The scrapping of Section 21: landlord responses

The scrapping of Section 21: landlord responses

14:39 PM, 28th June 2019, About 3 years ago 54

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Given that the Government appears to be rushing to scrap Section 21s possibly before the end of this year (and notwithstanding any change Boris Johnson might make to this if he becomes and stays as Prime Minister for any length of time), how are you as a landlord responding? “Section 21 could be outlawed within months, says outgoing prime minister Theresa May”

Are you going to instigate some Section 21s now, to get rid of any ‘dodgy’ tenants you have – the ones in arrears, notably? We all know that getting rid of them later through Section 8 will cost us a lot more in missed rent, so why not sort it now?

Are you going to give notice to tenants who you feel are very – or too – settled in an area? You might prefer to have more transient tenants – rather than those who are likely to stay even after their children have grown up. This might make your property worth less as you will only ever be able to sell to another landlord – because of your ‘sitting tenants’ – restricting your potential market, which will cost you.

Are you going to give Section 21 notices to any difficult tenants in shared houses – the ones that others find it hard to live with – whether because of their smoking, their rudeness, their aggressive attitude, their awful friends and visitors – including for example, drug addicts – and so on? We all know that Section 8 isn’t fit for purpose for this as other tenants and neighbours are often too scared to corroborate the fact that the tenant is anti-social.

It would be interesting to hear your views in comments below on how you will respond. If for example, you hear the ban is coming in by January 2020, what will you do and when?



Comments

by Yvonne Francis

22:54 PM, 29th June 2019, About 3 years ago

Reply to the comment left by Anthony Endsor at 29/06/2019 - 19:56
To start with I did not confuse section 21 with three year tenancies. I was replying to a post by Ross which can be found on the first page, in relation to student housing, because I wondered if she was. I don't think you 'quite' knew to what I was referring. I am very well acquainted with all the issues you mention.

I can see perfectly well that if provisions are not made in section 8, things could get very difficult for landlords in general, but that I thought, hasn't been fully worked out yet? However my personal concern is with student houses and the fact is, a joint and severally liable lease is a great protection for tenants not staying on, and my main point was the abolishing of section 21 may not (at least at the moment) affect a 12 month fixed tenancy.

by Paul Essex

9:12 AM, 30th June 2019, About 3 years ago

That is why we are so concerned, there seems to be a huge rush to end section 21; but we still have no idea how many section 8 changes may be made.
I have had issues with tenants troubling neighbours which was resolved with section 21, those same neighbours would not have been willing to make a formal complaint that a court could uphold - why? The answer is 'disclosure' if you formally complain then later sell your property you have to declare the neighbour problems, this is likely to damage your ability to sell. If you do not tell but the new owners of the property have nighbour problems the sale could at least in theory be classed as fraudulent and demand the money back!
With the student question, I think it depends on how attractive your property could be to non students. We advertised a student let in Cambridge a few years ago and a significant proportion of those responding were clearly not students. I fear that in future, claiming to be a student could become the new housing strategy for some.

by Mark

9:19 AM, 30th June 2019, About 3 years ago

Another consideration is for landlords with HMOs where they are struggling to fill the rooms, this is not uncommon with market saturation. Currently there is always the option to revert to a single let. With the scrapping of s21 this will no longer be possible as they will not be able to remove the HMO tenants.

by Yvonne Francis

10:10 AM, 30th June 2019, About 3 years ago

Reply to the comment left by Dr Rosalind Beck at 29/06/2019 - 20:37
Ross, I did know from thirty five years ago, when a solicitor pointed it out, in my lease, a tenant could stay on after a fixed period. However in a Joint and Severally Liable lease if one tenant stays on, then they could be liable for the whole of the rent. In my case, as I take rent quarterly, what would be owed on the first day of their stay over, would be considerable.

I am sorry to hear one of your tenants stayed on, but did you not have a Joint and Severally Liable Lease and simply bill them or their guarantor for the rent for all four? Or send a bill to each of the tenants, and their guarantors. That would put the cat among the pigeons and be legal.

