The Government has taken a step closer to enforcing the abolition of Section 21 ‘no fault’ evictions this week by releasing a consultation on the private rental sector.
In April, Theresa May gave an impassioned speech regarding the plight of the tenant and their lack of rights. In particular, Section 21 was perceived as a tool reducing stability and peace of mind for the renter.
Since this announcement, landlords have also felt as though their rights and protections were being diluted and restricted. This has encouraged many landlords to leave the sector in recent months.
According to a recent survey by the Intermediary Lenders Association (IMLA), many landlords are reconsidering their investment in additional property.
Up to 2015, buy-to-let investments had recovered from the financial crisis in 2009 where lending hit a mere £4.5 billion to £15.6 billion at the end of 2015.
However, since this point, the Government have imposed stamp duty land tax increases on additional property, introduced the Tenants Fees Order and threatened to abolish Section 21 ‘no-fault’ evictions. This has led to a 40% decline in buy-to-let mortgage investment which has dipped to £9.1 billion.
The research also highlighted a shift in the types of additional market owners dominating the buy-to-let sector in 2019. Almost four in five landlords (79%) owned one additional property in 2010. However, by 2018, this figure had shrunk to 48% of landlords.
Meanwhile, the number of landlords with more than 5 properties has increased from 5% in 2010 to over 17% in 2018.
‘A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants’, claims that strengthening Section 8 and creating a robust court system will help provide a greater balance of power for both tenant and landlord.
The consultation is looking for views on how best to use the new version of Section 8, reflections on how Section 21 has been used in the past and how landlords can regain possession once Section 21 has been abolished.
Additionally, landlords have been asked to share their thoughts on removing the ability for landlords to grant shorthold tenancies in the future and whether these regulations should extend to other types of landlords such as housing associations. Contributors will have until October 12 to share their thoughts.
James Brokenshire, Secretary of Housing, Communities and Local Government, commented:
“The use of section 21 of the Housing Act 1988 to evict tenants, without providing a reason or avenue for challenge, no longer fulfils these basic principles. That is why I announced the Government’s intention to repeal section 21, while strengthening the grounds for possession to deliver a fair and effective tenancy regime. I want to go further and to review the possession grounds in detail, to deliver a fair, balanced and effective tenancy regime. This consultation provides the opportunity to help the Government deliver on this ambition – preserving what works and reforming where necessary.
“The abolition of Section 21 will be achieved by removing assured shorthold tenancies from the Housing Act 1988, coupling the existing protections with a fairer, more transparent possessions regime. These reforms deliver on the Government’s manifesto commitment to ensure tenants have the security they need to plan for the future and build on this Government’s record of great housing progress. It will deliver a new deal for millions of renters – no matter who their landlord is – and will enable landlords to invest with the confidence needed to deliver the rental sector the country deserves.”
ARLA Propertymark commented:
“This is big news for the sector and we cannot underestimate the impact.
“We cannot accept amendments to the Section 8 eviction process unless all grounds are mandatory and include persistent rent arrears and anti-social behaviour.
“Only after a full impact assessment and conclusions from a pilot should the Government abolish Section 21.”
Chris Norris, of the National Landlords Association, said:
“The court system has been in dire need of reform for a long time, so we’re happy to see action on this.
“Any improvements to this system need to be in place, properly funded and fully functional before the Government even contemplates changes to Section 21.
“Landlords have been relying on Section 21 to compensate for the many failings of the Section 8 fault-based process, which has become too costly and time-consuming.
“If the Government want to deliver a fairer, better quality and more affordable private rental market, as they claim, they should try listening to the concerns of landlords, not just court the voting renters.”
What impact will the abolition of Section 21 have on the private rental sector?
