Scrapping Section 21 will trigger a rise in homelessness

by Property 118

11:29 AM, 19th September 2019
About 4 weeks ago

Scrapping Section 21 will trigger a rise in homelessness

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Scrapping Section 21 will trigger a rise in homelessness

Leading tenant eviction company, Landlord Action, says that as many as 50% of Section 21 cases they handle are as a result of tenants wanting to be re-housed by the council. They believe the abolition of Section 21, and subsequent expansion of Section 8, could put thousands of tenants at greater risk of receiving a County Court Judgement (CCJ) and ending up homeless as local councils will not be obliged to re-house those with rent arrears judgements.

According to Landlord Action, 95% of Section 8 cases are for mandatory two months’ rent arrears.  It is unknown how many Section 21 cases are as a result of rent arrears, but Landlord Action says it is the number one reason landlords serve notice.  Data from the Ministry of Justice reports that there were 22,527 accelerated possession claims issued in 2018 (section 21 claims). Of those accelerated possession claims under Section 21, 10,127 resulted in evictions carried out by County Court bailiffs.

Therefore, if landlords are forced to use Section 8 route in the future, thousands more tenants will have rent arrears judgements against them, rather than simply being evicted using Section 21. In addition, more tenants could find themselves with a County Court Judgement (CCJ), which will severely impact their future credit rating.

Commenting on what this means for tenants, founder of Landlord Action, Paul Shamplina, says: “Local councils will see when a tenant has a rent arrears possession order made against them so will consider that that tenant has made themselves homeless.  Therefore, the council will not be obliged to re-house them as they do at present under Section 21 accelerated procedure. If those tenants cannot get accommodation in the private rented sector and cannot be re-housed by the council, what will happen to them?”

In addition, Paul Shamplina is concerned that the figures demonstrate that the number of Section 8 hearings will double because landlords who would previously have used Section 21 will use Section 8. This will double the amount of court time before judges that is required, meaning that a major recruitment drive of judges will be required to deal with the increased number of hearings.

Recently, MHCLG attended Landlord Action offices shadowing the solicitors and paralegal staff to gain a greater understanding of the possession process, and what impact reforms to Section 8 and court processes could have.

“As well as a rise in homelessness, I believe there will be many other unintended consequences following the abolition of Section 21. These will include, but not be limited to; vulnerable tenants struggling to find accommodation as landlords become more selective; a surge in Section 21 claims as landlords feel increasingly powerless and opt to exit the market.  A shrinking private rented sector will result in further rent rises for tenants. In addition, unless anti-social behaviour is tackled within the reforms, unruly tenants will have the opportunity to remain in properties for longer causing landlords and their neighbours unnecessary stress” adds Paul.

The government consultation on Tenancy Reform ends on 12th October.  Landlord Action is urging all landlords and lettings agents to have their say and complete the survey as a matter of urgency.

https://www.surveymonkey.co.uk/r/52JFF5T

Contact Landlord Action

Specialists in tenant eviction and debt collection. Regulated by The Law Society.


Comments

Ian Narbeth

12:39 PM, 19th September 2019
About 4 weeks ago

To all tenant charities and to all politicians who vote to scrap s21, don't later start bleating about the problems this will cause. You have been warned of the consequences and you will intentionally cause them! (It is a principle of English law that a person is presumed to intend the natural consequences of his actions.)

paul robinson

13:12 PM, 19th September 2019
About 4 weeks ago

SECTION 21 Consultation (ends 12th October) – Info for all landlords and also specific Ministry of Housing feedback for HMO landlords using joint tenancies.

Warning Long post –

Copy of email extract at bottom of posting.

SCRAPPING SECTION 21 PROCESS AND CONTACT INFO.

I discussed with my MP and whilst he was supportive, I have not heard anything back from him.

I also phoned the ministry of housing (03034440000) and surprising someone did phone me back and following another email, they provide the below response.

They confirmed the process would be as follows:-

1) 12 week consultation
2) Info analyses and report written to government
3) Government would decide if to raise a bill
4) As primary legislation, would require a vote my MP’s in parliament.

Part of my own rental business deals with groups of young professionals on a joint tenancy, with fixed term tenancies and for a host of reasons provide great benefits to all parties, including providing safe, well priced quality accommodation allowing young professionals to save for their 1st house. The scrapping of section 21 will have a major negative effect on this market, as it will on the student market. We also have some single unit professional rentals and again sign fixed term tenancies (blocks), which all parties have always been happy with. But without the vehicle of section 21 allowing block tenancies it will have a negative effect, although not as great as the shared professional rentals.

I have express my grave concern that despite there being 1000’s of shared HMO rentals, clearly define by legislation and majority licenced, the consultation document does not recognise or even discuss the impact of scrapping section 21 on this rental demographic. The lady I spoke to at the ministry of housing in fact said “the consultation document is geared towards single unit occupancy” which if you consider is a major oversight and in my opinion a flawed consultation process!

As you can see in the reply email from the Ministry of Housing, they have suggested “exploring” revising the consultation documents – however with limited time left on the 12 weeks, again I feel that this is flawed.

