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TODAY'S OTHER NEWS

Changes to possession rules and their impact on landlords and tenants

These days, housing probably ranks right up with the NHS and education as a political battleground and over recent years, politicians made a particular effort to win the hearts and minds (and votes) of renters and first-time buyers (two groups in which there is likely to be a lot of crossover).

Unfortunately, there seems to be a lack of awareness of the fact that a robust and sustainable rental market needs to work for landlords as well as tenants and that therefore actions which prioritize one group over the other may have the short-term benefit of garnering positive media headlines (at least in certain sections of the press), but over the long-term, they can backfire spectacularly. One example of this is proposed changes to the possession rules.

Possession rules as they stand now

At current time, landlords can seek to regain possession of a property by one of two methods which are often known as “Section 21” and “Section 28”. The difference between them is that in Section 21 evictions, landlords merely have to state their wish to retake possession of their property without giving a reason let alone apportioning blame. In Section 28 evictions, however, landlords have to demonstrate fault on the tenant’s part.

This difference has led to Section 21 evictions becoming known as “no-faults evictions”. While this may be technically accurate, it is also both emotive and misleading, so it is very unfortunate that it has become commonly used by politicians, the media and certain lobbying groups.

The truth behind Section 21 evictions

A bit of common sense should make it clear that people who earn their living from letting out properties have an obvious, vested interest in keeping their properties occupied and are therefore far more likely to do whatever they can to ensure that good tenants stay happy than to throw them out into the street through no fault of their own.

The truth of the matter is that “no faults” evictions generally come about for very valid reasons, they are simply used in preference to “Section 28” evictions as they are quicker, easier and cheaper. In fact, according to research from the Residential Landlords Association, by far the most common reason for a “no-faults eviction” is rent arrears. This is followed by damage to the property and anti-social behaviour.

Of course, more than one of these reasons can apply in any given situation. Interestingly, over a quarter (26%) of landlords surveyed reported serving a Section 21 notice at the tenant’s request so that they would become eligible for social housing.

Section 28 no more?

Those opposed to the concept of “no-faults evictions” could reasonably argue that most of these scenarios would be covered under Section 28 anyway and this is true, it does, however, overlook the effort and costs involved in going through the existing Section 28 eviction process.

This means that if the government proceeds to ban Section 21 evictions without making it vastly more straightforward for landlords to evict problem tenants under the Section 28 process, then it is very likely that landlords will respond either by exiting the market or by only accepting the most reliable of tenants. In other words, the proposed change could end up hurting the very people it was intended to protect.

Mark Burns is the managing director of property investment company Hopwood House.

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    At last! An article that recognises that Landlords need their interests protected too, otherwise there will be unintended consequences. No need for a crystal ball. Scottish Landlords have had their right to determine the length of tenancies removed for over 18 months now, resulting in shorter (not longer) tenancies, unexpected voids and higher LA costs, some landlords selling up and thus large hikes in rents for the best properties ( up by around 40% compared to pre 2017 levels).

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    No fault eviction is basically a lie who wants to evict a tenant for no reason ? it’s an absolutely ludicrous statement and I cannot believe it is being used to gain votes.

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    I don't think Renters will vote Torie because they removed S21.

    But it will lose the Tories votes from landlords. They should stand strong and uphold the S21 also make it much quicker to evict bad tenants and make them repaid every penny before being handed a Social house. Instead they are coming over as very weak and a pushover running around like headless chickens in all directions. This will increase homelessness, cost the economy, lose votes and reduce rental supply.

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    tories have lost my vote permanently

     
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    Has nobody picked up on the glaring error ?
    Its Section 8 ! ( not 28 )

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    on the final point the government is well aware of the landlord serving section 21 notices so tenants can get on waiting lists but this is one of the fundamental reasons why I believe they are removing this possession route as this will block more people heading to the council for property and extending their waiting list’s , aswell as some good vote winning publicity no doubt
    The whole argument is a joke considering that landlords only end 10% of tenancies in the UK, and the recent landlords Association survey showed 83% of this 10% was served down to rent arrears ! So it’s under 2% of no fault evictions we are talking about of tenancies ending .. absolute joke this government

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    Vote winning from who ? generation rant ? they have always been labour voters, and Im sure they will continue to vote labour, the Conservative party will however be losing the landlord vote though, come on Boris, sort this out pdq.

