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Now that we have a new government it’s time to reassess where this might leave landlords. I’m saying “might” because often election promises don’t come to fruition, and some do but in a different form than we had expected. The important thing for us at this moment is to prepare for the worst and hope for the best – as is always the case when running a business.
In June I wrote about the changes which I believe will take place and how to prepare for them Landlords Need to Understand and Prepare for Some Changes – Landlord Insider (landlordvision.co.uk).
I now want to concentrate on survival because I am reading posts from so many landlords who have given up or are only carrying on because they have no choice. This isn’t healthy for any business and it’s definitely not healthy for a people business like ours nor our tenants.
The two biggest fears appear to be the loss of Section 21 and rent controls.
Removal of Section 21
(I wrote about how we should be prepared to regain possession Be Prepared to Regain Possession of Your Property at any Time – Landlord insider (landlordvision.co.uk)
There is little doubt that Section 21 no-fault evictions will not be around for much longer. When considering the balance of power in the private rented sector this is the biggest issue which swings that balance in favour of the landlord.
As a landlord, I am very aware that many tenants live in fear of being evicted when they have done nothing wrong and that fear is being realised by so many tenants now that landlords are selling up in very high numbers. This highlights the issue and makes the need for change more urgent. The Rental Reform Bill had many areas of agreement before it ran out of time, and it is very likely that the points on which there was agreement, will form the basis of a new Bill. Top of that list is section 21. It was agreed that there is a need to make the legal system work before making this major change, we will now need to wait and see whether this holds under the new government which will be under pressure to make some headline changes.
In a nutshell, we should all prepare for the loss of section 21 as I have outlined in the article linked above but it will not happen overnight it still requires a change to primary legislation and therefore must go through due process.
The government has two options
1. Do something big and showy
2. Lay down foundations for change.
I hope that they go for the latter because something big done in a hurry, like the removal of Section 21 or rent controls, will backfire badly and cause more homelessness. They need to lay down foundations and deal with some of the issues which landlords struggle with, which would not have a major negative impact on tenants but may begin to give landlords more confidence and reduce the mass exodus we are seeing at the moment.
Most importantly we must all learn how Section 8 works and make certain that we are not missing an opportunity to regain possession of our properties.
Rent controls
A 6 month Rent freeze was in place in Scotland 2022 and from April 2023 rent increases were limited to 3% for the following 6 months followed by a maximum of 6%. Along with this, there was an eviction ban, so that landlords had no option but to operate under the rent control system. And the result of all this –
“The average rent in Scotland has gone up by nearly 5% in the year to February. That’s faster than any other part of the UK.
As most rents are held down, that reflects a higher rate of inflation – above 10% – in advertised rates for new tenancies. These don’t have rent controls on them, so they reflect rising costs, landlords wishing to get ahead of rent controls and, above all, a shortage of supply.
It’s not just that rents have been rising, but it’s become more of a scramble to get a tenancy. The average time between advertising and signing a tenancy agreement has fallen in less than two years from 35 days to 16 days. It takes longer for bigger homes, but for one and two-bedroom flats, which is most of the market, more than 40% of tenancies are signed up in less than a week.” April 2023
Rental health: Scotland’s landlords versus the rent freeze – BBC News
Let us hope that this will influence the decision makers and make them pause for thought before introducing rent controls which are notorious for actually increasing rents in the long run.
What I have come to understand is that many, many landlords have no idea of legislation which is already in place, and which has the potential to do our business more harm when used. There was a whole raft of new legislation introduced in the Housing and Planning Act 2016. If none of this caused landlords to want to sell up, I’m not sure why losing Section 21 and rent controls would. Apart from the fact that most landlords don’t know that it exists.
Housing and Planning Act 2016 (legislation.gov.uk)
Banning Orders
“14“Banning order” and “banning order offence”
(1)In this Part “banning order” means an order, made by the First-tier Tribunal, banning a person from—
(a)letting housing in England,
(b)engaging in English letting agency work,
(c)engaging in English property management work, or
(d)doing two or more of those things.
(2)See also section 18 (which enables a banning order to include a ban on involvement in certain bodies corporate).
(3)In this Part “banning order offence” means an offence of a description specified in regulations made by the Secretary of State.
(4)Regulations under subsection (3) may, in particular, describe an offence by reference to—
(a)the nature of the offence,
(b)the characteristics of the offender,
(c)the place where the offence is committed,
(d)the circumstances in which it is committed,
(e)the court sentencing a person for the offence, or
(f)the sentence imposed.
[F1(5)An offence under section 12 of the Tenant Fees Act 2019 is also a banning order offence for the purposes of this Part.”
Housing and Planning Act 2016 (legislation.gov.uk)
Rogue landlord database
“28Database of rogue landlords and property agents
(1)The Secretary of State must establish and operate a database of rogue landlords and property agents for the purposes of this Chapter.
(2)Sections 29 and 30 give local housing authorities in England responsibility for maintaining the content of the database.
(3)The Secretary of State must ensure that local housing authorities are able to edit the database for the purpose of carrying out their functions under those sections and updating the database under section 34.”
Housing and Planning Act 2016 (legislation.gov.uk)
Unless you have been added to this Rogue Landlord list you probably have no idea that it exists but it came into being on 6th April 2018.
Database of rogue landlords and property agents: user guidance (publishing.service.gov.uk)
Rent Repayment Orders
“40Introduction and key definitions
(1)This Chapter confers power on the First-tier Tribunal to make a rent repayment order where a landlord has committed an offence to which this Chapter applies.
