Changes to the proposed Renters Reform Bill - my opinion as a Letting Agent
Focus: Section 21
May 2024
Before we dive into the whys and wherefores of the proposed changes, it’s helpful to understand how and why the Private Rented Sector got to where it is now.
A brief overview of the Private Rented Sector
The introduction of the 1977 Rent Acts in England & Wales led to very low returns for landlords, making renting a property financially unattractive, so much so that only around 6-7% percent of households were renting when the Assured Shorthold Tenancy (AST) was introduced by Margaret Thatcher's government in 1988.
This removed rent controls, allowing landlords to charge market rent as well as being able to regain possession of their property, without a specified reason, via a Section21 notice. These changes made letting a property financially viable and the Buy To Let boom in the late 1990s began.
The legislative changes in England and Wales coincided with shifts in population demographics and a modern lifestyle began to favour renting for its flexibility. The 10-year property boom which preceded the credit crunch of 2007-8 and thereafter resulted in unprecedented growth in rental property investment.
In 1991 around 6-7% of the population lived in a rented home. Today almost 20% of UK households live in property provided by private landlords (one in five).
Tenant demand for rented housing increased for several reasons. High property values, particularly in the hot spots of London and the South East and other major cities, resulted in first time buyers being squeezed out of home ownership, due to the high deposits needed to buy.
Other demographic changes contributed to this rising demand. For some tenants, renting became a convenient alternative to buying, and for some it has become the only option, with job mobility & insecurity and shorter-term work contracts meaning many are wary about becoming locked-in to owning a property in one location.
The trend for cohabitation prior to marriage means that couples are also often reluctant to become locked-in to a property with a mortgage, which may be difficult to unravel if there is a split.
Also, higher divorce rates, and an ageing population results in more single living, all leading to increased demand for rental housing.
Abolition of Section21
This, under the current government, has been delayed indefinitely pending court reforms. With a General Election now only a few short weeks away we may see further changes in the weeks and months to come.
Removing the option to issue a Section21 notice seems to be one of the main fears of Landlords since the Renters Reform Bill was first publicised. This doesn’t mean that a landlord will not be able to regain possession of their property, but that there would be a new way with new rules to do so.
Ironically the original concept of the entire Renters Reform Bill was to make A Fairer Private Rented Sector, which seems to have escalated having the opposite effect by landlord’s objections to the reforms resulting in them selling their rental properties which has contributed to the lack of available property in the Private Rented Sector throughout England.
Admittedly there are many points in the bill which are concerning and, unless I’m missing something, I’m not seeing how some of the proposals truly benefit tenants. (many of whom still don’t know about the cap on deposits and have a puzzled gaze when given the How To Rent Guide, EICR& EPC) More on changes benefitting tenants in a separate article.
Having Section21 removed from a landlord’s toolkit in itself isn’t something to be afraid of. As long as it has a suitable replacement.
Let’s be honest, Section21 is not as robust as is being made out and as a landlord you are completely at the mercy of your tenant complying with the legal request to vacate the property. If they don’t then you could be in for a wait until they find somewhere else to move to, or find yourself gearing up for a legal battle, which no-one really wants.
Why areSection21 notices issued?
Issuing a Section21notice is the “go-to” solution to request possession back of a property because it’s been made the most straightforward and safest route for landlords and letting agents to use.
The overuse & extremity of the term “No Fault Eviction” associated with a Section21, has created a lot of hysteria and should be renamed for what it actually is;
A landlord advising a tenant they need to make arrangements to find a new home in 2 months’ time.
Admittedly a bit lengthy in title but I’m sure there’s some Think Tank out there who has the time and interest to come up with something more catchy.
In most cases, there’s no animosity or blaming anyone for anything.
Just simply I would like possession of my property back please so you need to find somewhere else to live.
Why would a landlord issue a Section21 notice if they didn’t need the property back, and/or had a good tenant?
Guaranteed there will be a reason, whether it is disclosed or not and whether it is down to actions or lack thereof, by the tenant or simply a change in the Landlord’s circumstances.
