Posts with tag: Section 21

The Guild of Property Professionals discusses Government’s Section 21 changes

Published On: August 20, 2019 at 9:22 am

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As part of the suggested changes for Section 21, the Government has proposed to remove Assured Shorthand Tenancies (ASTs) from the Housing Act 1988. This will mean that assured tenancies will be the only tenancy available to landlords.

The Guild of Property Professionals has explained that tenants will be given the option of agreeing to a fixed-term assured tenancy. This will result in both parties committing to a predetermined time or a periodic assured tenancy.

If a tenant does not terminate their fixed-term tenancy or the landlord uses a Section 8 notice, it is possible that the tenancy will be renewed to a new fixed term. Otherwise, it will automatically become an assured periodic tenancy.

If these changes are indeed put through by the Government, there will be a six month transitional period before they become law.

How this might affect current tenancies?

Iain McKenzie, CEO of The Guild of Property Professionals, has highlighted that there has been confirmation from the Government that this plan for changes will not be retrospective.

“What this means is that should the law come into place, it will not impact tenancies that are already in place at the time it is passed. So, landlords in these agreements will still be able to use Section 21 until the tenancy comes to an end. Any new agreement thereafter will then become an assured tenancy,” he adds.

What about landlords and tenants looking to end the tenancy agreement?

A landlord looking to terminate an assured tenancy will have to give a Section 8 eviction notice to the tenant, based on our of the grounds specified in Schedule 2 of the Housing Act 1988.

McKenzie explains: “In the instance where the tenant decides to end the tenancy, they would have to give one month’s notice, but only at the end of a fixed-term tenancy or during a periodic tenancy unless their agreement includes a break clause.”

Will we see changes to Section 8 eviction notices?

With Section 21 gone, it has been speculated that Section 8 will not be enough to fill the gap and protect both landlords and tenants sufficiently, as it currently stands.

McKenzie says: “There are several other changes that the Government will be looking to make to Section 8 to mitigate the loss of Section 21, such as adding a new ground into Section 8 for when a landlord wishes to sell the property or widening the current grounds to cover a landlord, their spouse, partner, or family member, should they wish to move into the property.”

How will changes affect who landlords will let to?

“If landlords feel they have less protection the likelihood is that they will become far more risk-averse and less likely to want to rent out their property. This could mean the supply of rental properties would decrease, which in the long term could push up rental prices. 

“Landlords will also be far more stringent in their tenant selection process, meaning some tenants may find it far more difficult to find a place to live,” says McKenzie.

What should landlords do to prepare?

The Guild’s inhouse Compliance Officer, Paul Offley, says: “It is important that landlords have a workable process for obtaining possession where there is a justified need for them to do so. Any process which helps execute this process, whilst being fair to the tenant, has got to be seen as a positive move.

“Any change brings concern but providing MHCLG is working with organisations like The Guild and that they listen to the feedback they receive, then hopefully this will benefit all parties concerned.”

Claims Section 21 is ‘leading cause of homelessness’ not supported by available evidence

Published On: August 16, 2019 at 9:13 am

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The National Landlords Association (NLA) has rejected claims from the Government that the use of Section 21 eviction notices by landlords has been the leading cause of homelessness in the UK.

This is in regards to government data stating that 11.8% (3,890) households out of 33,020 assessed by local authorities between October and December 2018 faced homelessness as a result of being served Section 21 notices.

These figures also highlighted the top reason for why families lost their last settled home being because family or friends were no longer willing or able to accommodate them. This accounted for over 15,000 households.

The next most common reason was an assured shorthand tenancy (AST) coming to an end. This includes tenancies ended using Section 8, which is a fault-based system, and tenants abandoning the property, as well as Section 21.

Richard Lambert, CEO of the NLA, commented: “Claims by the government and tenant support groups that Section 21 is the leading cause of homelessness are not supported by the available evidence.

“They are factually incorrect, misleading and just plain wrong. No reasonable landlord would seek to evict a tenant without good cause.

“Most evictions are a symptom of wider issues, such as the freeze on local housing allowance, insecure jobs, and the lack of support for vulnerable tenants to sustain private tenancies successfully.

“The increase in the use of no-fault evictions through Section 21 is because landlords simply don’t have faith in the courts being able to deal with eviction cases, however justified their reason.

“That’s why we’re appealing directly to the prime minister to save section 21. Landlords are running businesses and have very few options when it comes to managing the risks they face. The focus should instead be on fixing the issues that contribute to this risk.” 

Scrapping Section 21: “Tinkering with the current system is not good enough,​” says RLA

Published On: August 1, 2019 at 8:09 am

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Private landlords in England who have experience using the courts to repossess a property are not receiving the service they need, with 79% feeling dissatisfied with the way they work.

The Residential Landlords Association (RLA) found out this information by conducting one of the largest landlord and letting agent surveys ever undertaken. It also reveals that 91% of landlords would support the establishment of a dedicated housing court.

In a letter to the new Justice Secretary, Robert Buckland MP, the RLA has warned that with Ministers pledged to scrap Section 21 repossessions, the courts are simply unable to cope with the increased pressures they will face.

