Section 21 misconceptions

Section 21 misconceptions

10:26 AM, 30th May 2022, About a month ago 76

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In the recent Queen’s Speech, the government reiterated its commitment to scrapping Section 21 ‘no fault’ eviction notices during the next Parliamentary session.

Paul Shamplina, star of Channel 5’s Evicted! Nightmare Tenants, founder of Landlord Action and Chief Commercial Officer at Hamilton Fraser, has joined forces with PropTech firm PayProp and issued a joint call on agents, landlords and tenants to look into how the eviction process could change once the government’s latest proposed reforms are introduced.

On their mutual agenda are some of the misconceptions that surround Section 21 and Section 8 notices, and a look ahead to the post-rental reform future.

“Currently the vast majority of tenancies end because the tenant chooses to leave, not because the landlord is evicting. Landlords want tenants to stay in their property long term, and only serve notice as a last resort,” Shamplina said.

“We know from our experience at Landlord Action that the majority of Section 21 notices are issued because a tenant is in rent arrears, or because a landlord wishes to sell or move back into their property. In many cases, landlords could have used Section 8 for rent arrears or anti-social behaviour, but their lack of faith in the associated court process, which is undoubtedly more protracted, is why many always revert to Section 21.”

He added: “Therefore, abolishing Section 21 will not significantly change the number of evictions, it will simply change the process, which may have knock-on consequences for the number of open court cases and the associated costs for which the tenant will be liable.”.

He argues that the Section 8 notice and associated grounds will become the norm. Landlords who previously wrote off arrears and used Section 21 will potentially now seek those arrears via Section 8, to the disadvantage of the tenant.

“There are various aspects of Section 8 that need considerable revision before Section 21 can be fully abolished. I believe it will need to be a phased ending to allow the courts time to clear the backlog from the last two years and for all grounds to be considered and revised appropriately,” he said.

“For example, the route for dealing with abandonment cases must be clarified, to prevent unnecessary court cases where the tenant has clearly already left the property.”

 The importance of evidence-gathering and record keeping

According to Neil Cobbold, managing director of PayProp UK, PropTech and automated software in particular has a key role to play in transitioning to a lettings market without Section 21.

“The scrapping of Section 21 is likely still some way off, with a White Paper and the legislation itself needing to make their way through both Houses to reach Royal Assent,” Cobbold said.

This, Cobbold says, gives agents, landlords and tenants a chance to prepare for a playing field without Section 21.

“It’s important to note that reforming evictions is going to cause some upheaval and there will be a significant bedding-in period,” Cobbold says.

“That’s why it’s vitally important that agents have their evidence-gathering and record-keeping processes in place, so they can move as seamlessly as possible from the old way to the new, in which agents and landlords will likely have to rely on a beefed-up version of Section 8.”

He added: “Comprehensive, automatically generated reporting based on live transactional information can make a real difference when it comes to providing the relevant evidence when eviction is necessary. The burden of proof for agents is going to be higher once Section 21 is abandoned. Having to demonstrate proof of arrears, for example, speaks to the need for robust record keeping and evidence gathering tools.”

The government also plans to reduce the number of cases making it to the courts by bringing in a new ombudsman for private rented sector landlords, helping to ensure disputes can be easily resolved without legal recourse. Using technology to create an automated record of payments, communications with tenants and other lettings processes will help landlords and agents to provide evidence of their good conduct when referred to the new ombudsman by tenants.

Section 21 back on the up

Recent Ministry of Justice figures found that private landlord eviction claims are now higher than pre-pandemic – a fact that some have attributed to landlords getting claims in ahead of the removal of Section 21.

Covering the period of January to March 2022, the figures show there were 6,447 claims by private landlords to evict tenants – some 3% higher than the same period in 2019, before Covid hit.

Of these, 6,066 were accelerated procedure claims being made as a result of a Section 21 notice – some 63% higher than the last quarter and nearly a third (32%) higher than the same quarter in 2019, before the pandemic.