     
  • Paul Barrett

    It doesn't seem to be appreciated by those other than LL that sourcing new tenants can be a stressful time consuming and expensive process.
    This now even more so with the TFA.
    LL will always strive to do their best to retain good rent paying tenants.
    The idea that LL issue S21 with gay abandon to evict tenants is for the birds.
    The whole point of being a LL is to achieve rental income.
    Why would any LL wish to evict a good rent paying tenant!?
    The 5 times I have been forced to use the S21 process was when my good rent paying tenants became rogue non-rent paying tenants forcing me to evict them as they did NOT comply with the S21 notice.
    So it was ENTIRELY the fault of the tenants that the S21 process had to be used.
    I would have far preferred to retain these tenants had they continued to comply with their tenancy conditions.
    But I was left with little alternative than to evict as I was not and never will be in a position to provide FREE accommodation to those who don't wish to pay for it.
    I have NEVER been able to achieve eviction using the S21 process for at least 8 months.
    So hardly the 2 month process that the vile negative propaganda spewed out by the like of GR and Shelter continues to falsely maintain occurs.
    Removing S21 will leave S8 which is even more dysfunctional that S21.
    The S8 court process could easily be more than a year.
    Mostly due to the inadequacy of the Court process due the reductions in County Courts and available appointment availability.
    It is bad enough with the current dysfunctional S21 process; but to make it even worse by reliance on S8 is just unbelievable.
    Even though the current S21 process is dysfunctional it is still better than the even more dysfunctional S8 process.
    Of course most of the dysfunction in possession cases is simply down to insufficient court resources.
    In theory the possession legislation should work effectively.
    But when theory meets reality that is when the system breaks down.
    Govt doesn't seem to have realised that if S21 is abolished then S8 must be vastly more resourced.
    If it ISN'T then that just makes usage of S8 for possession purposes even more protracted.
    At least the Scottish Govt recognised this reality and enhanced Court facilities to cope with the projected Court workload.
    There doesn't seem to be any recognition by the PTB that this needs to occur in England.
    As such the remaining S8 process becomes effectively useless.
    For the 50% of the PRS that comprises of mortgaged LL the S8 process is totally inadequate and will become even more so as more LL will be forced to use the S8 process as S21 is removed from usage.
    Very few mortgaged LL will be able to sustain even longer eviction periods where tenants are defaulting on rent.
    It reaches a situation where it makes business sense to leave a rental property empty if a LL cannot source tenants on whom they can obtain RGI.
    Many LL won't be able to achieve this and in many cases it would be worthwhile LL selling off those properties that cannot attract RGI qualifiable tenants.
    The business imperatives caused by removal of S21 will result in lower quality tenants being unable to source tenancies.
    Which I'm sure is exactly the OPPOSITE of what Govt will intend!!
    So what will occur is even more homelessness!!
    It DOESN'T seem to be appreciated by Govt that the only reasons the PRS had been so effective to date is entirely because of S21 and S8 along with the AST and BTL mortgages being available based on rental income.
    A 3 legged stool if you will.
    Remove one of those legs and the whole BTL model falls over.
    S21 should be retained but if Govt requires then it should be restricted to where there is rent defaulting.
    That then makes S21 totally based on fault by the tenant in failing to meet contractual rent payment obligations.

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    The Government Consultation Period has started for removing section 21, posted 22nd of July '19 and run 12 weeks until 12th October 2019, now is the time for LL's to be aware & to Act / lobby your M.P. & write to the Department. Shelter is in there as is ARLA part of the Consultation so Estate Agents are going to be well represented and already calling the shots how everything should be regulated, made Digital etc. Its not their Property and cant see private LL's interest being represented at all, so all LL's need to make their views known & that's if they know about the Consultation in the first place.
    I know many of you have come to this platform in recent months and said your piece in no uncertain terms especially in last April that I recall, now if you can re-do it again but this time to the Consultation Process, there are millions of us LL's but only a handful coming off the fence and making the effort, its no good moaning about it afterwards when we are clobbered.

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    I realise that most of these measures have been introduced by the Tories, but it would not be a good idea to vote Labour or any of the other left leaning parties for fear of electing a Corbyn government.
    The impact on landlords would be catastrophic in comparison.
    I understand the strong feelings that are evident at the moment among some of the contributors on here., but I urge you to think again about not voting for the Tories.
    I would liken the situation to a conventional war being waged by the Tories compared with a nuclear war that would be waged on landlords by Labour.