I would recommend that all landlords:-

Email their MP and also the following parties:-

TenancyReform@communities.gov.uk
Eleanor.Millington@communities.gov.uk
john.healey.mp@parliament.uk
james.hall@parliament.uk

Copy in:-

john.stewart@rla.org.uk
Policy@landlords.org.uk

Also if you are a HMO landlord, especially if deal with groups on shared tenancies, I feel it’s vital that we ask for the Consultation Document to me revised to recognised this large rental market, plus extend the consultation period to allow enough time for landlords to respond.

REPLY FROM MINISTRY OF HOUSING

Thank you for your email regarding Government proposals to remove Section 21 of the Housing Act 1988 and for taking the time to talk on the phone recently. Please accept my apologies for the delay in responding to you.

Please see below responses to your queries, which I hope will be helpful to you.

These answers reflect the proposals as they currently stand in the consultation document, which we are asking for views on. The Government will consider the responses to the consultation and the information gained through stakeholder engagement to decide on the new framework, and so the final framework may be different once this process is complete.

• Following the proposed removal of S21, subject to the proposal of still being able to agree an initial fixed term tenancy – at what stage in that tenancy can the landlord and tenant discuss another fixed term tenancy?

There won’t be a fixed point in the contract when landlords and tenants can discuss a new fixed-term tenancy – you would be able to do this at any point and could continue to use the two-month mark if that works for you.

A landlord could continue to find a new tenant to take the place of the existing tenants and issue a new fixed-term tenancy, in the same way as occurs at the moment, if all tenants are willing and agree.

However, the changes proposed in the consultation document would require the landlord to use one of the existing grounds for eviction under Section 8 of the Housing Act 1988 to terminate the tenancy, if they wished to gain possession of the property.

The consultation asks for views on the existing Section 8 grounds, including whether they need to be improved. It sets out that the Government plans to introduce a new ground for when the landlord wishes to sell the property and explores amending grounds for moving into the property, rent arrears and anti-social behaviour.

• As I understand it, following proposed removal of S21, and after the initial fixed term tenancy, if it isn’t possible to agree a 2nd fixed term tenancy, then the tenancy will default to a rolling periodic. With 5 tenants on a joint and severally liable tenancy, will only 1 be required to give 28 days’ notice to bring that tenancy to a close, or would all 5 have to be in agreement to bring that rolling tenancy to a close?

You are correct that if a fixed term contract comes to an end, and a new one isn’t agreed, then the tenancy will automatically become a statutory periodic tenancy.

If a joint tenancy enters the statutory periodic phase, any one tenant can serve notice to terminate. It is only during a fixed-term tenancy that all tenants must agree to end the tenancy together. The proposals as they currently stand in the consultation document do not seek to change this.

• Can the Q&A support document be updated to encompass shared HMO (licenced in particular), ensuring that this large sector’s feedback can be encouraged to be gathered and also easily analysed on receipt?

We are exploring updating the document so to explain how the changes will interplay with joint tenancies, to help landlords understand how this will affect them, including landlords of HMOs.

Thank you for also sharing details about your business model with us, and your thoughts on the impact the proposed reforms would have. As we discussed on the phone, the consultation is seeking to gather such views, to help shape the future framework so that it works for all parties.

If you haven’t already, I would encourage you to respond formally to the consultation survey. This can be done online at: https://www.gov.uk/government/consultations/a-new-deal-for-renting-resetting-the-balance-of-rights-and-responsibilities-between-landlords-and-tenants.

If you have any follow-up queries please don’t hesitate to come back to me.

With thanks again for your time,

Sami Houmrani

13:21 PM, 19th September 2019
About 4 weeks ago

Reply to the comment left by Ian Narbeth at 19/09/2019 - 12:39
I absolutely agree with you. Lately, we have seen so many changes. It’s completely, utterly, totally bankrupt policies. And it's coming home to roost. It was always a question of time. These guys aren't conservative. These guys are radicals.

Mick Roberts

14:44 PM, 19th September 2019
About 4 weeks ago

U know it, I know it, we all know it. Except Mr Govt & Councils & people not in the real world. Virtually all policies they've bought in over the last 6 years or so has made the homeless worse.

I've always thought I was normal Landlord with a bit of intelligence & drive. But as time goes on & being on the receiving end of these Govt & Council attacks, I'm starting to think I'm Einstein compared to these politicians.
This is why they always on the News, cause they constantly get it wrong.

Dr Rosalind Beck

16:47 PM, 19th September 2019
About 4 weeks ago

I would add that the new RLA/NLA organisation has to change sharpish and come out unequivocally against the scrapping of Section 21. This week they have published an article on their site by a Liberal Democrat peer, calling for the abolition of Section 21 and even a 'first right to buy' in the PRS - which could mean anything and is dangerous in its vagueness (it could mean for example the tenant's right to buy at a reduced price). To post this article on a landlord site, with no critique as though it is RLA policy is wrong on so many levels. Please get your act together. You are supposed to advocate for and work on behalf of landlords; not against us.

bob the builder

12:41 PM, 23rd September 2019
About 4 weeks ago

All politicians in Westminster are either really dim and don't understand how this stuff works (in which case they are unfit for office) or they know and are doing it anyway cos they are on the payroll of the Global Elites that see another chance of a money grabbing monopoly for the Corporates to step in and take over once the PRS is gone. As for Generation Rent that think that 'putting the boot in on the LL's is great'; get ready to rebrand yourselves as Generation Pod.


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