Removal of Section 21 – the end of an era for landlords?
Adrian McClinton, Partner and property litigation expert comments on the government’s recent decision to consult on the removal of ‘no fault evictions’, and what this could mean for both landlords and tenants.
“Make no mistake, the government’s announcement that it is consulting on the removal of ‘no fault evictions’ represents a seismic shift in the private rental sector. Back in the late 1980s, the introduction of the ability to remove tenants at the expiry of a fixed term without the need to have a reason was one of the primary drivers for investment in the private rental sector.
The ability to remove a tenant without providing a reason is a landlord’s most powerful tool and acts as an insurance policy, for example: “This tenant is causing me problems and I need to get rid, no questions asked”, and the legislators know this. But will the removal of no fault evictions fall foul of ‘the law of unintended consequences’?
Like any fledgling industry, an element of the ‘Wild West’ prevails for a period, where it takes some time for regulation to catch up to ensure rogue operators – in this case landlords – are prevented from abusing their position.
With that in mind, since 2004 successive governments have been attempting to control ‘bad practice’ by restricting the use of no fault evictions where there are examples of this bad practice, thus removing the landlords ‘insurance policy’.
It started with deposits and the requirement for landlords to protect them properly. Failure to do so means, amongst other things, that the landlord cannot serve a Section 21 notice.
Then, there was the requirement to register the property if it was a House in Multiple Occupation. Again, failure to do this meant that, amongst other things, the landlord can not serve a Section 21 notice.
Then, there was a whole raft of legislation that required the landlord to provide information to the tenant on their rights, information on the energy efficiency of the property and, finally, carry out repairs, when reported properly. Failure to do so meant, guess what? That’s right, the landlord cannot serve a Section 21 notice. With all of this taken into account, one of the most powerful incentives for landlords to comply with their obligations was to preserve the opportunity to serve a Section 21 notice.
The government needs to be careful that by removing the no fault eviction, it is not undermining some, or all of the drivers that have been put in place to increase standards in the private rental sector. Further, if the government is going to remove no fault evictions, it must take steps to improve and streamline the process for removal of tenants where there is a breach of tenancy. This includes increased court resources to reduce the court waiting times and the time it takes for bailiffs to evict a tenant.
Finally, the government and the public at large need to understand that landlords own property to make a return on their investment. That return is mainly made up by rental income. The removal of a tenant and finding a new one results in void periods and loss of income. Landlords do not evict tenants out of malice; they will do it out of necessity.”
For more information on property litigation, or regulations for landlords, or tenants, please contact Adrian McClinton or a member of the Property Litigation team.