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    Have to agree, '' out of the frying pan and into the fire''

     
    Paul Barrett

    It is not realised by many but ONLY about 2500 votes stopped a Labour Govt taking power at the last GE.
    Bearing in mind that there are very few new Tory voters being created and the fact that many of them are now dead along with the fact that lots of new Labour voters are being created leaves the very distinct possibility that Labour would win the next GE.
    The problem for the Tories is that if they achieve BrExit then many disaffected Labour voters will switch back to Labour from the BrExit Party.
    So bizarrely if BrExit is achieved at the next GE traditional voting patterns will apply which means Labour will be the largest party.
    So a strange problem for Boris who could well be snatching defeat out of the jaws of victory.
    Corbyn will be delighted if Boris achieves BrExit as that is what he has always wanted himself.
    So it will be thanks very much Boris for BrExit now FO while we now run the country into the ground with our ideologically stupid Marxist ideas.
    You can have power back in 5 years time once we have totally f##### all the evil capitalists and LL that includes YOU!!

     
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    vote brexit party

  • Paul Barrett

    It is a fact that the PRS has been and probably will continue to be a very fractured industry.

    One wonders why this is?
    But as long as it is the very successful propaganda campaign by Shelter and GR will continue to divide and conquer the PRS.
    I'm afraid there are very few LL sitting on the fence
    Most of them don't even appreciate there is a fence and if they did most of them wouldn't even be bothered to climb up and sit on it!!!!
    This was evidenced by the almost total lack of response to funding the S24 JR.
    I'm sure that many LL who didn't bother are now finding the effects of S24 are quite onerous.
    It could be said that it is their fault.
    They made no attempt to stop S24 and so must now accept the consequences of it on their income
    The lobbying efforts of the PRS have been pathetic compared to the consumate professionalism that GR and Shelter have shown
    Their propaganda has been par excellence.
    Even Goebbels would have been impressed!!
    Their usage of social media etc had left the old fashioned ways of doing things as done by the PRS in their wake.
    The PRS needs to up it's game to make tenants aware of the issues involved and to discuss them truthfully.
    I believe it would have made good propaganda if EVERY LL had agreed to retain a tenant for at least 1 year before a potential S13 rent increase and that if a tenant didn't wish to accept the rent increase then they could have 2 month's notice at the previous rent.
    But the biggest problem with this fence sitting issue is that most LL aren't even aware there is a fence let alone bother to even climb up and sit on one!!
    The fact is the PRS is a disjointed and fractured industry which greatly facilitates the ability of the likes of Shelter and GR to divide and rule the PRS.
    The PRS must learn from Shelter an GR how to propagandise successfully.
    Social media is something that the PRS must engage with.
    It has lost the propaganda war.
    Unless it starts attacking the likes of Shelter on social media showing them up for the lies they are disseminating then the PRS is doomed!

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    It all seems a bit of a mess, i have some student houses on AST and these are being abolished so what is going to happen? Also alot of BTL mortgages are on AST so are we going to have to remortgage?

    Paul Barrett

    Indeed you have raised a vitally important issue as regards the AST.
    With the 6 month FTT AST being abolished that puts Lenders in a very peculiar position.
    Essentially the main plank if their lending proposition was based on AST being no longer than 1 year.
    So what will they do when it is no longer to specify this?
    Lenders would surely have to remove the AST restrictions.
    But surely if LL are restricted from repossessing their properties it means lenders will struggle to repossess as well and invariably they will only have to do this if the LL has failed to keep up mortgage payments which will usually result from the failure of a LL to evict a rent defaulting tenant in sufficient time.
    I'm sure that BTL mortgage lenders will have work out what to do with existing mortgage conditions and certainly for all new ones.
    I can't see lenders calling in loans because LL can no longer comply with mortgage conditions.
    But certainly the whole BTL lending landscape will change.
    Potentially lenders will price for enhanced risk though there are quite a few lenders that gave abolished AST restrictions so I guess lenders are comfortable with increased AST terms.
    But I'm sure the wholesale changes in Tenancy law must surely change how BTL lenders go about their business.
    I think it is very much a case of we don't know what we don't know but I'm sure BTL underwriters are carefully considering their loan products and how they might be adjusted in light of all the new regulations.
    I can see them restricting loans to 50% LTV

     
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