Landlord Legislative Update May 2019 Residential Landlord Update for joomag | Page 13

P R O P OSED
S E C TI ON 2 1
A B O LI TI ON
Assured Shorthold Tenancies were created in 1988 to address the
lack of available houses to rent, due in part to statutory protec-
tion that made it virtually impossible to regain possession unless
a tenant chose to leave. As a result, people became less and less
willing to let their properties, exacerbated by the Government’s
decision to give council tenants the right to buy.
The removal of Section 21 is intended to protect tenants from
apparent unsolicited eviction, ultimately reducing the number
made homeless. The reality is while it may solve problems, it will
generate others for the market.
Potentially the UKs 11million renters may have fewer properties to
choose from and will need to pay higher rents. Landlords will have
to comply with the additional legislation and costs, but if rents keep
on increasing due to demand outstripping supply the landlords
eventually may end up better off.
The legislation being brought in is clearly there to protect those
tenants being mistreated by rogue landlords. We fully support this
concept, but do wonder if the protection could be delivered more
effectively, with less of an impact on tenants and landlords involved
in the rental sector.
Section 21 is usually evoked for one of three reasons; rent arrears,
anti-social behaviour, or property damage, with landlords occa-
sionally using the clause to reclaim their house for refurbishment
or occupancy. In the main however, 90% of tenancies are ended
by the tenant.
Without Section 21, providing landlords give a concrete evi-
denced reason specified in law, tenants can still be evicted if they
fall into arrears or damage the property. It is currently a relatively
lengthy process taking an average of five months via the court,
but commitment has been made to expediate the process; al-
though it is unlikely to achieve the eight weeks timeframe of Sec-
tion 21 notices.
It is suggested the new legislation will be supported by amend-
ments to Section 8, which will enable landlords to evict tenants if
they wish to sell or move in to their property, potentially negating
the protection the new laws are designed to offer to tenants.
Opinion on the potential abolition of Section 21 is divided, par-
ticularly when considered in the context of other reforms that
have recently been introduced or are awaiting introduction in-
cluding; caps on deposits, removal of tenant fees, The Home (Fit-
ness for Human Habitation) Act 2018, Minimum Energy Efficien-
cy Standards, the Ministry of Housing, Communities and Local
Government announcement that mandatory five year electrical
checks will be introduced as a phased approach, and the income
tax changes introduced by the Chancellor in April 2017.
The above changes have already encouraged a 2.7% UK increase
in rents (excluding London which stands at 8.2%) over the past
twelve months. Additionally, with the perceived reduction in
landlord control and increased costs, there has been a clear de-
cline in properties offered for rent. With an average of 13% less
stock available from last year, (33% less in London), rents are likely
to increase further as supply cannot meet demand.
In conclusion, the jury is still out as to how the market will react
to the reforms and who, if anyone, will be the winners and losers.
LANDLORD LEGISLATIVE UPDATE 2019 • 11