Don’t Panic! A Landlord’s Guide to Section 21
The loss of Section 21 is like the never-ending story, there has been talk of no fault evictions being on the way out for literally years, but it really does look like Section 21’s days are numbered now
The Rental Reform Bill recently went before Parliament, so it’s finally happening. But will it really affect you? What should you be prepared for? Do you really need to be prepared at all?!
We spoke with Landlord Action‘s Paul Shamplina for his main takeaways.
What does the loss of Section 21 mean?
It means that a landlord cannot serve a two-month notice to end the contract. But ‘no fault’ is actually a bit of a myth, as generally there was always a fault – why else would you want to evict?
The number of repossessions through Section 21 has nearly doubled in the first quarter of 2023, but nonetheless, experts do state that the main reasons that landlords serve Section 21 remain the same:
- Landlords are selling up. Paul commented that he has ‘never seen so many landlords selling to get out of the marketplace’. This is due in part to the high interest rates, the burden of Section 24, abolishment of mortgage interest relief and the impending additional regulation
- Landlords don’t want to go to court. Who does?!
- Anti Social Behaviour. This is a real bugbear for landlords and is a key reason that many serve notice on tenants as the easiest way out of the situation
- Tenants being told to stay put by the council. Tenants who need to be re-housed can’t voluntarily leave the property as then they don’t qualify for council housing
What is really troubling landlords right now?
There are a few things that landlords are worrying about at the moment:
- Landlords are coming out of their fixed terms, going from a 2-3% to 6-6.5%. They feel that it’s just not worth it
- Tenants are also now paying much bigger rents, for many the increases are unsustainable, so that’s an issue obviously as it can lead to rent arrears
- The mortgage rates are changing
- The impending regulation and loss of Section 21, so landlords worry they can’t get their property
- The minimum EPC rating will be increased
All of this means that landlords are using Section 21 while they still can; Landlord Action has seen a 41% increase in landlords instructing them to serve Section 21s.
However, it’s important to remember that there’s a whole procedure to go through before these proposals become law – so there is time yet.
How should landlords prepare for the loss of Section 21?
You need to do a business review, whether you’ve got one, three, five or more properties.
- Are you looking to scale up?
- How are you doing to manage?
- Which experts or professionals can you enlist to help you with these decisions?
However, in Paul’s opinion, there are some bright sides to focus on:
- Landlords have access to the best tenants they’ve probably ever had
- Tenants are now getting guarantors, which can ease the mind of the most worried landlord
Remember to take a step back and treat your portfolio as a business, by making decisions sooner rather than later about underperforming properties
