In light of the election of a new party, King Charles delivered his speech which set out a number of plans under the new Labour Government. A key change for the housing market is the plan to abolish Section 21 ‘no-fault’ evictions – immediately.
Elliot Leigh are awaiting confirmation but we believe that the abolishment of section 21 will not apply to landlords who rent their properties to local authorities under an approved guaranteed rent scheme. This is because section 21 notices are not used to give notice to social housing tenants. However read on, to discover how Guaranteed Rent could affect you as a private landlord.
What is section 21?
Currently section 21 allows landlords in England and Wales to give tenants a minimum of two months’ notice to vacate without having to prove any fault on the tenant's part. The common perception that Section 21 is an unfair eviction tool used indiscriminately by landlords is misleading. Many Section 21 notices are issued to remove tenants who have violated their tenancy agreements at the end of the fixed or periodic term, although this is not always evident.
Originally introduced by the previous Conservative government, the Renter’s Reform Bill was proposed to tackle issues faced by renters. The bill had progressed to its second reading in the House of Lords before the general election was called and parliament dissolved. Labour revived it in the King’s Speech.
Section 8: Periodic Tenancies
The proposed bill aims to simplify tenancy structures by making all tenancies periodic. Under this system, tenancies would only end if the tenant chooses to leave or if the landlord has a legally valid reason, as outlined by “Section 8” grounds. These reasons include the landlord wanting to sell the property, redevelop it, allow a close family member to move in, or if there is a breach of contract or anti-social behaviour by the tenant.
For landlords dealing with problematic tenants, issuing a Section 21 notice and waiting for the tenancy to end can be easier than serving a Section 8 eviction notice, which may be contested in court, leading to a lengthy process. Without Section 21, landlords will face increased challenges, making this change a potential political manoeuvre to gain votes without fully considering the consequences.
The impact of section 21 abolishment on Landlords
Abolishing Section 21 will not significantly affect responsible landlords, who prefer long-term, reliable tenants due to the costs and risks associated with frequent tenant changes. The change may curb rogue landlords, but it will also impact tenants, possibly making it harder for them to find accommodation.
Additionally, landlords may issue Section 21 notices pre-emptively if they observe problematic behavior, knowing that resolving issues will become more difficult after the ban. Insurance premiums could rise as the legal costs for evictions increase, adding to landlords' operational expenses.
The reliance on Section 21 to evict rogue tenants with minimal court involvement raises concerns about the impact of its abolition. The anticipated increase in resource-intensive Section 8 cases could overwhelm already burdened courts.
Despite assurances of additional funding to handle the surge in Section 8 cases, it is uncertain if the government can allocate enough resources to create an effective eviction process. Most landlords share these concerns, which may lead to greater difficulties for tenants seeking housing.
What are your thoughts on the abolishment of section 21? Let us know below!
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