Is Section 21 reform a welcome change, or a political stunt?

 

No sooner had Parliament broke for the Easter recess, that The Secretary of State for Housing, Communities and Local Government announced plans to reform the Section 21 eviction process.

The proposal is that private landlords will no longer be able to evict tenants at short notice or without good reason.  This will, according to the announcement offer peace of mind to private tenants.

The reasoning behind the proposed change to current legislation is to provide tenants more security in their rental homes, offering what are essentially open-ended tenancies. This is quite a headline grabber, and will no doubt resonate with anyone who has had to move out of their home because the landlord has exercised their right to evict them.

However, landlords are very unlikely to evict good tenants. After all, if the rent is being paid on time and the property is being looked after, then why would a landlord want to move them on? Across the board, rents across the UK are largely only rising in line with inflation, and therefore any suggestion that landlords would evict tenants purely to increase the rent on the next tenancy seems far-fetched.

When a landlord chooses to end a tenancy, in the vast majority of cases it will either be because the tenant has breached some of their terms – such as persistently late payment of the rent, or simply because the landlord needs the property back.

Landlords currently have two choices – issuing a Section 8 or a Section 21 notice. 

A Section 8 notice is served when a tenant has breached the terms of their tenancy such as non-payment of rent.

A Section 21 notice is known as a 'no-fault' eviction, because provided the original tenancy term has passed, then the tenant can be asked to move out after two months without the landlord needing to give any reason.

If the landlord has to rely on a Section 8 notice to secure an eviction where the tenant has defaulted on their rent, then the tenant could make a small payment shortly before the court hearing in order to delay proceedings. This makes Section 8 process lengthy – sometimes as long as 22 weeks. Particularly where a landlord relies on the rent to pay a mortgage, then this process can simply be too long which is why the Section 21 is often the favoured option.

Meanwhile there is speculation that tenants can be evicted if they have made a complaint about the property and the belief is that the landlord wants 'rid' of the complaining tenant. 

However, there are two fundamental flaws with this argument.

Firstly, so called 'revenge' evictions were made illegal in 2015 meaning that landlords couldn't issue a Section 21 notice within 6 months of a tenant making a complaint about the condition of the property, provided the environmental health department at the local council agreed that the property was in an unsafe or in a poor condition.

Secondly, the recently introduced 'Fitness for Human Habitation Act' means that a tenant can sue their landlord if the property is substandard - and this law has applied to all new tenancies since 20^th March.

Therefore, it's highly unlikely that a landlord could or would evict a tenant purely because they have made a complaint about the condition of the property.

 

So just why would the government introduce this legislation?

We have long argued that the Private Rented Sector doesn't get the focus from housing policy that it deserves. The sector has more than doubled in the last two decades, and now provides homes for more than 4.5 million households. 

In many cases, homes are provided by so-called 'accidental landlords' who are offering good quality homes that they don't need to live in themselves. This could be a property they've inherited or perhaps they're simply moving away from the area and don't want to sell their home. Meanwhile, many tenants enjoy the relatively low up-front costs of renting a home versus buying. The net result in many cases is a win-win for both landlords and tenants.

We believe a more suitable reform of the sector is to encourage landlords to remain within the sector and continue to provide homes for millions of households across the UK.    

However, sadly the recent changes to tax rules around the private rented sector could force landlords to consider selling some or part of their portfolio. Meanwhile, the additional Stamp Duty payable by purchasers of second homes can deter would-be landlords from entering the market.

Limiting supply when demand is on the increase will only result in rising rents, which is something which simply won't help private tenants.

Unfortunately, whilst the political agenda has been dominated by Brexit for more than two years, and there's a void when it comes to effective and progressive housing policy impacting the private rented sector, we're concerned this latest proposal could be nothing more than a political stunt which won't actually help the private tenants at all.