1st August 2019
How about a little role play to start off this newsletter? Before any smutty remarks are emailed back to me, I’m wanting you to put yourself in the shoes of an owner of a two-bedroom flat in Leeds. Nothing more! You have a family home elsewhere, don’t need the equity out of the flat, the mortgage and outgoings on the Leeds flat are £400 pcm and the rent being paid by your tenants has been £800 pcm for the last year. Your tenants are a nice couple in their late 20’s. They’ve been in the flat for 12 months and want to renew the agreement for a further 12 months, having provisionally agreed a 3% increase in the rent. The quarterly inspections we’ve been undertaking have reported that the tenants keep the flat neat and tidy, they clean the windows (on the inside) once a quarter and pay the rent on time, on the 1st of every month. Question: why would you want to serve a Section 21 (no fault) Notice on them and evict them?
I don’t know whether you’re up to speed with the Government’s proposal to abolish Section 21 (no fault) Notices but there seems to be a school of thought that landlord’s enjoy kicking their tenants out for no reason whatsoever. I do not follow this logic and it worries me that Government is naïve to the consequences an abolition of the Section 21’s may cause.
As managing agents we never try to evict good quality tenants. Why would we? We love tenants who pay the rent and look after the property they occupy. Our landlords love such tenants. It’s a worry-free investment from their point of view. There are perhaps a small number of estate agents who ruthlessly try to ‘churn’ tenancies to generate more letting fee revenue from landlords. There are few landlords who would fall for such duplicity, and when found out the agents will surely face the sack leading to very short terms benefits.
I accept we do use Section 21’s where we believe it is in the interest of the landlord or the property to remove tenants. This is usually due to persistent rent arrears or late payment (both costly to administer for us and a source of havoc for a landlords cashflow) or where the tenant is in breach of their covenants e.g. smoking in the property, antisocial behaviour towards neighbours, where they’ve brought unauthorised pets into the property (I will add that Julie and I have a 19 year old cat and we know how much effort is needed to look after a cat properly, keeping the house ‘fur-free’, avoiding fleas and occasionally having to accept claw-mark damage – but that’s our choice, our furniture and our expense!).
There is an argument that all the above could be dealt with via other Grounds for Possession i.e. Section 8 for non-payment of rent. But other than the Section 21 Notice, every other avenue for possession involves Court action and considerable expense, with no guarantee of possession should the Court’s opinion consider it unnecessary. Surely, the owner of the property is the one to deem whether it is a necessity or not?
As professional estate agents we can handle any new process imposed upon us, but landlord’s looking after their own properties may find the new process difficult, time consuming and costly. And you can bet that one error on the paperwork will lead to the case being thrown out of court necessitating the process having to be recommenced. Such landlords may turn to us. This will generate even greater revenues for professional letting agents, but that doesn’t persuade me the abolition of Section 21’s is the right direction for the Private Rented Sector (PRS) per se.
There are many landlords who are renting their former homes as a consequence of being in negative equity. They cannot afford to be tied to a tenant who pays the rent late. We have had numerous landlords ‘dip their toe’ in the rental market, knowing they could back out at the end of a fixed term using a Section 21 Notice if the title ‘property landlord’ didn’t sit comfortably on their shoulders. For some it doesn’t. For others, I’ve had them as clients for many, many, years. We’ve just said goodbye to two clients this year who have sold-up after being with us for 25 years. They’ve provided homes to some lovely tenants in that time, without us ever evicting anyone for unnecessary reasons.
Some landlords need to move back into their homes if their personal circumstances change e.g. work abroad has finished and they have a new job back in Leeds. But if they cannot recover possession at the end of a fixed term using a Section 21 Notice how are they going to achieve that? The Government are proposing a new ‘right for possession’ to cover homeowners needing their home back, or homeowners who are forced to sell. But if that’s the case, does this not imply that Government are targeting landlords who simply choose to evict a good quality tenant. Really?
I appreciate some tenants do have to move when they do not want to. That is hard on those tenants and their families, but is it morally correct that a homeowner should have less rights than a tenant?
My fear for tenants is that removal of the ‘flexible’ Section 21 Notice will see a number of landlords back out of the rental market and deter some potential new landlords from entering the PRS. Lenders are likely to become more restrictive on the properties they allow to become rental property leading to only one likely outcome from the abolition of the Section 21’s – an even greater shortage of supply of rented property. This will exacerbate the already profound lack of housing stock in the PRS (especially in Leeds) and drive rents up even further on the remaining stock putting yet more pressure on tenants.
The PRS is not the market to give security of tenure to tenants. This was tried way back when, with the Rent Acts. They were an unmitigated disaster! Landlords left the PRS as rapidly as they could until by the late 70’s there was such little left of the PRS that Government introduced the Housing Acts and the Assured Shorthold Tenancy along with its Section 21 option. Greater security of tenure is available with an Assured Tenancy (not a Shorthold) and for Housing Associations, Councils and corporately owned housing such tenancies work perfectly well. The solution to tenant security is for more housing stock to be built specifically for long-term letting. Not restrictions on the existing housing stock.