When I first became a landlord in 1980, the law was so draconian, to give a family or general tenants a lease, felt like giving them the house. That is why I chose students, as I was pretty sure with the sort of high flying students I have, they would not stay after the tenancy, not for long at the very least. It has always worked for me personally, so abolishing section 21 is not a big deal for me, even though I can see the extra clout section 21 can provide.

I can see from your assumption, without the clout of section 21 you believe it’s an infinite tenancy. But with a Joint and Severally Liable lease, the likely hood of everyone wanting to stay is considerably reduced, especially in large houses like my own. Even when tenants have taken up the next tenancy some leave and others are bought in. Yes anything is possible, pigs may fly and the sun may not come up in the morning, but one lives life by probabilities and past experiences and not necessarily by the letter of the law.

You have written, dare I say, some rather scaremongering posts, suggesting students will hand in notice (i.e. your son leaving in April) early. But if he was on a twelve month fixed term how could he? You have posted as if we are very disadvantaged on every side. Getting tenants to stay and not getting them to leave. I would like to somewhat readdress that balance. Abolishing section 21 certainly badly dents our armour but will not fatally injure us, at least, in the student letting market.

by Dr Rosalind Beck

13:21 PM, 30th June 2019, About 3 years ago

Reply to the comment left by Yvonne Francis at 30/06/2019 - 10:10
Hi Yvonne.
Yes, I can see how there can be additional precautions for student lets. You have to hope that you don't need to change your model at any point though and eg let to individual professionals, as then the jointly and severally liable clauses wouldn't apply. So, at the very least, the scrapping of Section 21 could impede the contingency plans of landlords who currently specialise in student lets.

Such shifts in tenant type might also become more necessary given the huge increase in PBSA. We don't yet know what the long-term impact of this increase in student provision will be, what student numbers might be like down the line and so on. The first that will be seen of the effect of such shifts in supply and demand will be when landlords suddenly find they can't get the groups of students to rent a whole house together. The natural move then is to consider individual professional lets. The scrapping of Section 21 will be very problematic for this model, as I mentioned.

In terms of me scare-mongering, in the current almost hysterical anti-private landlord environment, I'd prefer to be prepared and run the risk of being accused of scare-mongering than to be accused of smug complacency for example, which is kind of the opposite accusation.

In addition, I also like to look at the implications for landlords across the board and not just one sub-section. That can be a bit too much like an 'I'm alright, Jack' attitude. We need to stick together on this and on attacks against the sector - whilst often the institutional and social housing providers are let off the hook.

by bob the builder

14:04 PM, 30th June 2019, About 3 years ago

So is it just me or are the wheels coming off this thing ? lol

by Dr Rosalind Beck

15:35 PM, 30th June 2019, About 3 years ago

Reply to the comment left by Mark at 30/06/2019 - 09:19
Yes, an important point. According to what's been mooted so far, the landlord would have to sell in those circumstances and not be free to adapt to the changing needs of the market or their own financial circumstances.

by Frederick Morrow-Ahmed

16:58 PM, 30th June 2019, About 3 years ago

Anyone see this in the FT?
"Collapse of UK student property scheme hits investors"

As for all this media-hyped shortage of accommodation, as far as the eye can see from where I am in london they are building flats. What will this do to supply and demand?

And anyone notice the construction? Walls made out of shuttering plywood with highly inflammable PIR or PUR insulation sandwiched between this and plasterboard on the other side.

But hey, who worries about that when marketing is done with slick Poggenpohl kitchens and a young couple smiling with glass of wine in each hand. Easy to fool today's 'social media' generation.

by Rob Crawford

17:23 PM, 30th June 2019, About 3 years ago

Reply to the comment left by Bill Williams at 29/06/2019 - 08:27
Hi Bill, sounds like you have allowed your tenants to take advantage of you for sometime (you could have tried saying "no"! Once it becomes more difficult to re-possess I suspect it will get worse. I agree a section 21 now would be a wise move. I'm intrigued, what will you plan to do with the house once empty?

by Paul Essex

19:33 PM, 30th June 2019, About 3 years ago

Reply to the comment left by Bill Williams at 29/06/2019 - 08:27
Bill, don't forget that lettings relief finishes at the end of this tax year so if you are considering selling you may want to act quickly.


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