A report published by The Lettings Industry Council claims abolishing Section 21 evictions will irrevocably change the private rental sector – and not in a good way.
The report’s authors say rents will increase and the housing courts will be put under increasing pressure. They predict many landlords will quit the sector or move from long-term lets into short-term lets reducing the housing stock. Those landlords that remain in the sector will become more risk averse which will make it more difficult for low income and benefit tenants to find housing. In turn this will increase the pressure on social housing.
Striking the Right Balance
In a statement to the media, Theresa Wallace from The Lettings Industry Council said: “It is vital to strike a balance between the needs of tenants for long-term security and legal certainty [and] restoring landlord confidence to ensure an adequate supply of private rented homes.”
“The government must not proceed with its proposal…without careful consideration of the impacts and implementation of measures to mitigate such negative consequences.”
Wallace says Section 8 must be improved to compensate for the loss of Section 21, with an accelerated process to allow for fast-track evictions. She adds that the judicial process must be reformed, and all parties should be encouraged to use mediation services.
Tenants and Landlords Treated with Equal Respect
Landlord Action concurs with these measures. Paul Shamplina says a landlord’s rights and a tenant’s need for long-term security must be treated with equal respect.
The report’s conclusions have come as no surprise to many landlords and letting agents. Landlords are increasingly questioning whether letting properties is worth the hassle, with data from Hamptons International indicating the number of landlords in the private rental sector has fallen 222k in two years. One landlord ended up £12,000 out of pocket by the time he was able to evict his problem tenant.
Landlords Leaving the PRS
An increase in landlord legislation and various tax changes has made the private rental sector much less profitable than it once was. Many smaller landlords have left already, and those who are left are seriously contemplating their options.
A survey carried out by the National Residential Landlords Association (NRLA) shows that 48% of landlord members say Covid-19 has impacted them slightly but 18% say they have suffered significantly. Additional research has found that landlords have lost £437 in unpaid rent since the pandemic began. Many are looking to sell up and leave the sector.
The NRLA says:
“Whilst the vast majority of landlords have been working constructively with their tenants where they have struggled due to the pandemic, it is not sustainable to expect them or tenants to continue having rent arrears building indefinitely. This is highlighted in the lower levels of confidence among landlords and the impact it is having on their businesses.”
Help Tenants and Landlords
The NRLA is asking the government to implement a scheme whereby tenants are offered interest-free hardship loans they can use to pay off rent arrears, with the payments being made directly to the landlord. This would help both landlords and tenants and be cheaper than the “eat out to help out” scheme.
With more and more local lockdowns on the cards and no sign of the pandemic easing, the government needs to reconsider its stance on Section 21. They must more to help beleaguered landlords and tenants. Otherwise, there won’t be a lot to celebrate this Christmas.
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