How will Government changes to Section 21 affect landlords?
Following the Government announcement about planned changes to the eviction process made on the 15th April 2019, The National Landlords Association (NLA) have created the following guide to help landlords understand changes to the eviction process, how the changes will affect future eviction and when the changes will come into effect.
The NLA is opposed to the abolition of Section 21.
To highlight the short-sightedness of this policy to Government, we’re launching a postcard campaign to tell the Prime Minister directly the impact this will have on the market.
We are asking you to complete and return your postcard to us, explaining why you agree that Section 21 should not be abolished. We will hand deliver the postcards to Number 10, as a physical indication of the weight of opposition to this announcement.
Postcards are being shared via UK Landlord, membership communications, and at NLA meetings and events.
You can also sign up online here.
Current Section 21 legislation
Landlords in England and Wales can currently regain possession using the Section 21 process, except during the fixed term of a tenancy. This allows landlords to give two months’ notice to their tenant that they will seek possession, and they do not need to provide a reason for this. If the tenant does not leave within two months, the landlord can then apply for a possession order from the court. They need to ensure they complete the paperwork correctly and provide all the necessary evidence that they have complied with their requirements under the law. If they have done so, the court must grant them possession.
How will the eviction process change?
The changes which the Government intend to introduce will mean that, if landlords want to regain possession of a property, they will need to use the Section 8 process. This is a process which allows landlords to seek possession under certain grounds, mainly where the tenant has breached the tenancy agreement. This includes more than two months of rent arrears, damage to the property and antisocial behaviour.
Many landlords lack faith in the current Section 8 process. Our member survey found that those who used Section 8 took on average 145 days to regain possession, at an average cost of £5,730. This compares with the average for Section 21 at 104 days, costing £3,525.
The Government has indicated that they will be seeking to bring in changes to speed up the Section 8 process, as well as introducing new grounds such as when landlords want to sell or move into the property.
However, we await further details of what this will entail, and there is no guarantee that the Government’s proposals will have the intended effect.
When do changes to the eviction process come into effect?
It is uncertain when the changes will come into effect, however the Government will need to introduce and pass legislation in Parliament to make the amendments. The indications are that the Government intends to bring in legislation as soon as possible.
The changes will not be retrospective, and so existing tenancies will not be affected.
Further Comments from Richard Lambert on changes in the eviction process and what this means for landlords
Without Section 21, many landlords will leave the market. This will have a negative impact, both for landlords – many of whom have invested in property as a pension alternative – and for tenants, who will face lower supply, higher rents and increased personal and credit referencing requirements.
Richard Lambert, CEO of the NLA, says:
“Landlords currently have little choice but to use Section 21. They have no confidence in the ability or the capacity of the courts to deal with possession claims quickly and surely, regardless of the strength of the landlord’s case.
England’s model of tenancy was always intended to operate in a sector where Section 21 exists. This change makes the fixed term meaningless, and so creates a new system of indefinite tenancies by the back door.
The onus is on the Government to get this right. It’s entirely dependent on the Government’s ability to re-balance the system through Section 8 and court process so that it works for landlords and tenants alike. The Government should look to Scotland, where they reformed the court system before thinking about changing how tenancies work. If the Government introduces yet another piece of badly thought-out legislation, we guarantee there will be chaos.”
How the NLA will fight to reform Section 8 court process
With Section 21 being used as a backstop to overcome the ineffectiveness of the Section 8 process, we are now calling on the government to take a look at the housing sector as a whole. In a country where the model of tenancy was always intended to operate in a sector where Section 21 exists, it is unrealistic of the government to make impulsive changes to singular items of legislation without expecting chaos throughout the sector.
We will be meeting with government officials to provide our comprehensive research around the use of Section 21 and the ineffectiveness of Section 8, as well as our plethora of member feedback and case studies. We will now look to pressuring the government to re-balance the system so that Section 8 and the court process works for landlords and tenants alike.
We expect the proposals to be consulted on in May and will be asking every landlord to join us in telling the Government why Section 21 is a necessary part of a private landlord’s toolkit. We will contact NLA members shortly to advise what direct action they can take to try to stop this policy being implemented.
It is important now more than ever that we unify as one voice in front of the government. By joining an organisation such as the NLA, you will add your voice to the fight against an unfair PRS, giving us a better chance of influencing the government on matters of vital importance to landlords.