In all my years working in the Lettings industry I have never had a landlord instruct me to serve notice to their tenant Just Because … no particular reason/it’s Tuesday/they’ve lived there exactly 4 years and 51 days so it’s time for them to leave/it’s a full moon or other equally incomprehensible reasons.
A Landlord would not ask for a good, reliable tenant to leave if they didn’t have to.
There’s always a reason that prompts a landlord to seek possession of a property, with the main ones being the Landlord needs, or would like to, sell the property for a myriad of reasons, rent payments have become sporadic or are in arrears, rent amount isn’t meeting outgoings, tenants aren’t looking after the property or are causing issues for other residents or neighbours.
Currently when issuing a Section21 notice a reason doesn’t need to be stated, but oftentimes an explanation and pre-warning to the tenant is given out of courtesy and understanding.
In most instances an alternative notice could be issued, namely mandatory grounds under Section8. However, with this not guaranteeing a judge granting possession is a less attractive option for landlords.
A Section8 notice could serve as a warning to tenants if they are in arrears or persistently late with their rent, where gaining possession of the property is secondary, in the hope this will rectify the situation and they will in future pay their rent in full and on time.
A Section8 notice issued for persistent late payment contains the key word persistent. A Landlord would be unlikely to take action against their tenant if the rent was late, or underpaid, on one occasion.
Objections to issuing a Section21
The overall objections of the current version of a Section21 notice appear to be that a Tenant;
a) Is being asked to vacate a property through “no fault” of their own?
Unfortunately, renting a property doesn’t guarantee that you can live there forever more. The property is on loan to you by the legal owner until such time as this agreement is terminated by either party.
When you sign an employment contract for a new job it doesn’t mean that you can never be made redundant. You can of course get fired if you’re not doing your job properly or have broken the rules of your employment. Akin to not paying rent in full and on time once too often?
b) Isn’t being given a reason (or acceptable reason) as to why they are being asked to leave and find a new home.
The current proposals are to eradicate Section21 and use Section8 instead, which will be strengthened, widening the grounds for issuing such a notice and need to be backed up by evidence to confirm the stated reason. How you will prove a landlord’s want to sell a property is yet to be determined.
There are many grounds already available under Section8 although these don’t cover every eventuality and some are mandatory whilst some are discretionary.
A simpler solution may be to alter a Section21 notice to incorporate transparency: specifying a reason for ending a tenancy. As we already know, landlords don’t end a tenancy to a good tenant unless they have to.
This prompts another question, probably controversial but we’ll go there in brief; As the legal owner of a property, does someone really have the right to demand that you can only not have a tenant live there anymore because of x, y or z reason? Such reasons would more than likely be the obvious ones as to why a landlord would end a tenancy anyway (Selling, non-payment or late payment of rent, property not being looked after, consistent complaints from neighbours/residents)
As a legal owner of, in this case a property, is it not that person’s decision as to who may live there and for how long? Unless the landlord has a change in personal or financial circumstances, they would more than likely not fix something that wasn’t broken.
There are rogue landlords in the world, just as there are tenants, but landlords, certainly that I deal with, have key fundamental requirements in their search for a suitable tenant; being one who will pay rent in full & on time and look after the property. Landlord restrictions on the suitability of tenants are usually shaped from past experience. If they allowed a previous tenant to have a pet and the property was returned in an unacceptable condition at the end of the tenancy, landlord’s fingers burned = not likely to do that again.
Unfortunately, the thoughtless actions of one can ruin it for many.
Is this fair for other responsible pet owners? No it’s not, but was it fair to the landlord who will have had to renovate the property at their own expense as the deposit amount didn’t cover the damage? No it wasn’t.
