Getting rid of eviction powers under Section 21 could impact on landlord numbers
A ban on Section 21, the process where landlords start an eviction, could have a negative impact on the private rented sector, new research suggests.
The industry is currently awaiting the outcome of a Government consultation on the creation of a Housing Court which could see changes to or the removal of Section 21 along with mandatory longer tenancies.
But a poll carried out by Landlord Action suggest that without the ability to use Section 21 landlords may sell up and leave the private rented sector for fear they have no power over their own property.
Of the landlords who responded to the survey, 73% said they have had to serve a Section 21 notice, with 56% using it because their tenant was in rent arrears. According to the data collected, there were no other common specified reasons for landlords to use it, with 22% of landlords simply selecting ‘other’.
Paul Shamplina, founder of Landlord Action, believes many of these unspecified reasons, along with rent arrears, could be pursued under Section 8 but landlords are forced to rely on Section 21, even when there is a breach of tenancy, because they have very little faith in the court system.
‘Not only is using Section 8 already more time consuming, tenants can delay the process further for landlords by counter claiming. In addition, discretionary grounds of Section 8, such as anti-social behaviour, can be extremely difficult for landlords to prove, meaning it has a lower success rate,’ he pointed out.
‘It’s clear from the survey that landlords need to be able to get their properties back as soon as possible and are willing to forfeit arrears by using Section 21,’ he added.
Other specified reasons for using a Section 21 included tenants requesting their landlord obtain a possession order for 10%, while 5% was a need to refurbish the property, 4.5% to sell up, 2% to move back in themselves and 0.6% said because the tenant had complained about disrepair.
It also found that 43% of landlords said their tenants vacated the property when served with a Section 21 notice, but 42% had to go to court to obtain possession.
The Government has proposed the creation of a specialist Housing Court which is said would provide greater access to justice for both landlords and tenants and give landlords confidence to offer longer, more secure tenancies by making it easier for responsible landlords to regain possession of their tenancy, should they need to.
However, as part of this, Shamplina predicts that the use of Section 21 is going to be heavily diluted and is concerned that without major reform to the Section 8, some landlords will exit the market.
‘Section 21 gives landlords and mortgage providers the reassurance and flexibility to recover their asset if they need to. To abolish it, or even dilute its current use as has been suggested, will require significant reform to Section 8 which offer reassurances to landlords that if they had to use the Section 8 route under grounds for rent arrears, moving back into the property or selling it, there would not be significant delays in the court process. With this, we are likely to see a further cut to supply of rental properties as landlords will consider buy to let too great a risk,’ he explained.
He also believes that the tenants fee ban due to come into force on 01 June will also affect the use of Section 21. After this date, if a landlord or letting agent makes a charge that relates to a banned fee, they must return this within 28 days, or it will render a Section 21 ineffective.