Section 21 ban would devastate PRS

by Property118.com News Team

9:48 AM, 30th September 2019
About A year ago

Section 21 ban would devastate PRS

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Section 21 ban would devastate PRS

The private rented sector (PRS) would shrink by 20% if Section 21 ‘no-fault’ evictions are banned, according to a new economic analysis report*.

A new deal for renters? The unintended consequences of abolishing Section 21, by Capital Economics on behalf of the National Landlords Association (NLA), also forecasts a 59% reduction in housing available to tenants on housing benefit or Universal Credit, and a potential increase in rents for 13% of properties.

  • 960,000 fewer dwellings available to renters
  • 770,000 fewer dwellings available to tenants on housing benefit or Universal Credit
  • 600,000 dwellings could see rent increases.

The report also suggested a possible solution, a reformed court process that made dealing with Section 8 cases faster and cheaper could nullify the removal of Section 21 for many landlords. However, the PRS would still see a likely reduction of between 180,000-390,000 homes, between 130,000-300,000 fewer homes available to benefit claimants, and rent increases for between 110,000-240,000 properties.

In an accompanying report by the NLA, Faultless or fault-based? The realities of the possession processes, case studies of NLA members’ experiences with both Section 21 and Section 8 outline the problems many landlords currently face with both processes, including losses in the tens of thousands of pounds.

Chris Norris, Director of Policy and Practice at the NLA, says: “The Government has clearly failed to recognise the realities of the private rented sector by proposing the abolition of Section 21.

“Any government which thinks it appropriate to risk the loss of nearly 1 million rental homes at a time of housing crisis needs to reassess its priorities as a matter of urgency.

“Rather than playing to the gallery, the Government should be looking to support and incentivise good landlords to remain active and provide homes to those who need them, rather than making it harder and causing these landlords to exit the market.”

The report is available to view here.


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Dr Rosalind Beck

10:12 AM, 30th September 2019
About A year ago

The question is: will the Government listen to reason? Or will it forge ahead with its destructive housing agenda?

Hardworking Landlord

10:47 AM, 30th September 2019
About A year ago

Reply to the comment left by Dr Rosalind Beck at 30/09/2019 - 10:12
Going on previous experience, it will forge ahead. But will it matter? We will all be surrendering out properties to Labour once they complete the coup!

paul robinson

12:30 PM, 30th September 2019
About A year ago

SECTION 21 Consultation – 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,

tomforex

12:35 PM, 30th September 2019
About A year ago

Disclaimer; I am not a landlord, nor a tenant.

Those million properties will all be part of chains, they'll either be bought by existing cash rich landlords or owner occupiers. However what is being missed here is that those million homes being dumped onto the market, at roughly the same time will collapse it. Especially as they will likely be largely 1-3 bedroom places. Remember, there is extremely few people able to buy at existing prices, therefore the market will fall considerably as distressed property sellers become further distressed. With MMR in place, and average savings of less than £1,000, and without BTL buyers, there are very very few proceedable buyers

Ross Tulloch

23:51 PM, 1st October 2019
About A year ago

Going forward it will make us extremely careful that anybody coming into one of our properties as a secure job and income. Sadly the only housing benefit person we have ever taken cost us five months lost rent So not being able to evict a bad tenant simply for make us even more wary about taking any risks on

Annie Landlord

11:28 AM, 5th October 2019
About A year ago

Worth noting that I've 'conversed' with tomforex in the past and he actively welcomes a massive collapse in house values as the only way to a more equitable system. He accepts, indeed seems to welcome the fact, that many, many people, both owners occupiers and landlords, would be bankrupted.
Meanwhile, homelessness is increasing, rented property supply is reducing, ordinary people, whether working or not, are unable to afford average rents, in RSHP or PRS homes. But hey, its all worth it to either secure votes or advance a political radical agenda

James Mann

13:16 PM, 5th October 2019
About A year ago

It is essential that all landlords respond to the section 21 govt consultation before Oct 12.

Whiteskifreak Surrey

20:52 PM, 6th October 2019
About A year ago

Reply to the comment left by James Mann at 05/10/2019 - 13:16
We attended NLA Meeting in our area and they invited a Civil Servant working on housing. He assured us that the consultation is genuine and the views will be taken into consideration. He seemed to jot down all the complains and comments the landlord voiced. NLA presented a pie chart with the consequences, and also asked everyone to take time to reply.
I am not sure if I can believe in whatever we heard, but I am going to reply. I remember it was a thread here about possible / advisable replies.. Could please anyone publish a link here? Many thanks!

Dr Rosalind Beck

18:17 PM, 7th October 2019
About A year ago

Reply to the comment left by Whiteskifreak Surrey at 06/10/2019 - 20:52
I filled in the consultation but I also have written several times separately trying to get them to answer the following question. The only answer I have received has been a fudge.

To whom it may concern
Can you please let me know what plans you have regarding 'porting over' conditions attached to the legitimate service of Section 21, to the new version of Section 8? I am thinking specifically of things like the service of a gas safety certificate or other document being a condition of being able to gain possession.

To illustrate, what provision are you making to prevent the following from happening? I am giving an example to illustrate it:

A tenant is due to move in on the 2nd of February, but asks if they can move in and sign the tenancy agreement on the 1st as they otherwise will have nowhere to stay. The landlord hasn't got time to get the gas safety certificate to them before the 2nd but to be kind allows them to sign on the 1st and then gives them the certificate on the 2nd. Or: the landlord does give them the gas safety certificate on time but doesn't realise that they don't sign in the right place that they have received it.

Further down the line, the tenant stops paying the rent and/or starts being a nuisance to neighbours and/or damages the house. The landlord goes to serve a Section 8 on the grounds of rent arrears, as it is nigh on impossible currently to successfully use a Section 8 for anti-social behaviour or damage, but the case is thrown out as the gas safety certificate was not issued before the tenancy agreement was signed. This means that the landlord can now never gain possession of their house. The tenant is free to stay there forever, paying no rent for a tiny administrative error or because they were being kind.

What provisions are you making to ensure that this scenario cannot happen?

Yours faithfully
Dr Rosalind Beck
Portfolio landlord.

Whiteskifreak Surrey

20:43 PM, 7th October 2019
About A year ago

Reply to the comment left by Dr Rosalind Beck at 07/10/2019 - 18:17
Thank you very much - extremely valid question! I bet they did not even think about such an eventuality. A bunch of not very well oriented civil servants. From what we heard there at the moment there is nobody in particular driving that project, it is a legacy of Teresa May...

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