A Ban on Section 21 would shrink PRS by 20 per cent

Section 21 ban:

The Private Rented Sector in England, which now accounts for around 20% of all households, would be devastated by a ban on section 21, that’s according to new research carried out for the National Landlords Association (NLA).

A new report – A new deal for renting? The unintended consequences of abolishing Section 21 – commissioned by the NLA and produced by world leading economic consultancy, Capital Economics (CE), with offices in London, New York, Toronto, Sydney and Singapore, reaches this conclusion.

The report is also forecasting a 59% reduction in housing for those tenants claiming housing benefit (HB) now incorporated into Universal Credit (UC), and rents potentially could increase by 13 per cent.

Here are the figures produced in the report:

• 960,000 fewer dwellings available to renters
• 770,000 fewer dwellings available to tenants on housing benefit or Universal Credit
• 600,000 dwellings could see rent increases.

These drastic findings come at a time of unprecedented political upheaval in the country when the last thing Britain needs is a major housing crisis. But, says the report, there are possible solutions that could avoid this:

The report identifies that reforms to the court processes, making dealing with landlord and tenant disputes and evictions – Section 8 – cases, faster and cheaper, could off-set the effects of removing of Section 21 for many landlords.

However, CE thinks the removal of the “no-fault” eviction process, and replacing it with an improved but adversarial Section 8 process, would still see a likely drop of between 180,000-390,000 available homes. Between 130,000-300,000 fewer homes would be available to those on housing benefit, and rent increases are likely from between 110,000-240,000 properties.

Chris Norris, Director of Policy and Practice at the NLA, says:

“The Government has clearly failed to recognise the realities of the private rented sector by proposing the abolition of Section 21.

“Any government which thinks it appropriate to risk the loss of nearly 1 million rental homes at a time of housing crisis needs to reassess its priorities as a matter of urgency.

“Rather than playing to the gallery, the Government should be looking to support and incentivise good landlords to remain active and provide homes to those who need them, rather than making it harder and causing these landlords to exit the market.”

Consultation on the abolition of section 21

There is still time to respond.

On 15 April 2019, the Government announced that “Private landlords will no longer be able to evict tenants from their homes at short notice and without good reason”.

This announcement was followed in July 2019 by the launch of a consultation process with submissions accepted up to 12 October 2019.

The consultation paper proposes the abolition of section 21 of the Housing Act 1988. Section 21 enables private landlords to repossess their properties from assured shorthold tenants without having to establish fault on the part of the tenant. It is sometimes referred to as the ‘no-fault’ ground for eviction.

In addition to abolishing section 21, the consultation paper proposes improvements to strengthen/extend the existing Grounds for possession that are preceded by the service of a section 8 notice, particularly where the property is needed for the landlord’s or a family member’s use and where the landlord wishes to sell-up.

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