Scrapping Section 21 – Less Properties, Higher Rents And Tenant Insecurity
The Lettings Industry Council has published a report titled ‘Beyond 21’outlining why Section 21 should not be scrapped, despite the government’s intentions to do so.
The report suggests that if the Section 21 notice is abolished there are the strong possibilities that as many as 20% private rented housing stock will disappear coupled with skyrocketing rents due to the shortage.
The industry council’s findings predicts that a sudden demise of Section 21 will cause the following repercussions that have not been taken into account:
• Landlords will have to make prospective tenants undergo a much more stringent screening process, which of course will affect the majority on housing benefits and low income families.
• A catastrophic reduction of 20% of BTL housing stock in England which will have the biggest impact on vulnerable tenants, as many landlords will sell up or consider short term lets.
• Due to the supply and demand imbalance rents the report predicts that around 6000,000 homes (approx: 13% of the sector) may have to face rent increases.
• The justice system could face an onslaught of a tripling of courts’ caseloads as there could suddenly be an additional 45,000 possession hearings to be heard.
Theresa Wallis, chair of the Lettings Industry Council, said: “It is vital to strike a balance between the needs of tenants for long-term security and legal certainty, restoring landlord confidence to ensure an adequate supply of private rented homes.
“The social cost of abolishing Section 21 lies in the economic effects it will release and how the market will react to it. That is why the government must not proceed with its proposal to do so without careful consideration of the impacts and implementation of measures to mitigate such negative consequences.”
Within the report the council makes the following suggestions for the government to consider which will counter balance the negative effects that the scrapping of Section 21 will have on both landlords and tenants:
1. Strengthening the grounds of section 8 for which it can be used and to allow an accelerated process;
2. The use of meaningful mediation to reduce the number of disputes resulting in court proceedings before they commence and save both sides substantial legal costs;
3. Court reform including a modernised, specialist housing court for all housing related hearings, ensuring timescales for repossession can be reduced and a viable route for tenant claims against landlords for disrepair, poor conditions and management; and
4. Bailiff reform because securing the services of county court bailiffs is one of the longest delays for landlords, following the grant of a warrant for possession.
An industry spokesperson applauds the suggested measures and said the introduction of these would not only prevent the negative effects of ending Section 21, but would almost certainly help build a stronger trust in the private rented sector.
The spokesperson said: “These four measures make sure that the tenants’ need for long-term security regarding their tenancies is met while at the same time respecting the landlords’ right to use their property economically and according to their needs.
“Some of the measures, such as the mediation process and the bailiff process reform can be introduced on relatively short-term planning. Whilst we acknowledge that court reform and a review of Section 8 requires longer-term preparation, if the government were to adopt the step-by-step implementation of measures outlined in this report, it would not only prevent a short peak increase in serving Section 21 notices, but also give all relevant parties enough time to adapt to the change in legislation.
“We are confident that with faster and easier access to justice, banning both criminal landlords and anti-social tenants from the PRS, as well as the improved communication between landlords and tenants through mediation, both parties trust in the PRS will increase.
“Providing greater legal certainty will lead to further growth within the PRS, as more private landlords will be willing to rent out their properties and tenants will be provided with a broader range of properties they can choose from.”