Goodbye to Section 21s - update and impact on Private Landlords
What is a Section 21 Notice?
Section 21 of the Housing Act 1988 allows landlords to terminate an Assured Shorthold Tenancy on a “no fault” basis through a written notice, allowing a landlord to evict a tenant without giving a reason, to gain back possession of a property. This has been a useful tool for landlords, allowing landlords to evict tenants to gain possession of the property, so they can more easily sell the property to free up cash or move into it. The abolishment of Section 21 notices is likely to lead to difficulty for landlords, who will now be reliant on Section 8 of the Housing Act 1988. In comparison a more complex, costly and timely process of evictions, which is based on recorded, evidential and mandatory grounds.
Why are Section 21s being abolished?
Due to the no reason nature of the notice there have been fears that the existence of Section 21 notices has led to tenants not complaining about poor conditions of properties, in fear of being evicted. The Ministry of Housing, Communities and Local Government said evidence shows that ending tenancies through Section 21 is one of the biggest causes of family homelessness. This change in the law brings England in line with Scotland and many other Western European countries who issue longer tenancies and only allow eviction based on legally mandated grounds. The private rented sector in England now accounts for 25% of the housing market, this massive increase in tenants within the sector has led to them being viewed in legislation as consumers, seeing more tenant rights being enforced.
Timeline for the Abolishment of Section 21
The Renters’ Reform Bill which removes Section 21 of the Housing Act 1988, abolishes “no fault eviction” and reforms the grounds for possession. The abolishment of Section 21 was due to happen in April 2020, however the coronavirus outbreak seems to have postponed this date. The Coronavirus Act has amended the time limit that a Section 21 notice must provide, from 2 months to 3 months (with the ability for this to be extended to 6 months). These changes will apply until 30 September 2020, and although a specific date has not yet been set for the abolishment of section 21, there is nothing that indicates it will not go ahead.
Impact on Landlords’
With the abolishment of Section 21 brings pressure on agents and landlords to follow professional housing management practices, including recording all contact with tenants and all attempts to rectify a problem before resorting to legal action, using correct legal forms and presenting evidence at court. As well as conducting proper application checks before granting a tenancy to help prevent problems down the line. Good housing management will be essential to help prevent eviction, and therefore prevent the costs both financially and in time, that will inevitably result from an eviction proceeding.
Section 21 notices have been a useful tool for landlords, providing a quick and easy way of eviction. However, the repercussions that have resulted from a no fault basis of eviction has led to the insecurity and fear of many tenants, leading to its abolishment. The current situation is Section 21 will be abolished, although a date is to be confirmed. The Coronavirus Act has extended the notice period from 2 to 3 months, which will be reviewed in September 2020 and landlords are currently under an eviction ban until June 2020.
The abolishment of Section 21 is inevitable and now is the time for agencies and landlords to adopt professional housing management practices, to prevent eviction and therefore reduce any additional loss to their profits through costly and time consuming eviction proceedings.
Landlords are rightly concerned about the additional work, cost and time that is unavoidable with the abolishment of Section 21. This is just one of a series of stringent regulations brought in by the Government putting more pressure and strain on small private landlords. Whilst corporate landlords can take these changes in their stride, supported by financial resource and management structure, the forbearance of the private landlord is continually being tested, as they get pushed further over the line from profit making to financial burden.
Any landlords with questions or concerns regarding the management practices brought in by these changes should contact The Ethical Letting Agency, property professionals who offer one off or full management services. Please contact:
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