Drummed up by popular media horror stories, egged on by the homelessness charities, the “ban Section 21” band waggon kept on rolling until eventually the politicians saw it would be politically advantageous to jump aboard.
What is Section 21
It’s a section of the 1988 Housing Act, an Act that introduced the concept of the Shorthold tenancy. This is where landlords can grant a tenancy for the short term, usually 6 or 12 months, and are guaranteed to get their property back if things go horribly wrong, an occurrence which does happen, but in a minority of cases.
The concept was revolutionary back in the 1980s, a period when all tenancies were started out under the old Rent Acts. This presumed, and it pretty well proved so in practice, that tenants had a tenancy for life, with controlled rents to boot.
The Rent Acts had decimated the UK’s rental market as landlords left in their droves, and those that remained refused to spend on their properties. This was because their investments had become economically unviable – it led to years of decay and dereliction in the UK rental market housing stock.
But enter the shorthold tenancy and the rental market was revived. Not immediately, but over the next 30 years the working and middle class landlord emerged. Armed with their buy-to-let mortgage and sparklingly refurbished properties, they created lucrative nest eggs for their pensions, while at the same time housing tenants in vastly improved conditions.
Section 21 was part of the package: it meant that by giving two months’ notice, landlords could at last require possession of a rental property without the need to give a reason for wanting it. Section 21 still applies in England, for now. But evidently not for much longer. It does not operate during the term of the tenancy, only when the fixed term comes to an end, or when the tenancy becomes periodic, usually month to month.
During fixed terms Section 8 applies, which means the tenant can only be removed for serious breaches of the contract. Landlords must appear before a judge and argue their case to regain possession. It usually needs the services of an eviction specialist or solicitor to get a successful eviction and even then the process can drag on for months, and in some cases even years.
There is one exception to this breach of contract rule: where a landlord has served the tenants with a Ground 1 notice before the tenancy started, a notice that warns the tenant/s they may need to move out to allow the owner to come back. The landlord is wanting to return to live in the property, providing they lived there before. Even this process can drag on into months.
The argument against Section 21
The popular media regularly highlights the injustice of tenants being thrown out on their ears, landlords using Section 21 to give summary notice and kicking their tenants out onto the street, with only the clothes they stand up in! It’s a myth, perpetuated by the homelessness charities, but it’s one that has gained considerable traction among politicians, who are running scared of public opinion.
Granted, some rogue landlords have been known to evict tenants using Section 21 because they complain regularly about one thing or another, perhaps poor housing conditions. But these retaliatory evictions are a tiny minority compared to the whole, and in any case no tenant under a Section 21 notice can be removed in less that 6 months, on average.
In my experience, when tenants who start to complain regularly, picking up on trivial and contrived issues, it’s usually a smoke screen to hide the fact that they are struggling to pay the rent, they resent paying the rent, or they made a mistake and wish they had lived somewhere else.
The advantages of Section 21
For landlords, Section 21 gives them a safety net, a guaranteed possession order, albeit with a few months wait. They are absolutely sure to get their property back eventually, with the minimum of trouble and expense, in the unlikely event, things go wrong.
Landlords need this assurance to get them to use their hard earned cash, perhaps with the help of a buy-to-let mortgage, to provide housing which not only benefits them, it benefits their tenants and society as a whole. Without that assurance landlords will think twice about investing, I certainly would.
Why do landlords want to evict?
By far the majority just don’t. If tenants pay their rent on time and look after the property few landlords would want them out. After all they are providing a reliable income stream, and re-letting a property is not only a real hassle, it costs money, not to mention the loss of rental income during void periods.
There are only four reasons why landlords want tenants out of their properties, in my experience:
(1) They want to return to live in their own home. This is covered above and would no doubt be a remaining feature of any Section 21 replacement.
(2) The tenant is failing to pay the rent or payments are so late and erratic that the landlord’s tolerance has reached its limit. Rear arrears is by far the biggest reason for evictions and represents around 98% of cases.
(3) Tenants failing to look after the property, causing damage which goes far beyond what the deposit would cover. Obviously this is of great concern for landlords and very often leads to thousands of pounds worth of damage and cleaning, when the landlord does eventually regain possession.
(4) Anti-social behaviour, constant neighbour complaints and police call outs mean that the landlord, along with the neighbours, has no peace of mind while the tenant/s remain in place.
More often than not it’s a combination of these things. Once saddled with a really bad tenant the landlord’s life can be made a real misery. We’ve all seen the TV programmes that graphically demonstrate this. Until you’ve experienced it yourself you’ll never fully understand the anguish and the hassle it can cause, and I’ll wager none of the lawmakers considering this change ever have.
There’s a class of tenant, the serial rogue tenant, who goes from one tenancy to the next never paying any rent. In theory it is possible to play the system in such as way that these brazen “criminals” can live rent-free for 12 months at a time, before moving on to their next landlord victim. Even Section 21 struggles to combat this type of abuse.
What’s a viable Section 21 replacement
The ideal perhaps would be a local housing tribunal in towns and cities throughout the country, one with experts on the panel, perhaps a legal professional, and a representative from the landlords’ association and a tenant representative such as Shelter, much like the employment tribunals as they operate today.
We look forward to it, but is it ever likely to come about? Well pigs might fly! It would cost £millions if not £billions, and in these straightened times the money is just not there.
So, we are left with a beefed up Section 8 process, a legal tweak, and one which still relies on the overcrowded County Court system. Here, landlords or their legal representative have to go and argue their case in front of a judge, who is often a sucker for a sob story from tenants.
If they are lucky the landlord gets a suspended eviction order pending improvement in the tenant’s behaviour! Even when they get a full possession order, there could be weeks’ or month’s waiting for a court bailiff to evict, and that’s if the tenant does not appeal.
What are the consequences arising from the abolition of Section 21?
Michael Gove’s decision to include rental reforms, including abolishing Section 21, in his “Levelling up” White Paper sets the course – it’s not a good prospect for either landlords or tenants.
It will undoubtedly result in more landlords leaving the private rented sector for fear of being trapped in the system, fighting to remove a bad tenant. It will make the landlord’s task more difficult and more expensive.
Landlords will be even more choosy about who they take on as tenants, and rents will increase to reflect that. Rigorous background checks already feature highly in the armoury of a successful landlord, and there are only so many tenants with an A1 background history to go round. Accommodation scarcity, with high demand for tenancies only goes one way – rents go up!
With more and more social tenants being housed in the private rented sector, many will lose out. They will find it increasingly difficult to find landlords willing to take them on, with a diminishing pool of available rentals. It will simply exacerbate an already severe housing crisis.
Local authorities will find themselves under even more pressure than they are already to provide temporary accommodation for homeless tenants. Meanwhile, the landlords who do provide housing for those at the bottom end of the scale will continue to provide the lowest quality accommodation. There is then no incentive or competition for them to invest to attract tenants.
In other words, banning section 21 helps nobody, not landlords, not tenants and certainly not local authorities.
OPINION: The consequences of abolishing Section 21 is written by Tom Entwistle for www.landlordzone.co.uk