(2)A rent repayment order is an order requiring the landlord under a tenancy of housing in England to—
(a)repay an amount of rent paid by a tenant, or
(b)pay a local housing authority an amount in respect of a relevant award of universal credit paid (to any person) in respect of rent under the tenancy.
(3)A reference to “an offence to which this Chapter applies” is to an offence, of a description specified in the table, that is committed by a landlord in relation to housing in England let by that landlord.”
Housing and Planning Act 2016 (legislation.gov.uk)
There is one part of this Act which has never begun, and which would be a good place for the new government to start. This is already in place in Scotland.
Shelter Legal Scotland – Abandoning a tenancy – Shelter Scotland
This is what has been written in the legislation since 2016 but has not begun-
Recovering abandoned premises in England
“57Recovering abandoned premises
A private landlord may give a tenant a notice bringing an assured shorthold tenancy to an end on the day on which the notice is given if—
(a)the tenancy relates to premises in England,
(b)the unpaid rent condition is met (see section 58),
(c)the landlord has given the warning notices required by section 59, and
(d)no tenant, named occupier or deposit payer has responded in writing to any of those notices before the date specified in the warning notices.”
It goes on to list the details of how this can be achieved, and this would be one thing which would reduce the cases going through the courts because that is presently the only way a landlord can dare to repossess a property where the tenant has left but did not surrender the tenancy nor return the keys.
I am not fond of talking about personalities, nor parties for that matter, but on this occasion, we might glean some insight by looking at what Matthew Pennycook, the new Housing Minister, has had to say while in opposition and discussing the Rental Reform Act.
If you are interested in these conversations, they are here:
I have highlighted some of the comments which I believe are telling us what we can expect, always allowing for the fact that it’s easy to talk and not so easy to make major changes, especially in a very delicate market as housing is at the moment
“The damage caused by the discord on the Government Benches has been significant: not only have thousands of additional private renters been put at risk of homelessness as a result of being served a section 21 notice in the months for which the Bill’s remaining stages have been delayed; the sector as a whole has been left in limbo, not knowing whether the Bill will proceed at all and, if it does, what form it will take.”
The actual process of possession proceedings is also probably one of the more efficient aspects of the county court system. We heard extensive evidence in Committee about the fact that the system is essentially working fairly well and is recovering well from covid and that these changes would not be significant enough to delay the implementation.
”if a future Lord Chancellor assesses that funding or other specific measures are required to make the courts ready for the new system, there is nothing to compel the Government of the day to implement them. Even if a future Lord Chancellor were to assess that the courts were more than ready, it remains for the Secretary of State to determine whether they wish to make the relevant commencement order, even if clause 116 is amended by Government new clauses 27 and 28.
We all want the processes to be quicker—I do not think that is in dispute at all—and they certainly could be made quicker. Landlords need robust grounds for possessions in legitimate circumstances, and they need the system to operate quickly when they do. The question for us today is: should we essentially put the abolition of section 21 on hold until we have reassurance about an undefined amount of improvement and if we do not know when that is going to be delivered?”
“ With the Government having previously made it clear that there will be a requirement for advance notice of six months before new tenancies are converted, and a minimum of 12 months between that conversion and the transition of existing tenancies—with a proposal that the latter will also be made subject to the assessment required by Government new clause 30—it could be years before renters see section 21 completely abolished, making a complete mockery of the Secretary of State’s recent claim that such notices will be “outlawed” by the next general election.”
“We believe that hard-pressed renters have waited long enough for the commitment made by the Conservatives over five years ago to be delivered. They require certainty that it will truly be honoured, and section 21 evictions definitively abolished with the passing of this legislation. Our amendment 28 would provide that certainty by ensuring that section 21 of the Housing Act 1988 is repealed on the day that the Bill receives Royal Assent, with saving provisions for any notices served before that date so that they remain valid and of lawful effect.”
“We are pleased that the Government have responded to our calls to ensure the maintenance of a number of the regulatory obligations that have built up around section 21 notices over the years by tabling Government new clause 14, which gives the Secretary of State the power by regulation to transpose those preconditions and requirements into section 8 eviction notices.”
What can we conclude from all that?
- Section 21 will be abolished as quickly as the law can be changed and very possibly will apply to existing tenancies from day one.
- Section 8 may be amended to include the requirement to have served qualifying documents to the tenant before a valid section 8 can be served*
- It is unlikely that they will wait for any major changes in the court system to take place before changing the law, if they make any changes at all – because they believe that the system is, in fact, working “fairly well”
This brings us back full circle to accepting that Section 21 is going to be gone fairly soon and making plans to work with it not to leave the business because of the bogeyman. Additionally, we need to understand the need to serve certain documents to tenants at a prescribed time and not to rely on giving them just before we serve a notice because, in my opinion, which is another hole that they will plug.
The details
*Qualifying Documents which need to be given to the tenant at the correct time before a valid Section 21 can be used are here
Making sure that the deposit is protected as it should be, including renewals here
Protecting and Claiming from My Tenant’s Deposit – Landlord Insider (landlordvision.co.uk)
Important information about a free legal service which all tenants can use because it is not means tested – this will ensure that the person fighting on behalf of the tenant understands all how a possession claim can be invalidated and it is up to us to make sure that this does not happen in our cases.
Evictions are Becoming More Difficult for Landlords – Landlord Insider (landlordvision.co.uk)
If you have survived Section 24 you have done very well – don’t throw all that away now.
