There has been a sharp rise in the number of Section 21 notices issued, which gives a landlord an automatic right of possession without having to give any grounds once the fixed term has expired.
Paul Shamplina, founder of Landlord Action, says that the scrapping of Section 21, as part of the Renters Reform Bill, will come as little surprise to landlords, many of whom have already started making plans to sell in anticipation.
He explained that April was Landlord Action’s busiest month in 23 years, with a 91% year-on-year increase in the number of step two Section 21 notices being served.
Shamplina commented: “I have no doubt that as the date for the end of Section 21 nears, more landlords will start to panic, which will lead to more good tenants having to leave their homes.
“The government has made reference to digitising more of the process for those evictions which do end up in court, by way of speeding up the process. Whilst this is positive, greater reform of the court system will be required if landlords are to have confidence to remain in the market.”
A third of landlords say that the scrapping of Section 21 is of major concern to them, a recent poll found.
According to Mortgages for Business, which carried out the research, 33% of landlords were worried by the reform of Section 21 as part of the Renters Reform Bill.
Under government plans, landlords are set to lose the right to evict tenants at short notice without giving a good reason for doing so. Until now landlords have been able to use Section 21 of the 1988 Housing Act to evict renters after the end of a fixed-term tenancy, with two months’ notice.
Government plans will effectively create open-ended tenancies whereby landlords will have to give a reason for eviction — such as rent arrears or antisocial behaviour — as well as include evidence of the tenant’s shortcomings.
“Fears surrounding the scrapping of Section 21 are a driving force behind landlords not remortgaging and selling-up instead” said Gavin Richardson, the managing director of Mortgages for Business.
Emily Williams, residential researcher at Savills, warned that the real challenge is probably going to be at the lower end of the market.
“What it’s really going to do is make landlords much more careful about who they rent to and really do their due diligence on their tenants,” she said. “It’s probably going to make it tougher for people who are either on universal credit or have to use local housing allowance to secure a private tenancy.”