A high profile PropTech entrepreneur has come out against the scrapping of Section 21 eviction powers for landlords.
Alexander Siedes, chief executive and founder of Homeppl, says it would be better for landlords to have improved advance information about tenants.
“In my experience, there is always a reason why a landlord chooses to evict - it could be because the tenants are in arrears, or they are not meeting their legal obligations under the agreement” he says.
“In some circumstances, the landlord may be struggling financially and need to sell the property, and surely they need to be able to sell their assets to avoid being forced into debt.
“I think there is a much bigger issue here around tenant discrimination and how good tenants are being effectively ‘blocked’ from renting while bad ones are slipping through the net - this is having a detrimental impact on the market as a whole, and it will continue to if the industry uses old measures to address new challenges.”
Siedes claims that due diligence on tenants is traditionally done by insurance-led businesses who use it as a loss leader to cross-sell insurance.
He believes they have no incentive to do it well, and every reason to do it badly as it gives them the opportunity to upsell insurance. They rely on credit reference agencies and people for the checks, rather than technology, which means while they might be gathering the ‘necessary’ data, they have no clue what to do with it.
He continues: “They can’t spot rental fraudsters, and those who don’t have a credit file - which is common amongst internationals, the self-employed, or students - are forced to pay the rent upfront and are, ultimately, financially discriminated against.
“The result is that good but ‘invisible’ consumers are being denied properties, while fraudulent applications make it through the process, resulting in 8.0 per cent defaults and 1.6 per cent court possession claims in the private rented sector. This is a huge cost to landlords, much of which has to be recovered by increasing rents to mitigate further risks.”
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