Last month the government announced that it was considering scrapping Section 21, which allows landlords to evict tenants at the end of their term.
The government’s reasoning is that this eviction clause is unfair to tenants, because Section 21 allows for evictions without the landlord having to give a reason, which could result in unfair evictions. The government’s intention is to protect tenants from unscrupulous landlords, who are a stain on our profession.
Negative effect for landlords
However, in doing so, they mix the bad with the good and it has a negative impact on landlords. Any regulation must strike a balance between landlord and tenant, and scrapping Section 21 doesn’t do that. Landlords always run the risk of bad tenants, and if you are unlucky to have one, you are open to several risks including unpaid rent and/or damage to your property. Section 8 allows landlords to start legal eviction processes for violations of the tenancy agreement, like unpaid rent, but this can take a long time, especially if the tenant challenges the eviction order.
This threatens the revenue stream that landlords rely on to stay in business, particularly those with small portfolios. Section 21 allows landlords to minimise the damage and swiftly evict bad tenants.
Creating an imbalance
With the good intentions of helping out vulnerable tenants, this motion from the government would inadvertently throw landlords under a bus. What this will mean is more landlords selling up and getting out of the market, and even those who stay will think twice about expanding their portfolios. You can imagine how much more stringent tenant screening will be, with landlords knowing that getting the wrong tenant could cost them dearly. With right to rent, landlords are already being burdened with screening tenants based on immigration status, and if Section 21 was to go, I can only imagine tenant screening getting worse. In the long term, this will work against tenants.
With Section 21, there are already several safeguards protecting tenants, and there is too much focus on landlords not needing a reason to issue a Section 21. While that’s true, it doesn’t mean that landlords can just evict a tenant just like that. Landlords need to fulfil very specific criteria for a Section 21 to be valid, and this is where the protection for the tenant is built in. There are a number of circumstances where a Section 21 can be invalidated where the landlord hasn’t followed the correct procedures, such as not putting tenant’s deposit in a protection scheme, not providing the tenant with a gas certificate, or a how to rent checklist etc. So an unscrupulous landlord who doesn’t care about their tenants may well find themselves unable to evict their tenant under Section 21, because they don’t meet the strict criteria needed to issue.
Need to re-think
The government must appreciate that the UK housing market is one where demand comfortably outstrips supply, and the government’s plans to build more affordable houses, even they were on track, would still not address this imbalance. The market needs landlords to offer more accommodation, and to do that they need to be supported by government regulation, rather than have it work against them.
Landlords are like other business owners, there are good and bad ones, but the baby shouldn’t be thrown out with the bathwater, the government needs sensible policies to help good landlords and punish bad ones. Landlords must have rights over their property in order to protect themselves against bad tenants, otherwise the feasibility of their businesses will decline. The government must be an equal mediator between landlords and tenants, and it must strive to protect good landlords as well as good tenants.