Yesterday, the Government made an announcement that Communities Secretary, Rt Hon James Brokenshire MP described as the biggest change to the private rental sector in a generation.
As part of a complete overhaul of the sector, the government outlined plans to consult on new legislation to abolish Section 21 evictions – so called ‘no-fault’ evictions.
This will bring an end to private landlords uprooting tenants from their homes with as little as eight weeks’ notice after the fixed-term contract has come to an end and will effectively create “open ended” tenancies.
Previously, landlords had typically gone down the Section 21 route for such issues as rent arrears, damage to the property, anti-social behavior, tenant refusing to allow access for maintenance or compliance checks, and other such issues.
This line of repossession of the property is looking like it will now be closed down and many landlords are extremely concerned about it.
Respected industry commentator, Kate Faulkner, spoke to the Property Tribes forum and said that Government should stop tinkering around the fringes of the sector making piecemeal changes, and should completely revise the Assured Shorthold tenancy:
Industry stake-holders, lettings agents, and landlords took to social media yesterday and made this a trending topic as concerns started to pour in about the knock-on affect of this proposed new legislation.
LandlordBuyer M.D, Jason Harris-Cohen commented:
“This is a game changer.
I can’t see how the expedited process will work when invariably local authorities advise tenants to stay in situ until a landlord obtains a warrant for eviction. This creates further distress for the tenants and significantly increases costs for landlords.
This is going back to ‘assured tenancies’ albeit without succession rights. I can see a massive exodus of landlords as there is further illiquidity in a restricted market along with the continuous clampdown on regulations and taxation changes”.
“This could be the last straw for some” said RLA chairman Alan Ward in a letter to its members.
David Smith, Policy Director for the Residential Landlords Association said:
“Whilst the RLA recognises the pressure being placed on Government for change, there are serious dangers of getting such reforms wrong.
“With the demand for private rented homes continuing to increase, we need the majority of good landlords to have confidence to invest in new homes. This means ensuring they can swiftly repossess properties for legitimate reasons such as rent arrears, tenant anti-social behaviour or wanting to sell them. This needs to happen before any moves are made to end Section 21.
“For all the talk of greater security for tenants, that will be nothing if the homes to rent are not there in the first place. We call on the government to act with caution.”
Isobel Thompson, chief executive of the National Approved Lettings Scheme commented:
“What is worth remembering is that the vast majority of tenancies are ended by tenants, not landlords, so we hope this isn’t a case of the Government using a sledgehammer to crack a nut.
“We absolutely want a safer, fairer private rented sector for all, but that requires landlords to be operating in the sector to provide much-needed homes.
“What is the Government’s contingency plan if landlords decide to withdraw from the market following this latest announcement?”
There are now concerns being expressed on social media that landlords will consider exiting the sector ahead of the new legislation:
Meera Chindooroy, policy and public affairs manager at the NLA, told Property Industry Eye:
“It won’t be retrospective so there may not be a spike immediately, but many landlords are going to be considering their options and how to exit the market when their current tenancies come to an end, or potentially earlier if they are concerned.”
For many landlords, particularly older ones who were thinking of retiring in a few years, this will likely be the last straw that broke the camel’s back, and they may well bring forward their plans to sell up.
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