Abolition Of Section 21 Opens Floodgates For Landlord Exodus

A comprehensive survey into the buy-to-let sector has found that almost half of landlords are looking to sell all or most of their buy-to-let portfolio if Section 21, ‘no fault’ evictions are abolished.

2,990 landlords or 46% of the Residential Landlords Association’s (RLA) survey of over 6,500 landlords are looking to dilute their investments or sell them altogether if Section 21 repossessions are withdrawn as a viable repossession tool.

Before making any final decisions about leaving the sector, 40% of the survey respondents were waiting on potential changes to Section 8 or other planned housing reforms.

Whilst Section 8 improvements could be made so that anti-social behaviour is considered a ground for repossession, the average five months from application to repossession is considerably longer than it could take under Section 21.

Furthermore, 79% of respondents do not consider the courts to be reliable; especially since more applications made under Section 8 is likely to delay the current waiting time.

The survey follows a national postcard campaign, by the RLA, which aimed to inform the public and the government of the perceived negative impact revoking the current legislation would have on the private rental sector.

The postcard highlighted the anxieties landlords would have without the section 21 protections in place and the potential cause and effect this feeling of uncertainty will pass on to the tenant.

The RICS survey for April has highlighted that the private rental market could face more upheaval than any other. Tenant demand is on a ‘gently upward trajectory’ of 3% for the next five years whilst landlord instructions continue to ‘dwindle.’ The latest decline in the number of properties registered by landlords continues a pattern that stems back to the summer of 2016.

This figure of depression in the buy-to-let sector is the longest uninterrupted sequence of falling since records began in 1998. The report states that the situation is only set to worsen with anecdotal evidence suggesting the Tenants Fees Bill and the proposed abolition of Section 21 are set to deter investors from entering whilst also encouraging landlords to leave the sector.

As the demand for rental property anecdotally increases, the NLA postcard and survey reaffirm that a reducing housing stock will lead to increased rents, lower supply and a more difficult process for low income households or those with poor credit to access privately rented accommodation in the future.

David Smith, RLA Policy Director, said:

“Security of tenure means nothing unless the homes to rent are there in the first place.

“With the demand for private rented housing showing no signs of slowing down it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances.

“Whilst the system should clearly be fair to tenants, it needs also to support and encourage good landlords.

“Our survey shows how complex it will be to ensure that the grounds on which landlords can repossess properties are both clear and comprehensive.

“This needs to be underpinned by a court system that is fit for purpose and properly resourced. At present it is neither.

“It is vital that the government’s planned reforms are carefully considered to avoid finding ourselves needing to reopen this whole issue later down the line.”

What does a reducing bet-to-let investment market mean for the conveyancing sector? How damaging have recent changes to residential rental legislation been to the property market?

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