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

CMS

14:06 PM, 2nd June 2022, About 4 weeks ago

Reply to the comment left by neilt at 02/06/2022 - 12:48
Hi Neil, although I am being pretty positive about this i can see your, and other landlord's, reasons for leaving the market. Having said that, if you don't need to sell then there's no better investment than property because at some point the market will turn in your favour it has to...as Mark Twain said 'Buy land son, they aren't making it anymore!

Although, at the time of saying that, Mark Twain probably didn't count on Elon Musk trying to build cities on Mars. All the best, Charles

Mick Roberts

10:13 AM, 4th June 2022, About 4 weeks ago

U say it all correct.

Tenants are gonna' be much worse off by this. Council Homeless section will see Ooh Section 8 rent arrears, Intentionally homeless, we not helping u.
But u keep calling for it to be banned Shelter & Generation rent. Again more Landlords pack up, remaining tenants get charged extortionate rents-Just cause they can. Landlords will have 100 working tenants queuing for each house unlike now the 50.

But tell u what Govt & Shelter, none of the truth matters, cause when u do ban it, you will get more votes-That's all that matters.
What a society we live in-Where u KNOW something u bring in will make the majority worse off, but those that vote for u think Ooh baby I like the sound of that punitive change on the Landlord-I'm gonna' vote for. Just like Selective Licensing in Nottingham Imbecile Labour Council. 98% of tenants are worse off. But they did help 2%. Awful odds.

We told 'em Rent Holidays would make it worse for tenants in long run & that's now borne out by the official figures.

Loss of stock is 20 times worse lower earning tenants.

Ray Lancaster

14:27 PM, 4th June 2022, About 4 weeks ago

A mortgage lender requires their money back at the end the the specified mortgage term on a interest only mortgage. This is usually stated by the customer as sale of property? How is that going to go down with lenders that the government has said that landlords can’t sell their property at the end of the term of the mortgage to pay loan off?

Ian Narbeth View Profile

17:48 PM, 5th June 2022, About 4 weeks ago

Reply to the comment left by CMS at 31/05/2022 - 03:07Late coming to this as I have been on holiday. The Government have said they will provide for landlords to return to their main home but this raises at least two points. First, how quickly can they get possession and is it guaranteed. The family going abroad to work for three years want to know they will get their property back at the end of the three years and that they won't have to give notice to get possession months in advance thereby losing out on rent or risk several months being homeless. Second, what about the person who decides to let out their holiday home, perhaps for similar reasons that they will be living abroad. The concern is that as it is not their main home, there won't be a ground for possession - the property will be treated like an investment. This will lead to them not letting it except for holiday rentals and thereby removing a potential home from the market.

NEIL T

18:28 PM, 5th June 2022, About 4 weeks ago

At last, Ian, someone is coming close to what I've been saying all along; 'security of tenure and rent control'. All of the warning signs are there.
Please convince me that I'm - hopefully- wrong

CMS

23:43 PM, 5th June 2022, About 4 weeks ago

Reply to the comment left by Ian Narbeth at 05/06/2022 - 17:48
I don't disagree with these being an issue but cannot see that the Govt will make it particularly onerous in respect of wanting to sell the property. If they don't it is clearly going to be open to abuse but my understanding is that is what is happening in Scotland. There are measures that could be put in place but I can only think of the Govt putting in place some kind of ''flexible notice period whereby (a) the landlord has to serve notice to sell and has say 4 months within which to exchange. (b) within those 3 months the landlord has to serve a second notice confirming exchanged and a set completion date within say 6 months of the initial notice and give them say 2 weeks notice. It doesn't really do much more than extend the notice periods so why they don't just do that i don't know. Although a headline of 'Govt extend s21 notice periods' is probably not as eye catching!

Whatever the Govt do they should ensure that if the tenant refuses to leave - getting an Order for Possession etc needs to be alot quicker and easier for the landlord and have harsher penalties if the tenant breaches - but i appreciate the Govt probably wont.

On your second point, i was thinking about this when the first proposed the abolition of s21. I appreciate it is not the Govt's intention but i think the people that will be hardest hit will be those landlord's that, as you say, are either working away for 6 a year or moving abroad for a period. I cannot see them carving out a specific 'Landlord Employment/Holiday Possession Claim' allowing them to give shorter notice than the professional landlord...lets face it, it wouldn't be the first legislation amendment that hasn't considered the collateral damage it may cause! Best, Charles

CMS

23:48 PM, 5th June 2022, About 4 weeks ago

Reply to the comment left by Ray Lancaster at 04/06/2022 - 14:27
I don't think they will concern themselves with this unless the Govt make it a requirement that they do. Cannot see them requiring anything like the old endowment policies!

They may just increase interest rates on the basis that there is a higher risk that they may have to repossess and sell the property if repayment is not made.

Tracey Burke

15:05 PM, 6th June 2022, About 3 weeks ago

Hi me again as a landlord I have served a tenant a section 21 but I haven’t given her a gas safety certificate (up to date anyway ) I have since read that it not legal ? Is that correct

CMS

15:08 PM, 6th June 2022, About 3 weeks ago

Reply to the comment left by Tracey Burke at 06/06/2022 - 15:05
Hi Tracey, sorry but i dont think the notice is valid. Charles

Tracey Burke

15:24 PM, 6th June 2022, About 3 weeks ago

Reply to the comment left by CMS at 06/06/2022 - 15:08
Thankyou that’s what I thought but should the gas safety certificate been requested off the court before giving a court date?

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