Jonathan Rolande, a notable figure in the property industry and housing market commentary, is renowned as the founder of the National Association of Property Buyers.
Approaching nearly half a decade since its inception, Theresa May’s promise to abolish Section 21 (S21) notices remains a pivotal topic. First announced on April 15, 2019, this pledge not only marked a significant moment during May’s tenure but also found resonance in the subsequent manifesto of her successor, Boris Johnson.
But last month, the government announced an indefinite delay to the plan to ban them, pending court reforms.
How did we arrive at this juncture? The management of the entire process has been lacking, leading to prolonged uncertainty.
Amidst the current landscape of polarized conversations, it’s essential to delve deeper into understanding the typical landlord. Contrary to popular belief, they’re not reminiscent of Victorian-era slum owners.
Throughout my extensive experience dealing with landlords, it’s evident that the overwhelming majority would pass the litmus test of being considered desirable landlords. While they may not operate as charitable entities, most landlords demonstrate a commitment to complying with safety and contractual regulations. Moreover, they exhibit empathy towards tenants facing financial hardships and endeavor to maintain their properties in good repair, albeit often lamenting the associated costs.
It’s crucial to recognize that the narrative surrounding landlords is multifaceted, and generalizations often fail to capture the nuanced realities of their practices and intentions.
A recent report released by Shelter has brought to light a concerning trend: an estimated 500 private renters per day have found themselves without a home since 2019 due to the utilization of Section 21, commonly referred to as ‘no-fault eviction’.
The mechanism of Section 21 essentially enforces the original terms outlined in the rental agreement. It doesn’t constitute a traditional eviction; rather, it serves as a notice to tenants that their agreed-upon term is nearing its end. While some renters may view this as an unavoidable aspect of their rental arrangement, others may find themselves displaced and unsettled by the sudden disruption to their living situation.
It’s worth noting that Section 21 notices are not solely issued for arbitrary reasons. Landlords may resort to serving a Section 21 notice when they intend to sell the property or reclaim it for personal use. Even in the event of a ban on Section 21, landlords would still retain the option to pursue these courses of action, further underscoring the complexities involved in addressing the issue of housing stability for renters.
In certain scenarios, landlords or neighboring residents may opt to serve a Section 21 notice when they encounter issues within the tenancy that they find unacceptable. These issues could range from anti-social behavior to the noticeable odor of substances like cannabis emanating from the property, or even an influx of visitors during late hours. Rather than engaging in potentially confrontational conversations or initiating legal proceedings, some find it more expedient to terminate the tenancy without specifying particular grounds. This circumvents the complexities associated with pursuing a Section 8 eviction, which mandates legal justifications for termination.
While I don’t necessarily oppose the proposed ban on Section 21 notices, I also harbor reservations about its potential efficacy in reshaping the rental landscape. The reality is that only a small fraction of tenants face eviction under Section 21 without justifiable cause. Landlords often have legitimate reasons for terminating tenancies, such as the need to sell the property, to reclaim it for personal use, or to address illegal activities conducted by tenants within the premises. These grounds for eviction can still be pursued under Section 8, thereby minimizing the perceived impact of a ban on Section 21 notices. Therefore, while the ban may serve to address certain concerns surrounding tenancy termination practices, its practical implications may not be as transformative as initially anticipated.
I view the Section 21 debate as a distraction, purportedly tenant-friendly but ultimately ineffective in addressing the housing crisis.
Consider the plight of small-scale landlords, often individuals or couples who have invested significantly in buy-to-let properties. They’ve incurred substantial expenses, including purchasing costs, surveys, legal fees, high Stamp Duty charges, letting agent fees, maintenance bills, safety inspections, and ongoing maintenance. For those with mortgages, there’s the added pressure of monthly repayments without the previous tax relief on interest. In reality, landlords who entered the market less than eight years ago or have sizable mortgages are likely struggling to turn a profit. The average yield on buy-to-let properties stands at around 5%, while interest rates on buy-to-let mortgages typically exceed 6%.
Since the announcement of the Section 21 policy in 2019, the sales market has witnessed consistent growth, while the availability of rental properties has decreased by a third. When landlords hear discussions of a Section 21 ban, they interpret it as a restriction on their ability to regain possession of their property as needed. Many conflate this issue with the concept of rent control, which is also making headlines in areas like London and Scotland.
Landlords have been exiting the rental sector, capitalizing on soaring property prices to evade the impending ban. Ironically, the increased value of vacant properties has led to the displacement of tenants who would otherwise have had secure tenancies.
Furthermore, with recent interest rate hikes, there has been no influx of new landlords to replace those departing. Consequently, rental properties have vanished from the market, intensifying competition among tenants and subsequently driving up rents.
Despite widespread support from various political factions, the ban appears inevitable and could be implemented soon. Personally, I hope for its swift enactment, as the ongoing uncertainty surrounding the issue is resulting in tenants needlessly losing their homes.
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