Section 21 is going, but let’s have a say on how it goes

Tenancy Reform:

Paul Shamplina of Landlord Action urges with an interest in rental property, landlords and letting agents in particular to participate in the consultation on Tenancy reform which closes at 11:45pm on 12 October 2019. You views are vital to reaching a sensible outcome.

Firstly, says Paul, let me repeat the words I said to Richard Bilton in a TV interview I did with Panorama at my office two summers ago (an interview which lasted just seventeen seconds): “There is no such thing as NO-FAULT Eviction under Section 21”. 

There is always a reason why a landlord wants possession.  According to the survey we carried out on LandlordZone, 58% of the time it is down to rent arrears and just 0.5% are because the tenant has asked for repairs to be carried out – known as ‘Retaliation Eviction’.

Most of the time tenants will not know the reason because landlords do not have to give one.  There has never been any specific data, but The Lettings Industry Council is calling on its members to send out surveys to their landlords and letting agent databases to find out how many Section 21s are being sent out and for what reason.

As I have said in previous articles, from sitting in various meetings with trade bodies and landlord associations, the industry is coming together and has one clear message to the government: ‘Do not ban Section 21 until we have a clear understanding that the Court System or Housing Courts have sufficient investment to cope with the extra hearings, judges, administration and portals.  We need better education tools for tenants and an overhaul of the bailiff system so that landlords are confident they can gain possession if required.”

This is the biggest change and threat to landlords in years.  Much greater than additional stamp duty, Section 24 mortgage interest relief or the tenant fees ban.  Whether it’s a landlord with one property, a professional landlord with a large portfolio or a big institutional investor in the Build to Rent sector, investors need confidence. 

The Fair Possessions Coalition, which includes bodies such as ARLA Propertymark, Safe Agent, the Residential Landlords Association, the National Landlords Association and Landlord Action, have filed a response statement to the government with ideas on what Section 8 should look like, with clear grounds for repossession that are unable to be exploited by criminal landlords or unreliable tenants.  We need a complete overhaul of the regulations and processes which enable landlords to repossess their properties if required.

Banning Section 21, longer-term tenancies and introducing a Housing Court are all linked and must work together. In fact, next week, I have MHCLG coming to our offices to shadow our Landlord Action solicitors, case workers, paralegals and support staff.  We want to demonstrate the positives but also the challenges faced with the current system and offer our thoughts on what is needed for landlords in terms of better lead times, so that landlords can have confidence in buy-to-let in the future. The Ministry of Justice must invest.

If we look at 2018 statistics from the Ministry of Justice, in total 116,500 claims were issued, 71,500 from social landlords, 22,500 from private landlord using Section 8 with hearings and 22,500 for accelerated possession proceedings. Out of the 116,500 claims, 89,000 had possession orders granted, from which 60,000 went on to have a warrant issued and 32,000 were repossessions by county court bailiffs. The ministry of Justice last year made over £7.2 million in bailiff warrant fees.

But let’s breakdown the accelerated procedure (Section 21) figures from 2018.

• 22,500 claims were issued
• 18,000 went on to have possession orders
• 12,700 went on to have warrants issued
• 10,000 led to evictions under the accelerated procedure

Although we don’t know the exact figures because Section 21 is “no-fault”, we do know that a lot of these evictions are still as a result of councils encouraging tenants to stay put until they are evicted because of the chronic shortage of social housing. This puts the burden back on the landlord with lost time, rent arrears and stress for both the landlord and tenant.

So, my point is, what will happen to these tenants if Section 21 is banned? Although many Section 21 cases are down to rent arrears, this is not stated. If landlords are told to use Section 8 with a hearing and obtain a money order, the councils will then see that a tenant has incurred rent arrears and made themselves homeless, they will therefore be under no obligation to re-house them.  What impact will that have?

In addition, I predict that Section 8 hearings will double because landlords who would previously have used Section 21 will use Section 8. This will double the amount of court time before judges that is required, also meaning that a major recruitment drive of judges to deal with the increased number of hearings will be necessary.

I have been very vocal for many years on Section 8 and I strongly believe that when a money order is made, a County Court Judgement should be registered. This would help landlords to gauge if their tenants have had rent arrears possession cases made against them in the past and possibly save them from repeat circumstances, but I cannot see the government agreeing to this.

The government has now launched a 12-week consultation on Tenancy Reform in England which will consider proposals to scrap Section 21, improve the court system and an alternative process for regaining possession of a property via Section 8. This change is one of the biggest reforms in the PRS for many many years. I urge as many landlords and letting agents to complete this survey and HAVE YOUR SAY NOW. I believe the number of participants in this survey will be one of the highest the government has ever received.

CLICK HERE https://www.surveymonkey.co.uk/r/52JFF5T

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