The association highlights that it currently takes an average of over five months from a landlord applying to court for a property to be returned to them.

Similar reforms were made in Scotland, which led to the Government investing new money and providing more staff, after it underestimated the increased pressures brought on the court system.

Tenants have also reported issues with the system. Previous research published by Citizens Advice shows that 54% of tenants have said that the complexity of the process puts them off going to court in the case that their landlord is failing to look after their property. 45% of tenants also said that the time it takes to go through the courts has put them off taking action.

The RLA argues that tinkering with the current system is not good enough. It is calling on the Government to establish a single, dedicated housing court that is properly funded and properly staffed.

At present, landlords have two options for repossession: 

  • Section 21, which enables landlords to do so once a tenancy has ended and requires two months’ notice to be given, but no requirement for a reason to be provided.
  • Section 8, which allows landlords to repossess a property under a number of set grounds, including rent arrears and anti-social behaviour.

David Smith, Policy Director for the Residential Landlords Association, said:“Ministers are proposing some of the most far reaching changes the private rented sector has ever seen. If the new Government decides it wants to proceed with these it is vital that significant and bold reforms are made to the court system.

“With landlords and tenants failing to secure justice in a timely fashion when things do go wrong, anything other than wholesale changes with proper funding to support it will lead to chaos.”

Section 21 Changes will Increase Need for Professional Letting Agents

Published On: July 30, 2019 at 8:41 am

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Automated rental payment provider PayProp has spoken out about Government plans to abolish Section 21 of the Housing Act 1988.

It believes that scrapping this act will further increase the need for professional letting agencies to guide landlords through the lettings process.

Guidance from agents would, in such a case, be crucial to help landlords to legally regain possession of their properties, says PayProp.

It was in April that the Ministry of Housing, Communities and Local Government (MHCLG) announced its intention to abolish Section 21 evictions. It stated that such a move would be ‘the biggest change to the private rental sector in a generation’.

In replace of Section 21, the Ministry has proposed a new system under which landlords would be required to serve a Section 8 notice, providing a ‘concrete, evidenced reason already specified in law’ in order to regain possession of their property.

As it stands, Section 21 allows landlords to regain possession of their property without providing a reason. However, Section 8 can only be used when a tenant has fallen into rent arrears, been involved in criminal or anti-social behaviour or broken the terms of their tenancy agreement.

The Government has made a pledge to amend Section 8, so that it allows landlords to use it if they wish to sell their property or move back in themselves, and ‘expedite’ the court process to make the system more effective.

However, many in the lettings industry worry that the new system might make it more difficult for landlords to regain possession and discourage future investment in the PRS.

A huge overhaul for landlords?

PayProp has pointed out that the scrapping of Section 21 would be the latest in a long line of changes to the evictions process. The last significant updates were made to the legislation in 2015 and 2018. This increased workload for landlords could have an impact on the buy-to-let market.

In a recent study by Landlord Action, 33% of landlords said they would leave the market if the Government removed Section 21 without providing a clear alternative, while 38% said that they would consider selling properties.

Neil Cobbold, Chief Operating Officer of PayProp UK, says: “It’s no surprise that many landlords would consider their options if Section 21 was scrapped, as it would mean yet another change in lettings legislation after so many others in recent years.

“If introduced, the changes would represent a huge overhaul in processes for landlords. Therefore, it’s important for letting agents to raise awareness of the situation among landlords now, so they have time to prepare.”

Complexities of the evictions process

Cobbold has also explained why the expertise of professional letting agents would be crucial if the evictions process is to be reformed.

“Requiring the use of Section 8 to regain possession of their properties will mean landlords need to understand a new set of rules, steps and documents,” he says.

“Evicting tenants can be a legally complex and long-winded process, and if a new system is introduced, letting agencies will need to help landlords to follow the right steps and issue updated documentation,” Cobbold explains.

“If the evictions process is not followed properly it can cause complications for landlords. It’s also important to remember that landlords’ investments and tenants’ homes are at stake,” he says. 

Need for professional agents continues to grow

Cobbold believes that further changes to legislation and a more complex and time-consuming lettings process could mean fewer landlords will self-manage their properties in the future.

Meanwhile, figures supplied by the Government show the number of small-scale and accidental landlords has fallen, with the proportion of landlords letting one property falling from 78% to 45% between 2010 and 2018.

“This market shift means demand for professional letting agencies will rise – agents should see the potential for increased business and ensure they are prepared to meet landlords’ expectations,” adds Cobbold. 

“They can do this by offering an unrivalled landlord proposition which is fully compliant, transparent and efficient.”

The MHCLG is currently consulting on the proposed removal of Section 21 from the Housing Act 1988 and improving Section 8 eviction grounds.

The consultation was launched on July 21 and closes on October 12 2019. It can be viewed on the GOV.UK website: https://www.gov.uk/government/consultations/a-new-deal-for-renting-resetting-the-balance-of-rights-and-responsibilities-between-landlords-and-tenants

Scrapping Section 21: Government Consultation has begun

Published On: July 23, 2019 at 8:32 am

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The Government has published a consultation on the abolishment of Section 21, so-called ‘no-fault’ evictions. This consultation will run for twelve weeks, closing on 12th October 2019.

