This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Landlords are using Section
21 notices, instead of Section 8, due to a lack of confidence in the court
system, according to a new survey by eviction firm Landlord Action.
A Government consultation into which major reforms to make
to private tenancies has now ended, and the industry awaits the result. Critics
are calling for Section 21 notices to be banned, arguing that they tilt the
balance of power towards landlords.
However, the Landlord Action study has revealed some
interesting facts when it comes to the reasons that landlords may leave the
sector, for fear that they have no power over their own properties.
Of the landlords that responded to the survey, 73% said that
they have had to serve a Section 21 notice, with more than half (56%) using it
because their tenant was in rent arrears. There were no other common specified reasons
for landlords to use it, with 22% of respondents simply stating ‘other’.
Paul Shamplina, the Founder of Landlord Action, believes
that many of these unspecified reasons, along with rent arrears, could be
pursued under Section
8, but landlords are forced to rely on Section 21, even when there is a
breach of tenancy, as they have very little faith in the court system.
He says: “Not only is using Section 8
already more time-consuming, tenants can delay the process further for landlords
by counter-claiming. In addition, discretionary grounds of Section 8, such as
anti-social behaviour, can be extremely difficult for landlords to prove,
meaning it has a lower success rate. It’s clear from the survey that landlords
need to be able to get their properties back as soon as possible, and are
willing to forfeit arrears by using Section 21.”
Other specified reasons
for using a Section 21 notice included tenants requesting their landlord obtain
a possession order (10%), landlords needing to refurbish the property (5%) or
sell it (4.5%). Just 2% wanted to move back in themselves, while only 0.6% said
that it was because the tenant had complained about disrepair (a so-called
Interestingly, 43% of
landlords said that their tenants vacated the property when served with a
Section 21 notice, but 42% had to go to court to obtain possession.
The Government has put
forward a consultation on a proposed specialist housing
court. It believes that this
would provide greater access to justice for both landlords and tenants, and
give landlords confidence to offer longer, more secure tenancies, by making it
easier for responsible investors to regain possession of their properties,
should they need to.
However, as part of this,
Shamplina predicts that the use of Section 21 would be heavily diluted, and is
concerned that, without major reform to the Section 8 notice, some landlords
will exit the market.
He explains his
standpoint: “Section 21 gives landlords and mortgage
providers the reassurance and flexibility to recover their asset, if they need
to. To abolish it, or even dilute its current use, as has been suggested, will
require significant reform to Section 8, which offers reassurances to landlords
that, if they had to use the Section 8 route under grounds for rent arrears,
moving back into the property or selling it, there would not be significant
delays in the court process. With this, we are likely to see a further
cut to supply of rental properties, as landlords will consider buy-to-let too
great a risk.”
In addition, the recent announcement that the tenant
fees ban will come into force from 1st June 2019 could also affect
the use of Section 21, Shamplina believes.
After this date, if a landlord (or letting agent) makes a charge that
relates to a banned fee, they must return this within 28 days, or it will
render a Section 21 ineffective.
Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources.
When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.
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