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  • In the Spotlight

    Section 21 Consultation now LIVE!



    The Government has published a consultation on its plans to abolish Section 21 – the process by which landlords or their agents can reclaim properties without having to state a reason.

    There is no question that the abolition will not go ahead – it will be achieved by getting rid of Assured Shorthold Tenancies.

    Landlords will in future need to give a “valid reason for taking back possession of the property and would need to be able to satisfy a judge of the validity of their claim”.

    The consultation, slipped out shortly after midnight yesterday as the Theresa May premiership draws to an end but also when many people go on holiday, largely focuses on issues such as improving the court system and Section 8.

    Called “A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants”, the consultation relates to England only and is open until October 12.

    The abolition of Section 21 will be achieved by removing Assured Shorthold Tenancies from the Housing Act 1988: “Once we abolish Section 21, there is no longer any significant legal distinction between an assured shorthold tenancy and an assured tenancy,” says the consultation.

    ARLA said yesterday that the impact on the private rented sector cannot be under-estimated.

    The consultation states that tenancies would not have to be open-ended, with a choice between a fixed-term agreement and a period contract that rolls over. However, one of the questions asked in the consultation is whether fixed terms should have a minimum length.

    The consultation says that the Government does not support rent controls, but raises concerns that landlords may try to force tenants to leave a property by increasing the rent at the end of the fixed-term period to an unaffordable level. Legislation would prevent this by banning clauses  allowing changes to the contract after the fixed term.

    A number of questions are asked as to valid grounds to reclaim a property.

    Among them are:

    • If the landlord or a family member wants to use the property as their own home – if so, should this be allowed within the first two  years of a tenancy?
    • If the landlord wants to sell the property.
    • Rent arrears – the Government is considering allowing a landlord to serve a two-week notice seeking possession once there are two months of rent arrears. This would be a mandatory ground. If the arrears are under one month, then the ground would be discretionary. Critics say the consultation does not address the question of persistent rent arrears.
    • Anti-social behaviour – could tenancy agreements be strengthened to make it easier to provide evidence in court?
    • Domestic abuse could be a new ground, and could allow the landlord to evict the tenant who has perpetrated the abuse, not the whole household. The consultation also asks about protecting the victim should the abusive partner threaten to terminate a tenancy.
    • Unsafe properties: if a tenant has allowed the property to deteriorate below legal standards, should this be a ground for possession?

    The consultation also asks questions about student accommodation and short lets, and whether and how these sectors should be included in the new framework.

    The changes proposed would not be retrospective – Section 21 could still be used to end existing ASTs after the legislation comes into force. The new law would probably be implemented six months after Royal Assent.

    ARLA Propertymark yesterday said: “This is big news for the sector and we cannot under-estimate the impact.

    “We cannot accept amendments to the Section 8 eviction process unless all grounds are mandatory and include persistent rent arrears and anti-social behaviour.

    “Only after a full impact assessment and conclusions from a pilot should the Government abolish Section 21.”

    Chris Norris, director of policy and practice at the National Landlords Association, said: “The court system has been in dire need of reform for a long time, so we’re happy to see action on this.

    “Any improvements to this system need to be in place, properly funded and fully functional before the Government even contemplates changes to Section 21.

    “Landlords have been relying on Section 21 to compensate for the many failings of the Section 8 fault-based process, which has become too costly and time-consuming.

    “If the Government want to deliver a fairer, better quality and more affordable private rental market, as they claim, they should try listening to the concerns of landlords, not just court the voting renters.”

    David Smith, policy director of the Residential Landlords Association, said: “Landlords’ concerns over scrapping Section 21 remain unchanged unless and until a new system is in place that provides the confidence and certainty needed that they can regain possession of their property in legitimate circumstances.”

    See - David Smith - Views on RLA Section 21 Report

    Property Tribes urges all landlords to take part in the consultation.