It invites respondents to share their views on “how section 21 of the Housing Act 1988 has been used in the past, and the circumstances in which landlords should be able to regain possession once it has been abolished, including what changes may be necessary to the existing grounds for possession in Schedule 2 of the Housing Act 1988.”

The Government also hopes to receive views on the following:

  • The implications of removing the option for landlords to grant assured shorthold tenancies (ASTs) in the future;
  • How improvements can be made to the processing of repossession orders through the courts;
  • Whether the reforms should be extended to other types of landlords, such as housing associations.

David Smith, Policy Director for the Residential Landlords Association, comments: “Landlords’ concerns over scrapping Section 21 remain unchanged unless and until a new system is in place that provides the confidence and certainty needed that they can regain possession of their property in legitimate circumstances. 

“We have engaged extensively with the Government over these proposals and we are pleased to see that many of our points have been taken on board. This includes on improving the court system and alternative process for regaining possession of a property, known as section 8, to account for how landlords can be certain they can regain their property when faced with rent arrears or anti-social behaviour.

“Section 21 notices are not used for no reason; our research found that of those who had used the process, 84 per cent had used it because of tenant rent arrears, 56 per cent because of damage to a property and 51 per cent because of anti-social behaviour. This is backed up by this week’s English Housing Survey which found that only 12 per cent of private tenancies were ended by the landlord. It is mostly used as the Section 8 process and court system are not fit for purpose.”

“We will continue to make the case for a system that works for both tenants and landlords and will be responding to the consultation once we have reviewed the full details. It is welcome that the Government has listened to our calls for the consultation to run for a proper length of time to give the millions affected time to respond, at 12 weeks.”

Dan Wilson Craw, Director of Generation Rent, says: “Abolishing Section 21 is a central task for any government that wants to make renting work for the millions of people who have no other option for the foreseeable future.

“Any changes must be carefully designed so that unscrupulous landlords cannot continue to force out tenants to avoid making repairs or to churn their properties. It is essential that renters speak out during this consultation process.”

The consultation can be viewed here: https://www.gov.uk/government/consultations/a-new-deal-for-renting-resetting-the-balance-of-rights-and-responsibilities-between-landlords-and-tenants

Scrapping Section 21 will Squeeze the Vulnerable, says RLA

Published On: July 22, 2019 at 8:21 am

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Vulnerable tenants at a higher risk of rent arrears will be hit hardest by Government plans to scrap Section 21, says the Residential Landlords Association (RLA).

One of the largest ever non-government surveys of landlords and agents recently took place, revealing that 84% feel these plans to get rid of Section 21 repossessions would make them “more selective” about which tenants they let to.

The RLA conducted this survey and has warned that this will lead to landlords being less open to accepting applications from those considered to be at a high risk of rent arrears or causing damage to a property. The concern is that in the case that a problem did emerge, they would not be able to swiftly regain possession.

Una, a landlord in Leeds, told the RLA: “If Section 21 were to go I would only rent to professionals because I don’t want to be left in a situation where a tenant is in my property who cannot afford to pay the rent.”

There has been speculation that many Section 21 notices are used for no reason or even as an act of revenge by the landlord, but this research disproves such a theory.

Of those landlords who did use this method to repossess a property, 84% had done so because of tenant rent arrears. 56% had used it because of damage to the property, and 51% went down this route due to anti-social behaviour.

Furthermore, rather than landlords seeking to evict tenants of their own accord, 26% said that their tenant had requested it in order for them to seek social housing and avoid being classed as intentionally homeless.

There are two routes currently available for landlord repossession:

  1. Section 21, which enables a landlord to regain possession at the end of a tenancy and requires two months’ notice to be given, but a reason is not needed.
  2. Section 8, which allows landlords to repossess a property under a number of set grounds, including rent arrears and anti-social behaviour.

Section 8 will still be an option, but it is known to take a long time to be processed, during which a problem tenant may not be paying rent or could potentially be causing a nuisance to other tenants or neighbours. Landlords’ dissatisfaction with the courts has been reported, citing numerous delays and problems with regaining possession from tenants for anti-social behaviour or rent arrears.

As it stands, the average time it takes from a landlord applying to court to a property being returned to them is an average of over five months.

Plans for a consultation by the Government has been announced, in which an alternative as-of-yet undefined system will be discussed.

David Smith, Policy Director for the Residential Landlords Association, said:“Whilst no landlords should ever abuse the system, it is only right and fair that they can repossess properties swiftly and with certainty in legitimate circumstances.

“At present, only Section 21 provides this certainty. If the Government is to get rid of it, landlords should have the same level of confidence and certainty about repossessing properties in cases such as rent arrears, anti-social behaviour or wanting to sell the property.

“Without such confidence landlords will simply leave the market, making it more difficult for the growing number of people looking for a home to rent.

“Secure tenancies will mean nothing without the homes to rent being there in the first place.”