The looming threat of the abolition of Section 21 is already impacting the rental market, a legal firm is warning.
Dutton Gregory’s Landlord and Tenant department says it is processing “an unprecedented number” of Section 21 notices, which have been issued to tenants since the announcement of the planned reform. The Ministry of Justice also recently reported that no fault evictions were up by 15.8 per cent in the three months to March.
Dutton Gregory puts this down to “fear and uncertainty felt by private landlords.”
A Section 21 notice is currently carried out through the accelerated possession process and does not generally require a hearing to be listed by the courts; as a result of the proposed abolition, the government has said the grounds of Section 8 will now be strengthened, to allow landlords to recover their property.
But the law firm warns: “This hasn’t offered peace of mind to many buy-to-let owners.”
Gina Peters, Head of Landlord and Tenant at Dutton Gregory Solicitors, says: “Our increase in workload hasn’t gone unnoticed, and we feel many private landlords are now suddenly serving Section 21 notices as a safety precaution.
“The current socio-economic situation has seen inflation, mortgages, and interest rates sore, which is having a knock-on effect on housing stock and forcing rental payments to go up.
“This has left many landlords in a tricky position, as they want to retain their property and make a profit, but fear they could potentially go for months without receiving rent if a tenant defaulted. Many would now rather serve a notice – while they still can – with the intention of selling their property and exiting the rental market.
“The proposed Section 8 grounds on paper give landlords the ability to get their property back, however, any court claim for possession will require a court hearing, without the possibility of just the presentation of paperwork. This could see the whole process take significantly longer - months, rather than weeks.
“The length of the notice for rent arrears is due to increase from two weeks to four, which means a landlord could experience rent not being paid for an even longer period.
“The Civil Procedure Rules currently provide for all possession claims to be listed for hearing within eight weeks, though this was suspended during the pandemic and has never recovered in certain courts. As the court infrastructure currently stands, the system would not be able to cope with the influx of increased numbers of possession hearings, as listing in all courts is at a premium. I fear the inherent delays with Section 8 could bring about the significant decline of the private rental market.”
Peters says one effect of this combination of events could be that the private rental market turns “extremely corporate” with national Build to Rent companies benefiting from economies of scale.
Zoopla reported just last month that 11 per cent of homes listed for sale on the site were previously rented out, and today Rightmove is reporting that figure at 16 per cent.
With fewer rental properties available – as a result of private landlords selling up – the demand from tenants will continue to soar, and Peters says this may allow Build to Rent to triumph.
“This will change the rental landscape enormously” she says.
She continues: “The Landlord and Tenant team at Dutton Gregory Solicitors has also seen far fewer private landlords expanding their portfolios this year. Furthermore, some tenants being served a Section 21 notice are not actually able to vacate the property in a timely fashion, due to the lack of affordable alternatives, which continues to put pressure on the courts and increase costs for landlords. Much more needs to be done to help improve the waiting times at court to eradicate lengthy delays and give private landlords an increased sense of security and surety.
“The Renters Reform Bill is expected to come into play at the end of next year at the earliest, but with a General Election anticipated for May 2024, this intended abolition is already skewing the rental market.”
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It's ironic but not a surprise - in fact I first predicted it on a post her long ago - that merely just the *threat* of abolishing the s.21 will encourage many of the more sensible forward thinking landlords to serve one and evict tenants they would otherwise have been very happy to keep forever, just so they can sell up and get out while the law just about still allows it!
When the law is finally passed and we're in the countdown period to it's implementation I'm sure that vast numbers of notices will be served, the courts will be overwhelmed and it will make "shock" headlines with landlords being blamed of course!
All of this is obvious... Its essential to the industry that we have an absolute and fundamental right to serve notice and regain possession without having to explain why. No amount of fudging the issues or pretending as a token to "enhance" s.8 can possibly magic away the plain and simple facts that without it - once it's gone - we're more or less back to the bad old days of the 1970s and sitting tenants...
It will then take years of misery and market stagnation after that before any politician has the balls (ironic, given it was Mrs Thatcher last time) and gumption to put it right... and also like Mrs T they'll need a massive landslide mandate to get it passed all the virtue-signaling politically fixated "social justice" fools with their blinkers on and heads in the sand, oblivious to the facts and realities.
