us as landlords if we can’t afford to spend up to £10,000 upgrading an EPC rating. This figure is well in excess of a year of landlord net income in most areas outside London. Would selling a property in order to pay the £30,000 fine that seems to cover most landlord misdemeanors these days, be seen as a valid reason to sell up? Then there is the fear of the prospect of rent caps, eviction bans and increased capital gains tax if you do delay selling up. All of this is encouraging landlords to actively sell up, especially if a tenant does leave of their own accord. I have a tenant leaving and have decided to sell. After capital gains tax I will still realise the equivalent of about 25 years net rent at today’s prices which would certainly see me out.
Nick Van Hoogstraten
17:24 PM, 20th March 2023, About A year ago
As above Ben Beadle doesn't represent us. He sat in an online meeting with the government, Shelter and Gen Rent and said "I don't have a problem with S21 going". Well may be he doesn't but his members do. As said above it is understood he has student lets so wants to protect that. Probably at our expense by sacrificing us.
The properties are landlords' properties. Why should they be handed over to the tenant and the lefty organisations like the councils and government to control.
I am selling up. I'm on my 2nd tenant. Nigerians. I never wanted them but I did the right thing and took them on. They break window and door handles (7 handles in 12 months). Grow mould and I got a no-win no-fee solicitor letter. Runs to the council for lots of things. She acts like S21 isn't even a thing. I'm going through all the expense of having a lawyer and the court costs for eviction now. And that's just for S21. None of this court business. Drawn out for 12 months + while they are free not to pay rent!
This is not to mention S24 with rising rates and the EPC nonsense. Everything is stacked against landlords.
Even with a good tenant I can't see it's worth it. Once S21 good tenants are free to turn bad. As some people on forums have reported where they issued a good tenant a S21 due to selling. They become a nightmare.
S21 is a healthy deterrent to bad behaviour. Although not with my Nigerians....
northern landlord
17:32 PM, 20th March 2023, About A year ago
Reply to the comment left by Nick Van Hoogstraten at 20/03/2023 - 17:24
Agree. I dumped the NRLA all they seemed to be doing was encouraging me to "delight" my tenants by trying to get me to buy stuff. They certainly seem more tenant focused than landlord focused.
Castle
22:20 PM, 22nd March 2023, About A year ago
Reply to the comment left by Monty Bodkin at 20/03/2023 - 10:57
Revenge evictions don't make much sense to me. A bit like all the silly talk of 'no fault' evictions I think it's being overhyped, most landlords would prefer to put something right for a good tenant, rather than have a void, and then have to do the work anyway before marketing it.
Rod
10:03 AM, 23rd March 2023, About A year ago
Reply to the comment left by Mike Fleming at 22/03/2023 - 22:20
Mike, revenge evictions are not carried out by responsible landlords who, as you say, work with their tenants to address issues and negotiate rent increases.
These evictions are carried out by the minority of greedy, lazy landlords who only see their properties as a cash cow without recognising that they need to maintain their asset and provide the services which come as part of a landlord's obligations.
Castle
10:14 AM, 23rd March 2023, About A year ago
Reply to the comment left by Rod at 23/03/2023 - 10:03
Yes, it must be a very small percentage of landlords who would kick the person out to avoid doing work which genuinely needs doing - how is he going to rent it to the next tenant if its genuinely in disrepair and the work isn't done anyway.
Of course, there might be cases where the request is not reasonable, and this has contributed to the LL decision to evict, and this has been termed a revenge eviction, but if one thinks it through property the number of evictions that arise from people simply asking for required repairs must be tiny.
Freda Blogs
10:38 AM, 23rd March 2023, About A year ago
Reply to the comment left by Mike Fleming at 23/03/2023 - 10:14
Far too logical.
Imagine this headline: "Tiny % of tenants get evicted because they wanted some repairs done. Vast majority of tenants get evicted for good reason - rent arrears, neglect of property, causing mould etc."
Nope, doesn't work. Doesn't get views or votes.
Don't let the facts get in the way of a good story. Ask our friends at Shelter, Generation Rant, The Grauniad et al.
Castle
11:12 AM, 23rd March 2023, About A year ago
Reply to the comment left by Freda Blogs at 23/03/2023 - 10:38
Exactly - and who suffers - everyone, LL's and T's
Andrew Main
5:35 AM, 24th March 2023, About A year ago
Let's say you die. You leave BTL property to your kids. They only have 6 months to sell it before they have to pay inheritance tax on your estate. After which HMRC charges the estate 6%.
And if your kids can't get rid of the tenants in time to sell they are liable.
It's madness.
Graham Bowcock
8:46 AM, 24th March 2023, About A year ago
Reply to the comment left by Andrew Main at 24/03/2023 - 05:35
The answer is for everyone to do thorough IHT planning. It is possible to mitigate/avoid IHT by thinking ahead. This is the same for all people who may fall into the IHT tax rate, landlords are not unique.