With the government’s consultation period for the proposed scrapping of section 21 coming to an end last Saturday, what would the effect of this potential new legislation mean for landlords, letting agents and the private rental sector in London and UK as a whole?
Understanding Section 21:
In England and Wales, a Section 21 notice, also known as a section 21 notice of possession or a section 21 eviction, is the notice which a landlord must give to their tenant to begin the process to take possession of a property let on an assured shorthold tenancy without providing a reason for wishing to take possession.
What is the Government proposing?
The government’s new proposal recommends the removal of Assured Shorthold Tenancies (ASTs) from the Housing Act 1988, meaning that the only type of tenancy which private landlords could use would be assured tenancies.
This would result in a situation where a landlord no longer has the ability to evict a tenant without reason.
How will this effect landlords and the rental market?
The legislation is clearly aimed at stopping rogue landlords from evicting tenants for no good reason, however, research by the Residential Landlords Association shows that 84 per cent of landlords who had used a Section 21 notice did so because of tenant arrears, and 56 per cent because of the damage to property and antisocial behaviour.
If this is the case, the only upshot of scrapping section 21 is that bad tenants will still be evicted but landlords will have to go through the much lengthier and more expensive process of using Section 8. https://www.gov.uk/evicting-tenants/section-21-and-section-8-notices
The overall effect on the lettings market is likely to be a very negative one with investors debating whether it is in fact worth the risk and effort involved in letting a property in England and Wales where the changes would come into force. With the lack of homes already an issue in London and across the UK and a proposal for rent control in London by Mayor Sadiq Khan https://www.bbc.co.uk/news/topics/cdl8n2edgj5t/housing-market, you can understand why some may think twice about becoming a private landlord. This would of course then have an effect on the amount of stock available on the market creating a shortage of rental property which is bad for agents and tenants alike.
Not all doom and gloom?
So it sounds like a lose-lose situation but it is worth noting however, there was absolutely no mention of this at all in the Queen’s speech on Monday. In fact very little was mentioned about property reforms at all https://thenegotiator.co.uk/property-industry-queens-speech/ so perhaps it’s just best to watch this space and see how it pans out as it is debated in parliament over the coming weeks and months. If we all hold our breath and keep our fingers crossed perhaps politicians will opt for a sensible outcome on this one??
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