Side Thought - If Landlords are required to state a reason for ending tenancy, and there will be a national database of private Landlords so that Tenants have access and confidence in their Property and Landlord, will there be a national database of Tenants too? One which discloses the specified reason for them being required to vacate the property? After all A Fairer Private Rented Sector cuts both ways does it not?!
c) Shelter’s website states that, “Section 21 puts tenants at a distinct disadvantage. The provision doesn’t offer much room to challenge the eviction. Unless the landlord has failed to comply with legal obligations like protecting the tenant’s deposit or providing a safe living environment, tenants have little recourse. This inherent imbalance in power makes it difficult for tenants to establish long term housing security. The risk of “no fault” eviction often looms over tenants, potentially forcing then into a cycle of short-term leases and housing instability. Additionally, the short notice period of two months often places a significant emotional and financial burden on tenants, who must scramble to find new accommodation in a short span of time”
Arguably it isn’t a Section21 that places the tenant at a distinct disadvantage, but the basic rules of renting a property which do so.
Renting doesn’t by it’s nature, assume an infinite agreement. It is offered and agreed on a temporary basis. Therefore, as harsh as this may seem, the only way to almost guarantee stability in a forever home, is to purchase a property which will come with its own rules and is almost assured for life, as long as the mortgage payments are met for example. Or to enter the world of social housing if a house purchase isn’t possible. This could be the preferred route to housing stability for many long-term renters, blighted by the availability of properties, which is another discussion in itself.
Landlords and Tenants are grown-ups, and yes it may be disappointing, devastating even, to be told that you have to find a new home and will be expected to move out with two months’ notice.
Less devastating for a Landlord when a Tenant gives one month’s notice to leave, particularly in the current rental market conditions as there would be many new tenants to choose from. If you go back to a time when the Lettings market wasn’t as buoyant and competitive, and finding a new tenant after the current occupant had given one month’s notice to leave, Landlord’s properties could sit vacant for a couple of months at a time, with rent reductions, offers of a free month’s rent and other incentives suggested to encourage a new tenant – all the while a Landlord still had to pay the mortgage, council tax and bills. I didn’t hear any suggestions at the time to protect Landlords by requesting that tenants should provide more than one month’s notice to leave to allow more time to source another tenant. Perhaps this will be considered in a future amendment to RRB if and when the demand for rental property declines.
I won’t hold my breath.
Overall, for Landlords and Tenants, it’s not an Us vs Them scenario.
As a Letting Agent, I’m not Against Tenants and For Landlords, nor am I Against Landlords and For Tenants. Without either of them I wouldn’t be able to assist in providing someone with a new home or indeed have a business.
Do I disagree with abolishing the Section21 notice? It does what it was designed to do, which is to give notice to a tenant that the landlord requires possession back of their property.
The current proposals to me seem to be taking the scenic route on a journey that will end up in the same place.
Abolishing Section21 doesn’t mean that a landlord will never be able to regain possession of their property. It just means that they will only be able to do so for specified reasons. Which will likely be the exact reasons why a notice would be issued in the first place.
I am fortunate that my landlords and tenants act reasonably, taking my advice where needed with parties not only adhering to the terms of the Tenancy Agreement but also acting with basic human kindness & understanding.
Landlords don’t dislike Tenants, as without them they wouldn’t have an income/business/occupied property. Tenants don’t dislike Landlords, as without them they would be forced to buy a property or rely on an alternative housing provider.
Renting a property, on both sides as landlord or tenant, requires elements of trust.
As a landlord you are trusting the tenant to pay rent in full & on time, look after the property, inform you (or your nominated Letting Agent or Property Management company) if something requires repair that extends beyond the duties of a tenant, and to take it on the chin if asked to leave (amongst other things)
As a tenant you are trusting the landlord/agent to provide you with a home; one that is fit for human habitation, free from hazard, with repairs being carried out in a reasonable timescale (which will differ depending on the severity of the issue)
A Landlord is someone who owns a property and allows someone else to live there in exchange for payment and other agreed terms.
A Tenant is someone who wants a home to live in and for any number of reasons isn’t able, cannot or does not want to buy their own or live there, so lives in a property belonging to someone else in exchange for payment and other agreed terms.
Rent: noun (payment) – a fixed amount of money that you pay regularly for the use of a room, house, car, television, etc. that someone else owns.
If you need any help or advice regarding lettings or property management, don’t hesitate to get in touch.
Tel: 01524 969 778
Email: louise.sadoune@exp.uk.com
louise@property23.co.uk
Sources: LandlordZone, Shelter, Cambridge Dictionary