Section 21 Evictions Ban Changes How Landlords Choose Tenants
Landlords are reluctant to take risks due to the upcoming Section 21 evictions ban.
Talk about abolishing Section 21 has certainly been brewing over the years. But it’s all about to bubble over as the government has finally given the green light to go ahead.
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The Evictions (Universal Credit) Bill passed its first reading five months ago in 2021 and will get a second reading at the end of this month. The government announced its Levelling Up plan this February will include a focus on landlords and the scrapping of Section 21 completely.
What are the consequences for abolishing Section 21?
The Section 21 evictions ban does sound quite frightening to some, with many now exercising extra caution when it comes to taking on tenants who are not as financially secure. There is also an increased demand for fewer available rental properties, possibly due to the Bank of England’s raising interest rates and the current rising cost-of-living crisis.
There are plenty of great tenants who pay rent on time and look after the property, so of course landlords don’t just want to ‘evict tenants’. But there are so-called ‘rogue landlords’ who are known for taking advantage of and abusing the system.
However, without the assurance of Section 21, landlords will surely be thinking twice about investing in properties. So what are the potential consequences you should be aware of due to the abolition of Section 21?
- Landlords may decide to leave the private rental sector for fear of being ‘trapped in the system’, unable to remove non-paying tenants
- Landlords will certainly be more careful when it comes to who they take on as tenants, knowing the Section 21 notice will no longer be readily at hand
- Rent may possibly increase in the future to reflect the upcoming changes
How will the Section 21 evictions ban change how landlords choose tenants?
New research from Goodlord revealed that the number of landlords insisting tenants pay two or more months’ rent upfront has risen by 43% since the pandemic. And 1 in 40 landlords have made the demand already in 2022.
Goodlord also analysed 730,000 tenancies that have been made over the last four years, and have found a 36% rise in the number of non-student tenants that have been asked to provide a guarantor. This is the biggest jump they’ve seen since the year 2020.
But there are what some may call ‘guarantor hotpots’. The biggest increase seen was in the West Midlands, where 14.9% of non-student tenants were asked to provide a guarantor, up from 6%. During the same period, requests for guarantors for student tenants have remained rather stable.
Nathan Emerson, CEO of trade body Propertymark states that not only are tenants facing financial difficulties right now, but that it’s important to remember many landlords will also face difficult issues as well. He states that 54% of landlords have buy-to-let mortgages, with nearly half of all landlords having only one property. Emerson says:
Even before the pandemic, changing legislation and the onset of tax changes have impacted landlords’ costs.
Emerson also stated that because of this changing legislation, it’s not surprising to see a rise in landlords requesting rental guarantors. This provides a greater level of protection, should a tenant fall into arrears or default on their tenancy agreement.
Goodlord also reported that as more tenants continue to spend a greater proportion of their salaries on rent – stretching out their budgets in order to secure properties with spare rooms or gardens – landlords will want that additional assurance during the referencing process.
At Mashroom you can secure the best tenants with professional tenants referencing all whilst enjoying a greater peace of mind. It makes sense that landlords will no doubt become more wary of tenants who are unable to make payments in the future, and will need that extra layer of security. Verifying incoming tenants is highly recommended to ensure you have the best tenant possible for your property.
