Blog Series: Dear Prime Minister to be… [1: Possession]
Dear Prime Minister to be…
As the country gears up for the General Election, we are calling on the newly elected Prime Minister to take a strategic approach to the private rented sector, and address issues which affect landlords’ ability to plan and run effective businesses.
Uncertainty is the enemy of investment and the inability to plan for the future has led to landlord confidence reaching an all-time low. The next government must recognise the value the majority of landlords offer – and ensure criminals in the sector are removed.
They need to take informed policy approaches to the key issues of possession, taxation and energy efficiency, to harness the value of the private rented sector effectively and avoid unintended consequences in making renting harder to access for tenants.
Confidence in possession
The proposal to abolish Section 21 from the Housing Act 1988 – so-called no-fault evictions – is short-sighted and fails to understand how the private rented sector operates in practice. Analysis for the NLA by Capital Economics showed that, if this policy goes ahead, the number of dwellings available to rent privately could fall by 20 percent – almost 1 million homes. Even more concerningly, the number available for tenants in receipt of benefits could fall by 59 percent.
Most landlords do not end a tenancy for no reason. Section 21 does not assign fault, but our survey of 3,088 landlords in England and Wales found that, of those who had sought possession due to a breach of the tenancy agreement, such as rent arrears, antisocial behaviour or damage to the property, 67 percent used a Section 21 notice, with 47 percent using Section 21 only. In comparison, just 20 percent used only a Section 8 – fault-based – notice.1
Those with secure jobs, good credit histories and glowing references will reap the benefits – whilst others who rely on the private rented sector but have a higher risk profile will find it increasingly difficult to agree a tenancy.
Unless, and until, there is fundamental reform of the courts to ensure landlords have confidence in regaining possession on a fault-basis, Section 21 should be retained.
Need for fundamental court reform
The average cost of a Section 8 claim for our members is £5,370, taking an average of 20.7 weeks to complete. This compares with an average cost of £3,525 and time of 14.9 weeks for the Section 21 process.2 Given the notice period for Section 21 is two months, versus two weeks for rent arrears under Section 8, this shows the failure of the court system to meet the needs of the sector.
The abolition of Section 21 would put further pressure on the court system, pushing possession claims through the courts. Landlords need certainty in the consistency, timeliness and cost of the possession process.
The gold standard would be for the next government to establish a housing court or tribunal – but this would require significant capital investment to achieve and ensure that access to justice is not impaired. A more cost-effective alternative would be to ensure that specialist judges hear housing cases in the county court – accompanied by increased capacity for the courts.
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