I couldn't agree with you more Barry.
And of course it's exactly what the likes of Shelter want. What use is a homeless 'charity' if there aren't any homeless? They are ensuring they have jobs for life, ably supported by big business who have had the wool pulled over their eyes.
I disagree with your sensationalist comment. Your example states Landlords are serving Sect 21’s so they can sell up. The current section 8 has selling as one of the grounds? My view is the removal of the Sect 21 is purely a PR exercise. Landlords will still be able to remove tenants using the enhanced Sect 8 for pretty much any reason. I think you’re missing the point.
Unfortunately theres very little social housing stock left as its been sold off and the population increased so theres none available. This cannot therefore be compared to the 70s this is more like the victorian slums era!
I notice @ Michael Harvey suggesting that if a landlord wants to sell then s.8 will be sufficient and so nobody will need to sell "reactively" over the abolition of s.21
he is of course completely missing the point, and so are the people who have "liked" his posted... the whole point is they would NOT be selling ordinarily - they are selling in response to the abolition of the s.21 which fundamentally undermines all of us as landlords and our businesses and forces us to have to always "prove" something - no matter how difficult that might be - if we are unhappy with a tenant and want them out.
For most sensible landlords it is the *abolition* of s.21 in itself that is intolerable and the reason (or last straw) why they no longer wish to continue being landlords and so, therefore, are now selling.
As I've posted before, abolishing the s.21 is the unnecessary and politically motivated removal of our safety net and so, understandably, sane and sensible landlords might no longer be willing to carry on performing the increasingly dangerous and exposed "high wire act" that providing private residential accommodation for rent has been turned into.
As soon as the end of the s.21 is confirmed as beyond doubt and there's an implementation date for its demise I'm quite sure a lot of people will serve s.21 notice that otherwise would never have arisen...
...and those that don't and who miss the deadline will belatedly have to try serving s.8 notices to get out and will find it a lot harder, more longwinded and frustrating than they'd (or @MH and his endorsers) expected! There will probably be all sorts of onerous and inconvenient conditions where you have to "prove" you are really selling and will be under pressure to sell within a particular timescale or provide evidence that the property really is on the market or something... in other words a lot of nonsense and inconvenience that a simple s.21 avoids, so even if you really are selling why do you have to "prove" it?
I'd rather keep the s.21 thankyou very much, and proper reform would have been to restore it to the way it was originally intended, i.e. without being undermined by all sorts of extraneous conditions such as having to prove to a judge that you provided the tenants with the correct version at the time (perhaps by then long ago) of the then latest "how to rent" booklet, etc.
@ John McKay I agree and three that spring to mind are Nationwide, Co-op and B & Q.
I think there is a big problem coming with using S8 for nonpayment of rent. Tenants will be deemed to have made themselves homeless and therefore Councils can abrogate their responsibility to rehouse them. At least under S21 the tenants (renters if you must!) were not going to be homeless.
and as ive been saying since i read the Renters Reform this is exactly why theyre going ahead. Councils are on their knees waiting lists for social housing from homeless families are at an all time high. Allocations take years meanwhile theyre stuck in temporary accom. The councils duty to house and homeless figures will drop dramatically once section 21 is abolished leaving the governments dilema of social housing provision solved and many people on skid row.
S24 plays a big part in this mass exodus too this article fails to address that.
being taxed on turnover with the crazy interest rate hikes means that many unorporated landlords either switch to short lets or sell up.
Totally agree with you @MA....
But if you haven't already given up as a result of the impact of s.24 on your once profitable business I think the abolition of s.21 in addition to it could be the nail in the coffin for your once thriving and popular rental homes.
Be interesting to see how a Labour govt will deal with destitution
Indeed... in an effort to out do the Tories they will of course try hard to make things even worse... or just through their sheer incompetence achieve that anyhow.
With apologies to Winston Churchill who said something similar; The only government worse than the one we already have is the one we're going to get next!
Easy. A moratorium, look at Scotland and Wales.
On debt you mean? Suppose the courts will be told to go easy and give them time to pay sticking landlords with the problem.
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