Letting agents and landlords have reacted with dismay as the Government unveiled plans to scrap Section 21 notices.
The Ministry of Housing, Communities and Local Government revealed yesterday that it plans to consult on new legislation to abolish Section 21 evictions and said it would work with landlords and tenants to create a system that would amend the current eviction system under Section 8.
Under the proposals, landlords will have to provide a concrete, evidenced reason specified in law for bringing tenancies to an end.
The proposals came in response to a previous consultation on introducing three-year tenancies, which the Government now seems to have dropped, stating: “It is clear that a ‘one size’ approach to tenancy length will not meet the needs of the range of households and different types of landlord operating in the market today.”
For many agents and landlords, the scrapping of the Section 21 notice will now make tenancies effectively indefinite and there are warnings that there could be a spike in its use before it is abolished so buy-to-let investors can more easily exit the market or get their properties back.
Isobel Thompson, chief executive of the National Approved Lettings Scheme, said such a reaction from landlords could not be discounted.
She said: “What is worth remembering is that the vast majority of tenancies are ended by tenants, not landlords, so we hope this isn’t a case of the Government using a sledgehammer to crack a nut.
“We absolutely want a safer, fairer private rented sector for all, but that requires landlords to be operating in the sector to provide much-needed homes.
“What is the Government’s contingency plan if landlords decide to withdraw from the market following this latest announcement?
“NALS looks forward to engaging with the Government to ensure this legislation is fair to all.”
Her fears were echoed by the National Landlords Association.
Meera Chindooroy, policy and public affairs manager at the NLA, told EYE: “It won’t be retrospective so there may not be a spike immediately, but many landlords are going to be considering their options and how to exit the market when their current tenancies come to an end, or potentially earlier if they are concerned.”
The Residential Landlords Association (RLA) warned against “knee-jerk responses”.
David Smith, policy director for the RLA, said: “It is important to note that although the Government has announced it will consult on how to end Section 21 repossessions, this process, together with the consideration and implementation of legislation to achieve it, will take a long time.”
Letting agents were also fearful of the changes.
Emma Kerrywood, head of residential lettings at Dacre, Son & Hartley, which has 21 offices in North and West Yorkshire, said: “These changes appear to promote a move towards open-ended tenancies, but the timing is terrible considering that we are still to see how banning tenant fees will impact the industry.
“Demand for rental properties is increasing and yet this appears to be another piece of legislation that could deter landlords from continuing to operate.
“Making it potentially harder to regain possession of a property, in conjunction with the deposit cap, may also make landlords much more risk-averse and reluctant to rent to tenants with complex financial situations.”
Peter Hermon-Taylor, managing director of lettings at Maskells, warned: “The rental market is a delicate balance of supply and demand.
“We understand the premise of what the Government is trying to do, which is protect the more vulnerable against the 1% of landlords who would seek to abuse the rights that Section 21 affords.
“However, meddling with a system that already works for the overwhelming majority is a perilous undertaking and we are very wary of this process, which by its nature is designed to tip the balance of power towards the tenant.
“By doing so, however, they risk upsetting this stability of the whole sector which could have the effect of pushing droves of landlords out of the industry altogether, particularly when taking into account the additional tax burdens landlords are facing on both acquisition and income of their buy-to-let properties. The devil, however, and as always, will be in the detail.”
Supporters of the change include homeless charity Crisis.
Jon Sparkes, chief executive of Crisis, said: “We warmly welcome the news that private landlords will no longer be able to evict tenants at short notice with no reason.
“We know that the end of a private tenancy is the single leading cause of homelessness across England so this decision represents a monumental leap forward in helping prevent homelessness across the country.”