Overall, there were 3,763 evictions by landlords, an increase by over a third (38%) on the previous quarter.

Although these numbers aren’t massive, they are still significant, and the direction of travel post-pandemic is for more eviction claims to be made.

“Section 21, having been virtually unused during the pandemic for obvious reasons, is starting to be used more frequently again,” Cobbold concluded. “So, if and when it is scrapped, it is likely that there will be a higher number of claims already in process, which will make some kind of bedding-in period even more vital.”

Shamplina adds: “Ultimately, tenants’ interests are best served by a rental market where landlords have confidence to invest, giving tenants a choice of properties to rent at a competitive price due to a balance of supply and demand.”

“It is essential that new legislation continues to encourage investment in the market as there is already a supply and demand imbalance, so any loss of stock will be negative for tenants.”



Comments

Dylan Morris

10:57 AM, 31st May 2022, About a month ago

Reply to the comment left by Tim Rogers at 31/05/2022 - 10:12
Royal Mail Special Delivery Next Day Before 1pm is good value 👍

NEIL T

12:13 PM, 31st May 2022, About a month ago

Reply to the comment left by John Payne at 30/05/2022 - 18:03
Proof of posting given at your local post office is fine.

NEIL T

12:53 PM, 31st May 2022, About a month ago

Reply to the comment left by charles stevens at 31/05/2022 - 03:07
Rent control and security of tenure; it's been done before and it may well happen again, IMO. Are you willing to take the gamble?
Although not on our team, this article written by Nick Bano a lawyer and housing activist puts it into perspective.
https://redbrickblog.co.uk/2021/02/rent-controls-a-retrospective/
Is history about to repeat itself? I hope that it won't.
I would love to hear some fact-based arguments as to why it might not.

Pete England - PaTMa Property Management View Profile

15:07 PM, 31st May 2022, About a month ago

Reply to the comment left by John Payne at 30/05/2022 - 18:03
What’s wrong with using WhatsApp or telegraph or text to send the link and communicate to the tenant?

Tim Rogers

17:27 PM, 31st May 2022, About a month ago

Reply to the comment left by neilt at 31/05/2022 - 12:13
Interesting you say this, I would have agreed, until I came across a situation where a tenant argued that as they had never received documents xyz the proposed action could not be taken. As there was no proof of receipt, things became very difficult.

Given the general policy of landlord bashing, and the clear bias of some courts / tribunals / councils / etc, I'd firmly recommend ensuring any documentation can be proved to have been delivered. If delivering by hand, have a witness. It just cuts out so many avenues for problems.

CMS

22:46 PM, 31st May 2022, About a month ago

Reply to the comment left by Pete England - PaTMa Property Management at 31/05/2022 - 15:07
in essence there isn't anything wrong with service by these means so long as you make it clear that this is an acceptable way of communicating in the documentation but generally it is accepted that section 196 of the Law of Property Act 1925 provides the acceptable means of serving notices and when they are deemed served regardless of any response being received.

With notices such as section 8/21 (section 21 in particular as it is 'no fault' as we know) one of the only valid arguments a tenant has as a defence is that the notice wasnt received so you would be best getting a process server to serve the notice for you and to give you a statement confirming service.

Dylan Morris

9:03 AM, 1st June 2022, About 4 weeks ago

I hand deliver the notice to tenant’s postbox, taking time/date stamped photos and have a friend with me as a witness (who takes the photos and pics of me doing the delivery). I also email a copy the notice to tenant informing of the delivery and stating that the email is just for additional information only.

CMS

3:03 AM, 2nd June 2022, About 4 weeks ago

Reply to the comment left by neilt at 31/05/2022 - 12:53
Hi Neil,

Here's an article I wrote a couple of months ago. I haven't got round to editing it yet so excuse any poor english or typos please, but as you said you would be interested in views here is mine from a couple of months back:

Could Abolishing the current section 21 process actually be good for landlords?
Please don’t think that the last two years of solitary confinement have got to me because they haven’t (I don’t think) but I have actually got a different view of the potential abolision of the current section 21 notice and its good news for landlord’s.

