A recent report by Capital Economics on behalf of the National Landlords Association (NLA) forecasts that there will be a 20% drop in the number of properties available to rent if the most common route private landlords can take to regain possession of their property under the Housing Act 1988 is scrapped.
The report, ‘A new deal for renters? The unintended consequences of abolishing Section 21’, also predicts that a 59% reduction in housing available to tenants on housing benefit or Universal Credit, and a potential increase in rents for 13% of properties.
Chris Norris, director of policy and practice at the NLA, said: “The government has clearly failed to recognise the realities of the private rented sector by proposing the abolition of Section 21.
“Any government which thinks it appropriate to risk the loss of nearly one million rental homes at a time of housing crisis needs to reassess its priorities as a matter of urgency.”
Tenant eviction specialist, Landlord Action, reports that up to half of Section 21 cases they handle are as a consequence of tenants wanting to be re-housed by the council.
The company fears that the scrapping of Section 21, and subsequent expansion of Section 8, could put thousands of tenants at greater risk of receiving a County Court Judgement (CCJ) and ending up homeless as local councils will not be obliged to re-house those with rent arrears judgements.
Some 95% of Section 8 cases are for mandatory two months’ rent arrears, according to Landlord Action, and although it is unknown how many Section 21 cases are as a result of rent arrears, the evictions firm says it is the number one reason landlords serve notice.
Data from the Ministry of Justice reports that there were 22,527 accelerated possession claims issued in 2018 (section 21 claims). Of those accelerated possession claims under Section 21, 10,127 resulted in evictions carried out by County Court bailiffs.
Therefore, if landlords are forced to use Section 8 route in the future, thousands more tenants will have rent arrears judgements against them, rather than simply being evicted using Section 21.
In addition, more tenants could find themselves with a County Court Judgement (CCJ), which will severely impact their future credit rating.
Paul Shamplina, founder of Landlord Action, commented: “Local councils will see when a tenant has a rent arrears possession order made against them so will consider that that tenant has made themselves homeless. Therefore, the council will not be obliged to re-house them as they do at present under Section 21 accelerated procedure.
“If those tenants cannot get accommodation in the private rented sector and cannot be re-housed by the council, what will happen to them?”
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