    ACCESS THE CONSULTATION DOCUMENT

    Source story from Property Industry Eye 

    SEE ALSO  -         Abolishment of Section 21 - effect on tenants

    UP NEXT -             Direction of travel - Section 21 consultation

    DON'T MISS -        Section 21 - curated threads, news, & videos

    NOW WATCH:

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    Housing blogger, Joe Halewood, is writing on his blog that Government must withdraw the consultation and defer all plans for outlawing section 21 NFE for at least three years because Government knows nothing at all about who and what is the ‘private landlord’ and until it does it is absolute madness to seek the seismic change they are.

    Government must instruct every council to operate authority-wide private landlord licensing schemes as standard so that central government knows who private landlords are and then, but only then, seek to ban no-fault evictions. Until that time Government like Manuel (from Fawlty Towers) "knows nothing".

    Nobody knows who or what the ‘private landlord’ is and least of all government!

    Read Joe's blog in full

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    Hi Vanessa

    Is this a summarised report of the actual publication? I like that you've drawn out the keys points. 

    If there is an extended version could it be attached or linked for us to read? 

    Kind regards
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    Saagar

    Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences. 

    Thanks. My bad as I completely missed it from the hyperlinks at the bottom.
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    Saagar

    Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences. 

    One of the many troubling aspects of this "consultation" is that it is clear that the anticipated specialist housing court is not even mentioned and is clearly not within the Government's contemplation. They simply propose to tweak the existing system - no reference to any additional funding, resourcing or how the courts will cope with the inevitable increase in caseload. Nor is there any recognition of the virtual impossibility of obtaining sufficient evidence of anti-social behaviour to satisfy a court that eviction is appropriate.

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    So no housing court - guess that would involve spending some money that Boris needs to buy votes with....

    load of ********....., some vague tinkering around the edges of S8 process with no real reform

    - and only vague muttering about bailiff reform by magically improving county court bailiff without spending any money....


    The detail of the proposals is a million miles away from all the hype at the beginning of the document...

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    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.

    I would be interested if anyone has access to legal counsel advice on my thoughts about the Section 21 removal creating unfair terms?

    I have put down my thoughts on Section 21 removal over the past 24 hours under three points below:

    On the proposed abolition of Section 21 Notices


    Point 1

    I am a Private Rented Sector (PRS) landlord.

    The central instrument of my business is a contract (Rental Contract).

    To end the contract without acrimony already takes place on unfair terms. The tenant may give one month’s notice; the Landlord has to give a notice of two months (called “Section 21” because it is covered by Section 21 of the Housing Act) but this is accepted by all involved.

    This is in contrast with renting from the government through Local Councils and Housing Associations. They are social housing providers. They don’t have the same commercial contract; they serve the wider population. The authorities are indeed legally obliged to provide accommodation under the “Housing Obligation” and tenants have greater right to remain.

    Under a present proposal to remove Section 21 landlords will lose their right to give notice without acrimony, but tenants will keep their right to give notice.

    This may fall under Contracts Unfair Terms legislation by giving an absolute right (to quit) to one party (the tenant) that it is proposed is removed from the other party (the landlord).

    Indeed, you’d have to be crazy to sign a contract that gives fundamental rights to another party that you don’t yourself have in the contract!

    Imagine that you sign a contract with a builder, which gives the builder rights to leave the job in a mess but you don’t have the right to fire them unless they break the law?

    This is about the size of the proposed measure.

    In the case of absolute breakdown of the tenant/landlord relationship anyone can go to court, of course.

    The tenant (who does not need to qualify legally in any way for the tenancy) can hold the PRS landlord to any one of approximately 140 laws. In Wales (where I live and work) all landlords are regulated by licenses.

    The Housing Act (Section 8) stipulates a high threshold for a landlord to take a tenant to court which can be hugely expensive both in time, effort and in money, sometimes unaffordable. If the tenant is poor none of the loss, cost, damage can be recovered.

