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TODAY'S OTHER NEWS

Scrapping Section 21 is ‘another attack’ against BTL landlords

The Queen has announced the new government's priorities for its coming term, and it includes a proposal to abolish Section 21 of the Housing Act and reforming the grounds for possession, as part of a new Renters’ Reform Bill, designed to “introduce a package of reforms to deliver a fairer and more effective rental market”. 

But in the absence of any meaningful plan to boost the level of social housing in this country, the announcement confirming the abolition of Section 21 in yesterday’s Queens speech has been described by ARLA Propertymark as “another attack against the landlords who actually house the nation”. 

The trade body’s chief executive, David Cox, said: “If Section 21 is scrapped, Section 8 must be reformed and a new specialist housing tribunal created. Without this, supply will almost certainly fall which will have the consequential effect of raising rents and will further discourage new landlords from investing in the sector. 

“ARLA Propertymark will be engaging with the government to ensure they fully understand the consequences of any changes, and we will be scrutinising the legislation, to ensure landlords have the ability to regain their properties if needed.”

The government also plans to introduce a new scheme to permit tenants to transfer their tenancy deposits when they move properties. 

The new Lifetime Deposit scheme will permit renters to transfer their deposit from one property to another instead of being left out of pocket for weeks while they wait to be reimbursed from their old landlord but have to spend money securing their new property.

However, landlords will also be given strengthened powers to regain possession of their property under the new proposed Bill, while the expansion of the database of rogue landlords is also included in the legislation to be introduced in Parliament.

But the Residential Landlords Association (RLA) has also warned of a rental crisis that could lead to a mass sell-off of properties following the announcement Section 21 will be scrapped. 

The organisation is calling on the government to develop a dedicated housing court to ensure that there is easily accessible and swift justice available where there are conflicts between landlords and tenants. 

David Smith, RLA policy director, commented: “We accept the need to protect tenants from abuse, but it is crucial that plans to reform the way repossessions can take place are got right if the government is to avoid a rental housing crisis. 

“Unless the new system is fair to good landlords as well as tenants, those same landlords who we need to support simply will not have the confidence to provide the rented homes that are needed to meet the demand.”

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    Rents will inevitably increase hurting good tenants whom landlords are happy to keep long term. Everything seems to be designed to protect rogue tenants and rogue landlords (who have their own highly effective means of evicting tenants).

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    • L C
    • 20 December 2019 12:38 PM

    Constantly meddling to try to ‘protect tenants’ but it only makes things worse.

    More landlords will sell up, leaving a shortage of available housing on the rental market which then leads to further increased rents.

    The tenant fee ban pushed up rents and then this will do the same.

  • Mark Wilson

    What is the detail of how rents will be reviewed on the back abolition. The introduction of some sort of rent control is my bet.

    John Cart

    YEs, and that worked well the last time they tried it...…………..NOT.

