I totally understand that tenants are worried about the prospect of landlords evicting them under the ‘no fault’ eviction ground known as section 21 (section 21 of the Housing Act 1988).
And I agree that many landlords have misused this right in the past.
However, I am not convinced that an immediate removal of that right will be for the long term benefit of tenants. As is being called for by Shelter and others.
In my opinion, and that of others, if the removal of section 21 is not done very carefully, it will simply make matters worse for tenants, not better.
A shadow of the past
I, and I am sure many landlords, remember well what things were like under the old Rent Act 1977 regime. Under that act, landlords could only charge a modest ‘fair rent’, and it was almost impossible to evict tenants.
I can still remember the young man I advised in around 1990 who had temporarily (as he thought) rented out a house he inherited to a family, only to find that he would probably never be able to get it back again. In another case, a property owner allowed a friend fleeing from an abusive husband to stay in her house for six months. Thirty years later, they were still there.
One landlord described the situation to me as ‘expropriation without compensation’.
If landlords are going to be faced with a similar situation, or even if they just THINK that they are going to be faced with a similar situation – they will sell up.
Indeed they ARE selling up already. And the selling up is noticeably quicker in Wales, where a more onerous system is due to be imposed on landlords this coming July.
Then and now
In the 1970’s and the 1980’s when the Rent Act 1977 applied to all new tenancies, the proportion of households living in rented accommodation had gone down to around 8% (as opposed to the 80% of households before the first world war).
So, where did people live? Well, it was easier then to buy your own home – as the average cost of a home tended to be around 3x someone’s salary. As opposed to the unaffordable 10-20 x a modest salary now.
There was also a lot more social housing around.
However, in the intervening period much of the best of social housing has been sold off under the right to buy. And few people, certainly few families on a low to modest income, can afford to buy their own home.
So most people who cannot buy or get social housing live in the private sector.
The unintended consequences of a fast track s21 removal
I and many others are worried that if section 21 is removed without very careful thought and planning, it could have a hugely detrimental effect on the availability of housing in this country.
Yes, it may provide protection to some, but if many landlords sell up, low-income families will struggle to find a home.
Those landlords who remain in the sector will be far more careful who they rent to and it is highly likely that rents will go up further – as usually happens when there is a high demand for something in short supply.
This is already happening.
Suggestions on what should be done
The Lettings Industry Council, which comprises over 50 representatives from the sector, including the NRLA, Rightmove, UKALA, Propertymark, MyDeposits and others, have published a new report warning of the unintended consequences which could flow if section 21 is abolished too hastily. They have come up with a list of recommendations which includes:
- Enabling faster possessions where a tenant has clearly ‘abandoned’ a property
- Reducing the backlog of eviction cases stuck in the courts, including via the hiring of more judges.
- Prioritising cases which involve high or persistent rent arrears and dropping the ‘review hearings’ introduced during Covid.
- Making mediation recommended in all possession cases
- Introducing a new bond or guarantee scheme for tenants on benefit or who struggle to find a deposit,
- Using Unique Property Reference Numbers or UPRNs to join up all the data about properties and landlords into one place, and
- Launching an industry-wide regulator to oversee a system of letting agent regulation, property MOTs, a property register as well as both tenant and landlord redress.
The full report can be read in full here.
Tax issues and lack of enforcement
Another thing which is putting landlords off and discouraging investment is the tax regime which has become harsher, as discussed by Mark Alexander in his post here on Property118.
Consider – if landlords are unable to make a profit and are faced with increased and more onerous regulations – where is the incentive for them to continue as a landlord?
Do we really want all our good landlords to sell up?
Tenants will be left at the mercy of the bad and criminal landlords who will continue in the sector, wholly ignoring all tenant-friendly regulations and encouraged in this by the shockingly low enforcement action taken by many Local Authorities.
Not that this is entirely their fault. It is largely due to a lack of finance and experienced staff. Which, in turn, is down to austerity and the ‘letting go’ of experienced enforcement teams by Local Authorities under financial pressure over the past decade.
I have to say that I have little hope that this appalling government will do anything sensible, focused as it is on saving Boris Johnson’s job.
However, tenant organisations should realise that they are doing themselves no favours by crying for action that will drive most decent landlords out of the sector.
What we need is more, not fewer landlords and more, not fewer, properties available for rent. If there was an adequate supply of rented property, then the bad landlords and shoddy properties would be shunned by tenants, driving those landlords out of business.
As it stands, they are likely to be the only landlords offering property to let – if ill-considered calls for the immediate removal of section 21 are heeded.