Jonathan Rolande - Why the Section 21 Debate Is a Smo...

Jonathan Rolande is a property industry and housing market commentator, and is founder of the National Association of Property Buyers.

It’s almost five years to the day since Theresa May first made the pledge to scrap Section 21 (S21) notices. Her announcement on 15 April 2019 was also in her successor Boris Johnson's manifesto.

But last month, the government announced an indefinite delay to the plan to ban them, pending court reforms.

How did we find ourselves in this position? The entire process has been mismanaged – it has taken too long, and it has created uncertainty upon uncertainty.

Taking a step back from the partisan ‘choose a side’ level of conversation these days, we need to understand what the average landlord is really like. And, spoiler alert: they are not like a Victorian slum owner.

Of the thousands of landlords I have dealt with over the years, only a tiny fraction would not pass the “would I want you to be my landlord?” test. Landlords are not charities but almost without exception, those I have dealt with have wanted to obey safety and contractual legislation, are sympathetic to tenants' financial issues, and while no doubt complaining about the cost, keep their properties in good repair.

According to a new report by Shelter, 500 private renters a day have lost a home since 2019 by use of a Section 21 – so called ‘no-fault eviction’.

Why? Well, Section 21 enforces the original terms of the agreement. It isn’t an eviction as such. It says, “You took the place for a year, this is month ten, in two months, you’ll need to move out please.”

Many of the 500 will have accepted that as part and parcel of the agreement and will not feel hard done by.

Section 21’s are also used when a landlord wants to sell or move back into the property themselves, something a ban would not prevent.

Others are used when a landlord or the property’s neighbours aren’t happy with something going on in the home. Rather than confront a tenant with a complaint about say anti-social behaviour, a smell of weed from the flat or lots of visitors in the late hours, it is easier just to say your goodbyes and not fight a legal case or create bad feeling with a Section 8 eviction (which requires legal grounds).

This isn’t to say I am against the ban, I am not particularly. Why? Because it really won’t make much difference to anybody so I can’t get too vexed by it.

Only a tiny fraction of tenants are thrown out with a 21 for no good reason – why would a landlord do that? To sell? To move back in? Because the tenants are doing something illegal in the property? All grounds they can be gone with a Section 8 anyway.

I believe that the Section 21 debate is a smokescreen, something that looks tenant-friendly, grabs some attention, is a measure to ‘solve the housing crisis’.

It won’t. And it gets worse. Let's go back to the smaller landlord, the mum and dad setup. They will have invested a substantial amount of money in their BTL property – buying costs, a survey, solicitors, super-charged Stamp Duty, letting agent, maintenance bills, safety inspections, decorating – an almost endless list. If they have a mortgage they will also have to find the repayments with no tax relief for interest. The reality is, anybody who didn’t buy the property 8 years or more ago and/or has a fairly substantial mortgage will not be making money from their letting. The average yield on BTL is 5%. The average interest rate on a BTL mortgage 6%+.

From 2019 when this policy was announced, the sales market has risen consistently – the number of homes to rent down a third. When the government talks of a Section 21 ban what do landlords hear? They hear that they will not be able to get their property back when they want it. They conflate the issue with rent control, which is also mentioned in the news in London and Scotland. "

Landlords have been leaving the sector, cashing in at these high prices to beat the ban. Ironically, as a property is worth more empty, many tenants who might otherwise have been secure have been turfed out prior to sale.

And since recent rate rises, nobody has replaced these fleeing landlords. The homes have disappeared from the rental market, pushing up competition between tenants and therefore, rents.

Many people on all sides of politics, who should know better, have accepted that the ban is a good idea. It seems inevitable that it will come to pass, possibly soon.

That is my hope at least, because during this time of uncertainty, whilst the government squirm in an effort to placate all sides, tenants are losing their homes for absolutely no good reason.

https://jonathanrolande.co.uk

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Peter Merrick
26 April 2024 07:55 AM

Tricia, I think the pressure groups would like to ban evictions altogether. I guess this is the backup plan after it became clear that renting was not going to just go away with S24 and SDLT and other elements of their war on landlords.

Tricia Urquhart
26 April 2024 12:09 PM

If you issue a S8 tenant can choose to leave rather than fight it through the courts. The beauty of S21 was that as long as it was correctly served, the court HAS to give possession to the LL. many of the S8 clauses are discretionary. That's one reason why so many LLs use S21 rather than S8.