     
  • Paul Barrett

    AHH!! that old chestnut of rent control.
    Why can't they control the prices of Rolls-Royces then I might be able to afford one.
    Simply not fair that some people can afford them and I can't.
    A bit like rental property in certain areas!!
    In my ideal world which the Labour Party inhabits I would be able to have lots of free or very cheap stuff.
    Of course I would expect people with money.....................you know those rich b######s like LL to subsidise my lifestyle.
    After all why should they have money when I don't have enough to meet my aspirations!?
    Rents should be cheap enough so that I can live in Mayfair.
    It is an affront to common decency that I can't afford to rent or buy in places like Mayfair.
    In fact I can't afford anywhere on the Monopoly board.............so unfair!
    Surely those evil capitalist LL should subsidise my renting lifestyle in expensive areas!?
    What gives them the right to make PROFIT out of my domestic circumstances.
    Unfortunately those who wish for rent control essentially wish to steal from the service provider's pockets.
    I seriously doubt that if a service provider is essentially being robbed every month that they will bother continuing to provide that service.
    Just imagine Harrods being forced to sell their goods at Woolworths prices!!!!
    They would go out of business pretty soon.
    For some bizarre reason the idiot socialists believe that other people's money should be used to provide subsidised private rental accommodation..............that is subsidised by the provider!!!
    A most bizarre business concept.
    Don't these idiots realise that most LL are in the game to make as much PROFIT as they can!?
    Without the possibility of PROFIT it is pretty pointless being a LL.
    It is surely inevitable that with rent prices being controlled there would be reduced or zero profits.
    As that Swedish economist once stated that rent controls are the surest way to destroy a city beyond that of bombing it!!!
    The mere threat of rent control will see LL selling up in their swathes.
    It seems that PRS has a bit of a breathing space now that it has swerved the Corbyn bullet.
    But with the repeal of the FTPA the risk of a bonkers Labour Govt raise its ugly head.
    This could be at anytime of the PM's choosing.
    A far too risky proposition on which to base a long term lettings business.
    The expropriation and rent control rabbits are now out of the hat.
    As such they remain an existential threat to the PRS.
    Inevitably at some point there will be a Labour Govt.
    It is highly unlikely that the Labour Party will have given up on its bonkers Marxist ideology and as such remains a threat to LL profitability whether in power or not.
    The only way to control rents is to allow the market to set them.
    To achieve reduced or stable rents there needs to be a lit more property building and massively reduced demand.
    Govt's AREN'T prepared to control the UK borders and as a consequence migrants illegal and otherwise continue to flood into the UK.
    This is simply unsustainable.
    Controlling rents would mean even fewer LL offering far fewer rental properties as there is certainly no capability for most who rent to be able to buy.
    Even if social housing was expanded very few of those in the PRS would qualify for it.
    1 in 5 of those on Council waiting lists ISN'T a British National!!
    Since when have foreigners taken precedence with social housing over British citizens.
    Are UK taxpayers supposed to house the world!?
    Rent controls would utterly decimate the PRS as if the current policies are not doing a pretty good job of achieving that already!!
    I intend to still let but not to AST tenants.
    Lodgers will be my income earners where Govt can't interfere in the rents I will set though they would still be controlled by the market which is fair enough.
    Not many Live-in LL will take on lodger families.
    I will only be taking on singles.
    No more than 3 to avoid Mandatory HMO Licensing.
    I will make more net income from 3 lodgers than I currently do from my existing properties.
    So for me lodgers are the way to avoid the horrors of the PRS.
    Of course it is always a possibility that Govt might try to control lodger rents but I don't believe that would be so easy to achieve.
    The threat of rent control is no longer an esoteric threat.
    It could have happened very quickly had Labour won the GE.
    Such a threat is more than sufficient to undermine the business viability of many in the PRS.
    As such many LL will be considering their position in light of the rent control threat plus the expropriation one.
    Dodgy times ahead for the PRS!

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    Great post (if not a little too long) as always.
    Also, with the imminent repeal of the Fixed Term Parliament Act, the prospect of a Labour government, sooner rather than later will be that much more of a reality, if they get their act together.
    Therefore I am taking your advice and selling one of my properties next year, with the intention of reducing my reliance on private rentals.
    My corporate rentals are doing well and I intend to go into holiday lets with my listed barn which I have on my property, where I could potentially get a lot better return than renting in the PRS.

     
  • Paul Barrett

    This will be a short one.
    Getting out of AST letting that you are doing is a good strategy.
    I can't do anything else so I have to sell up.
    Would love to be in your position.
    My posts tend to last as long as my train of thought at the time!
    I doubt the vast majority of AST LL who are facing unviability are able to develop alternative strategies like you.
    As such they will be a total net loss to the PRS.
    This will be very bad news for tenants but we are where we are.
    I just feel it is a great shame that so many good LL are being forced out of business.
    All their efforts over the previous years have come to nought being now forced out of business.
    Most of these LL don't need to be LL, I know I don't need to be one, but tenants definitely don't need LL to leave the PRS.

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    No job is for life these days and this also applies to any business.
    I think that the expression' adapt and survive' is pertinent in these circumstances.
    Initially, I became an accidental landlord, developing the accommodation out of necessity above two commercial buildings.
    Since then I have added to my portfolio and around 20 years ago bought a 40 acre farm with substantial outbuildings in Monmouthshire.
    It has taken all this time to refurbish the farmhouse and outbuildings, but I now have a valuable asset.
    My intention was always not to 'have all my eggs in one basket' and despite being a little overweight in property, it has turned out pretty well up until now.
    In this fast moving world, it is essential that we don't 'rest on our laurels'.
    In the same way that you have identified an alternative plan, we must all do so also, I am 63 now, but have not lost any of my enthusiasm for continuing to develop new businesses and I will ultimately take that to my grave.
    Anyway, I wish you and all the contributors on here a very Merry Christmas and a happy New Year, with some positivity, in that Corbyn et al failed to get elected.

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