As will no doubt be aware, at present if you wished to evict a tenant without any justification you would wait until the fixed term of the Assured Shorthold Tenancy (‘AST’) expired and commence the no-fault section 21 process which simply requires you to give the tenant 2 months notice to vacate and if they do not then you can make an application for a court order to gain possession of the property. The Government are hoping to abolish the section 21 process in its current so that a tenant who has done no wrong can only be evicted in certain limited circumstances such as the landlord is selling or wishes to move themselves or a family into the house.

The Government give as two main reasons for abolishing the ‘no fault’ as (1) it gives tenants more security and piece of mind regarding being able to stay in their property; and (b) it will stop landlord’s being able to increase the rent on a rent review without the tenant disputing it because they are concerned that they will be evicted. Looking at the proposals with the Governments objectives in mind I feel that the other impllications of this decision I going to nullify any possibility that the abolision will achieve these two objectives. If we look at commercial tenancies as an example, the rent payable under a tenancy which has security of tenure is more than one that does not. Combine this with the increased demand in the market for rented properties causes by firstly the Government making AST’s more appealing to individuals but also the very real potential that mortgages may become more difficult to obtain in the very near future – what do you really think will be the likely impact on rents under an AST? Unless this increase in demand is going to buck every economic trend ever the rent has to increase. I guess there is an argument that the Governments proposals will at least achieve their second goal because the majority of the tenants who would not be able to dispute the rental increase wont be able to afford the rent in the first place!

I can’t help also wondering whether this issue that the Government are trying to address really is as dire as they believe. I do appreciate that there are some rogue landlords out there and I do feel for those tenants that have to deal with them. But in the main, the professional landlord’s that I deal with, don’t want their property to be vacant and would rather keep a good rent paying, no bother tenant in the property rather than take an increase in the rent.

The only type of landlord that I do think could be adversely impacted by the proposals are the situation landlords eg an individual who has to work abroad for 6 months or so. Depending on how the Government intend to structure the justifications for eviction these situation landlord’s may feel that allowing the property to be let to a tenant and potentially not being able to evict them is too much of a risk for them to take.

I know that some commentators have stressed concerns about going back to the old Rent Act days which would clearly be devasting to landlord’s but I just cannot see that this is a real prospect. The Government have already said (and they are not known for lying haha) that they do not intend to interfere with the rent being set by landlord’s which is ironic because that’s exactly what they will be doing by implementing their proposals…just not in the way they envisaged!

CMS

6:57 AM, 2nd June 2022, About 4 weeks ago

Reply to the comment left by neilt at 31/05/2022 - 12:53
Hi Neil, sorry i have just seen that you asked me a question and the answer to that is 'yes' i am willing to take that gamble. i really just cannot see the Govt taking us back to those days. If they do restrict rent it will certainly not be as it was before i wouldnt think. There is too much demand to justify restricting it in as draconian a way as we have seen before which, if they did severally restrict rents, would only increase as landlord's sell up and take the leasehold properties out of that market.

I don't particularly like Boris but i would like to think that at least one of them has some sense...

NEIL T

12:48 PM, 2nd June 2022, About 4 weeks ago

Reply to the comment left by charles stevens at 02/06/2022 - 06:57
Hi Charles, yes, you make some good points. I sincerely hope that you're right.
I'm pretty much sold up now as rightly or wrongly, security of tenure may well come hand in hand with rent control particularly if the government of the day felt that LLs would leave the market en masse.
Labour will almost certainly get in at the next election and they are promising to be far more draconian than the other parties.
So I plan to wait and see before I reinvest on behalf of my children.
God bless

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