Why more crackpot policy should not concern buy-to-let investors
The government has put Section 21 in the dock. It is pulling no punches in its attempts to abolish no-fault repossession. Like an outclassed boxer, Section 21 is on the ropes. Soon, the rope will be round its neck. But does this mean that a landlord’s ability to remove a tenant will be strangled?
Why landlords love Section 21
Section 21 provides a route to easier eviction of a tenant. It is called ‘no fault’ because it doesn’t require the landlord to prove a reason for repossessing the property. It is a swift, relatively hassle-free way of gaining possession of your property, and the most common route to repossession.
Why the government wants to abolish Section 21
The government wants tenants to feel more secure in their homes, free from the threat of being thrown out for no reason. Sounds reasonable, but it could backfire on the government (like so many of their actions do).
If Section 21 is abolished, then you will need to prove that there is a ‘concrete, evidenced reason already in law’ to bring a tenancy to a close.
Why abolishing Section 21 could backfire
Has the government really thought this through? Its own data shows that the average tenancy length is longer than four years. Nine out of 10 tenancies are ended by the tenant, and not the landlord. This is hard ‘concrete, evidenced reason’ for kicking Section 21 into touch.
Landlords don’t want to evict tenants. They want a good landlord/tenant relationship that benefits both parties. Every time a tenant leaves – whoever’s decision it was – it invariably leads to a void period. And void periods cost money – not the way to profit from a buy-to-let investment.
Section 21 enables landlords to remove bad tenants with less fuss and cost than other methods of eviction (such as Section 8, which the government has said will need to be reviewed). Take away this ability to remove tenants more easily, and the government risks:
- Prospective buy-to-let investors deciding against investing, because if they needed to sell they may not be able to easily
- Some existing landlords who have suffered a nightmare tenant may decide to sell up to avoid a worse experience in the future
This could further limit the supply of properties in the private rented sector and drive rental prices up. In addition, before the ban comes into force, any landlords considering using Section 21s may bring their plans forward. If this happens, the market could be flooded with more tenants looking for vacant properties.
What are the reasons to evict without a Section 21 notice?
If Section 21 is knocked out with a killer punch from the government, it doesn’t mean you cannot get shot of bad tenants. Valid grounds for eviction of tenants include:
- The tenant is in arrears of more than eight weeks
- The tenant consistently pays their rent late
- The mortgage company is repossessing the property from the landlord
- The terms of the tenancy agreement have been broken by the tenant
- The landlord wishes to make repairs or renovations (though there must be suitable alternative accommodation for the tenant)
- The tenant undertakes anti-social or illegal behaviour
- The tenant has damaged the property beyond normal wear and tear
- The tenant provided false information to obtain the property
In summary
If Section 21 is abolished, it will send shivers down the spines of some investors. In reality, abolishment will affect very few. Only one in 10 tenancies are ended by the landlord. Many of these are ended amicably. Very few tenancies are ended in acrimonious circumstances, and the average length of a tenancy is more than four years.
It’s more crackpot regulatory change by a crackpot government. Sent to try us, but there are still ways to evict a bad tenant.
If you are concerned by the potential death of Section 21, give us a call at +44 0 1522 503 717 or send us an email. We’d love to hear your concerns, and we’re here to help. We make property management effortless.
Live with passion
Brett Alegre-Wood