    The alternatives

    So is the government to rewrite all consumer legislation in line with this proposal so that a retailer then cannot refuse to serve a customer who behaves badly, short of getting a court injunction?

    Shall a publican (for example) not be able to legally refuse to serve a drunk without leave of the court (I have had to deal with substance abuser tenants, and worse)?

    Or if the government wants all rented housing to operate with no landlord voluntary notice to quit, shall it buy or replace all PRS housing and put it into social housing.

    My short response to the government consultation on abolishing Section 12 is that it is deconstructing my contract, perhaps illegally because of unbalanced (unfair) protections to me in the proposed revised contract.

    Point 2

    The PRS contract is a contract voluntarily entered into.

    The government is proposing to rewrite it so that it is a contract that cannot be voluntarily got out of.

    These are some of the things that can go wrong below the level of a (Section 8) court enforcement of the landlord’s right to get the tenant to leave through the courts:

    1. Rudeness, spitting, threats, drunken and drug fuelled behaviour, general unpleasant personal behaviour, verbal assault below the level of arrest.
    2. Noise, fights on the street and unneighbourly behaviour, litter, animal fouling.
    3. Lack of co-operation, mental health issues, minor persistent non payment – lacking of communication, concealment or hiding from problem resolution.
    4. Full blown unpaid rent/loss of income for 3 – 5 months during court process after the first two months are not actionable.
    5. The cost of orchestrating, maintaining and recording legal detail for 3 – 5 months duration of a court process after action has reached this point.
    6. Damage to property, repeated in-tenancy repairs, failure to maintain the property.
    7. Damage to the property discovered after a tenancy, retributive damage by tenants, clearance of rubbish and broken furniture, damage to the building fabric (I have seen this cost above £2,000 and going up to many thousands of pounds).
    8. A tenant can disappear without a forwarding address at the 11th hour.
    9. A tenant can pay down just enough rent arrears to avoid court eviction, then rebuild arrears (at the Court’s patience).
    10. After the landlord’s loss of many months of time and cost of many thousands of pounds no cost is recoverable from a penniless tenant.

    No sane person goes to court.

    No good landlord with a good tenant under ordinary circumstances wants to evict?

    Yet any landlord would be crazy to enter into a contract where the other side has the power to end it but s/he doesn’t.

    A contract is a voluntary arrangement. Why should anyone tie themselves down by signing one into giving the other party but not them no reasonable exit?

    This proposal doesn’t make sense and may be also illegal because it constitutes unfair terms.


    Point 3

    I operate a private sector business of renting out property for profit. The average Net Rental Yield for a 2-3 bedroom house in my part of the country is acknowledged to be £100- £200/per month after costs are taken from a Gross Rent of typically £500 - £600/per month. i.e. the running costs of maintaining an asset to generate £100 - £200 income are £300 - £500. This is “my business”.

    No good landlord with a good tenant all things being equal, wants the tenant to vacate because this means disruption, loss of income (voids), remarketing and reletting costs, all taking time and effort that interrupts the smooth flow of business. Why should any sane landlord want the tenant to vacate?

    Yet any landlord would be crazy to enter into a contract where the other side has a power to end it that s/he doesn’t.

    The government is proposing to dissolve the Section 21 notice for landlords for which the alternative is a “Section 8” notice through the courts.

    This is a 3 – 5 months process costing as many thousands of pounds. The bad faith of a court action can produce in worse case scenarios a completely trashed house vacated by a penniless tenant too poor to claim expenses from.

    It must be clear to all that no sane person wants to go to court.

    It is already a brave private landlord who deals with the Universal Credit tenant and operates in poorer social class areas and just a small percentage increase of acrimonious (court) evictions (made necessary by the removal of the non-confrontational Section 12 closure) will tip the balance of landlord affordability negative, most pointedly in locations where the council housing provision is already most stressed. Clotting existing private housing provision and advancing homelessness.


    Thank you for reading, and any comments!

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