Section 21: The impact on tenants
With the announcement to repeal section 21, the government has promised that it will make renting fairer. However, the NLA sees this as the latest in a line of announcements by a Government that, time and time again, has not considered the impact of its policies on the most vulnerable members of society.
This latest announcement will have a range of unintended consequences, namely a lower supply of desperately needed private rented housing and more risk averse landlords. The parties who will lose out the most are tenants on Universal Credit or benefits, and tenants with bad credit records, CCJs, and/or pets.
These are the harsh realities of the Governments' lack of planning impacting real people all over the country. As well as vulnerable tenants, we have received many stories from our members on how the removal of section 21 will make them more vulnerable to rogue tenants.
Our call for case studies has shown many examples of how section 21 has been a vital lifeline for landlords when dealing with difficult tenants. One landlord who has written to us, had racked up £70,000 in court costs, property damage and arrears from one problem tenant. She has yet to be paid in any damages, and appeared in court a total of fourteen times over the period of a year. This was only ended when she got a restraining order against the tenant to stop the harassment.
Many members also submitted their stories regarding tenants who had stopped paying their rent and were subsequently served with section 8 and 21 notices. These stories highlight the tenants who had stopped paying the rent and ended up in tens of thousands of pounds in arrears, those in court who often delayed the process by claiming they had misplaced payment or claimed they would pay a small part of the arrears, setting the process back by weeks or months and costing our members even more money in legal fees. Thankfully, our members had the additional protection of section 21, without which they could have lost perhaps thousands more in unpaid rent.
Do landlords abuse section 21?
When reading much of the content regarding the removal of section 21, the problems highlighted have stemmed from a lack of enforcement of housing legislation by central and local government. Much of the dynamic also focuses on how the removal of section 21 will fix a fundamental imbalance of power between the unscrupulous landlord and the vulnerable tenant. However, the reality is rather different.
Landlords are extremely concerned about being stuck with a tenant who is not paying rent, damaging the property, or behaving in an anti-social manner. As a result, responsible landlords make it their key priority to comply with all of the section 21 rules. If they don’t, they are unable to use section 21. As enforcement is already non-existent in many areas of the country, removing one of the only effective pieces of legislation that secures compliance from landlords could be disastrous. This is covered in more detail in our article ‘the myths of section 21’.
The final most common argument used by advocates of repealing section 21 is that landlords issue these notices on a whim. The reality is that no landlord would end a tenancy without good reason. The potential of a void period, even when there is high tenant demand, is not an appealing thought. If the testimonies of our members on this issue are anything to go by, implementing the use of S21 really is a last resort when all other avenues of rectifying an issue with a tenant have been exhausted. Furthermore, according to the Government’s English Housing Survey* results, 90 percent of tenancies are ended by the tenant, not the landlord.
The impact of extra risk on vulnerable tenants
On top of the problems with supply, more vulnerable landlords and the Government consideration to introduce minimum three-year tenancies, landlords are exiting the market at a faster rate due to the increased risk, further damaging the already fragile supply of properties in areas where they are desperately needed.
The current conditions in the market are offering up a perfect storm for more tenants at the lower end of the market, the supply of homes continues to not meet demand, LHA rates are still frozen and, under the flawed rollout of Universal Credit, arrears continue to increase. NLA research published in February found that found that 73 per cent of landlords who let to tenants on Universal Credit have experienced rent arrears in the last year.
Alongside supply issues, the benefit cap and Universal Credit, section 21 is just another legislative overhaul that will make landlords more restrictive in who they let to. Combined with the recent announcement by the government on the 5 week cap for security deposits as a key part of the Tenant Fees Act, the NLA campaigned strongly against this measure, citing the negative impact it will have on tenants with poor credit records, benefit tenants and tenants with pets.
If the Government wants to make renting truly fairer for tenants, it needs to have a joined-up approach the private rented sector, instead of enacting policies with good intentions that end up hurting those that they aim to empower.
*English Housing Survey: Private Rented Sector Report 2016/17