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Government Plans Further Shake-up in the Lettings Industry

The Government has today unveiled plans to abolish section 21.  In the light of this news, we take a look at what section 21 actually is and give our first thoughts on these proposals.

The section 21 notice was introduced in 1989 to try and increase rental properties on the market to help the lack of housing available. It meant that the secure tenancies in the previous years would phase out and landlords could have much more control over their houses.  This would give them confidence to actually be landlords

It can be really difficult, time consuming and expensive to evict a tenant through a court procedure.  Often, the entire duration of this process can take between 4-5 months. Therefore, of course a landlord is more likely to choose to use a section 21 rather than having to wait this long.

There is usually a very valid reason for landlords serving notice.  In fact, an interesting point to note is that around 90% of our tenancies come to an end by tenant instigation.  Landlords very rarely serve notice on our tenants.

Some of the reasons that a landlord would want their property back are:

  • Antisocial tenants;
  • Rent arrears;
  • Sale of property;
  • Need to do major upgrade works;
  • Moving back into their property themselves.

Often, the sale of one rental property is to fund the growth of the landlord portfolio.  Essentially, the landlord has done well with capital growth on the property they intend to sell.  This massively benefits the housing market in general, as we will see more rental stock available in time.

The Government may wish to protect tenants from the odd rogue landlord who wants to serve notice because the tanant is complaining about the condition..
In a market where demand has been outstripping supply for over the last 5 years it is concerning to think that this news will deter both current and prospective landlords from continuing to invest their money in rental properties.

The Government is in favour of improving the court system so that the time taken to evict tenants takes much less time than it currently does.  Of course, it is absolutely vital that these, or any other reforms are fully embedded prior to the abolition of Section 21.

Laura Fiddes-Baron, Lettings Branch Manager said:

The Government needs to ensure they implement changes in a well thought-through manner that doesn’t damage landlord confidence.  We need landlords to continue to invest in properties so that we can satisfy the demand!

We will be waiting keenly to hear what the Government plans are on this, as they forge ahead with a far-reaching shake up of the lettings industry this year!