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.