Section 21 won’t change until pandemic passes
- Published: Tuesday 17 November, 2020
- By: Commercial Trust
Under the 2019 Renter’s Reform Bill, Section 21 evictions were set to be removed from the Housing Act 1988. The Renter’s Reform Bill was considered to be a pivotal component of the Conservative General Election manifesto in 2019, and thus many individuals have been awaiting its enforcement.
Introduction of the Renter’s Reform Bill has however been delayed; attributed to the ongoing difficulties the coronavirus pandemic has inflicted on the UK.
As a result of this, many have been left uncertain about when Section 21 evictions will be abolished.
Government officials have now confirmed that the plans to eliminate Section 21 evictions will be moving forward when the pandemic is in a more settled position.
However, it is yet to be highlighted how the government proposes to alter eviction procedures when the pandemic ends.
The information comes from Liberal Democrat Sarah Olney, who received the news in response to her letter regarding the ban on Section 21 evictions.
Housing Minister Christopher Pincher provided the response and stated:
“The government is committed to abolishing Section 21 through a Renters’ Reform Bill, which will enhance renters’ security and improve protections for tenants.
“Repealing Section 21 represents the largest change to renting in 30 years and it is only right that the reforms are taken forward in a considered manner.
“It is important that providing tenants with greater security of tenure is balanced with an assurance that landlords are able to recover their properties where they have valid reasons to do so. This is vital to ensuring the future supply of good quality housing in the rented sector.
“We will bring forward the Renters’ Reform Bill in due course once the urgencies of responding to the pandemic have passed.”
Landlords must therefore prepare for the impending ban of Section 21 eviction powers, to ensure they are sufficiently equipped to manage this development.
A welcome, but temporary reprise
With so much else to manage at present, the delay in the introduction of the Renter’s Reform Bill may provide temporary relief to landlords.
However, it is abundantly clear that there is no long-term solace to in the delay of the inevitable, without dramatic improvements in the alternative, Section 8, court process.
The long-term impact of the removal of Section 21 must inevitably be a rising caution amongst landlords, in who they are prepared to take on as tenants. Getting that decision wrong has the potential to be even more costly in the future.
Report claims private rental market needs reform
A recent report significantly criticises landlords and their properties, in a bid to reform the private rental market.
Written by housing charity Shelter and Nationwide, the report highlights problems that some private renters are currently experiencing in the sector.
These sentiments are outlined by the chief executive of Shelter Polly Neate and Nationwide’s chief executive Joe Garner who states:
“Many private renters are still faced with poor quality housing, poor landlord, housing management agent and letting agent practice and discrimination. Renters also face an underlying lack of security and power.”
“Over the last 15 months, we’ve conducted extensive research. We have interviewed a broad range of stakeholders including private renters, users of Shelter’s helplines, local authority officials, Shelter’s legal advisers and case workers, representatives from sector organisations and landlords.
“They told us about the many issues private renters face from poor housing standards and bad practice to discrimination and a lack of power.”
“Shelter and Nationwide have used the findings of this research to develop a shared long-term vision for an improved private rented sector.”
Areas for reform
To tackle the prior areas, the report illustrates a number of reforms that Shelter and Nationwide believe the government should implement. These include:
- A national landlord register - “All landlords and housing management agents must register themselves, the properties they manage, details of the letting agents they work with and the rents they charge to a national register.”
- Eliminate right to rent checks – This will ensure that private renters are not required to undergo immigration checks and thus may help to prevent discrimination.
- Introduce a regulatory body who monitors the market – “This body should oversee the national landlord register, rogue landlord database and the regulation of letting agents.”
- Eradicate no fault evictions – Landlords will be required to provide legitimate reasons and evidence for the eviction of tenants.
- Regulation of letting agents –Enforce a code of practice to be followed by letting agents, which includes confirming all agents have the necessary qualifications and licenses.
- Ensure local authorities have sufficient resources and funding to manage inadequate housing conditions – Local authorities must have access to the necessary resources to ensure poor housing conditions are diminished.
By employing these measures, the two organisations believe that landlord accountability will increase, whilst giving greater power to private renters.
Furthermore, these changes may serve to decrease discrimination and enhance private renter’s safety in their homes.
It is therefore thought that these reforms may positively impact the private rental market, primarily for tenants.
Impact for landlords
Under these reforms, landlords would experience greater regulation and decreased power, which could cause problems when faced with non-compliant tenants.
By contrast, eliminating the need for landlords to conduct Right to Rent checks, is likely to be seen as a positive step for all concerned. It would remove a weight of responsibility away from landlords, who were never keen to be burdened with it.
Despite the report’s negative comments about the private rental market, it is acknowledged that these issues are not prevalent in all homes in the sector.
It is therefore important to consider how these reforms may create more barriers for the majority, when it is only a small number who are deemed “indecent”.
PRS experiences increase in later life tenants
Recent research by Paragon Bank highlights a significant rise in the level of tenants over the age of 55.
It is reported that over the preceding decade, the number of renters aged 55-64 has increased by 118 percent.
Within the same period, the over 65 age category experienced a 93 percent increase.
Interestingly, the 33-44 age bracket had a considerably lower rate of growth, which stood at 65.7 percent.
This substantial rise in later life tenants could suggest a potential demographic shift in the private rental market.
Managing Director of Mortgages at Paragon discusses this:
“There are a number of factors that may have contributed to the increase in over 55s in the PRS over the past 10 years, such as rising divorce amongst older people, poorer pension returns and factors such as men living longer.”
“With the number of over 55s forecast to rise from 30% of the population to 36% - 26 million people - by 2043 and new household formation predicted to be driven by older, single person households, the PRS will have an increasingly important role to play in providing a home for older tenants”.
The bank further notes that 21 per cent of landlords are already anticipating renting to older, single people in the future and 20 percent are predicting they will rent to retired individuals.
This suggests that many landlords are already considering these changes in their future rental plans.
Impact for landlords
Older tenants may bring benefits to landlords, including a stable income; settled lifestyle and an established history of renting.
In light of the removal of section 21 evictions, this may give landlords an additional layer of comfort and confidence.
Therefore, the rise in later life tenants is a positive development for landlords.
Additional report findings
A number of other key findings were highlighted in the report. These are as follows:
- “Over 55s are much more likely to live alone, with nearly half (48%) in this category versus 23% of under 55s, and they also tend to live in the property for a long period.”
- “Half (49%) of over 55s have lived in only one or two rented properties; of those who have lived in only one property, 46% of tenants have lived there for 10 years or more.”
- “Nearly seven in 10 (68%) of over 55s said that renting suited their needs or they enjoyed renting, compared with 49% in the under 55 group, whilst an overwhelming majority (63%) said they were pleased they don’t have to worry about repairs.”
- “When asked about the reasons for renting, 39% said they didn’t have a mortgage deposit, whilst 22% said they didn’t want the responsibility of owning a home – compared to 9% of under 55s – and 16% said it enabled them to live in an area couldn’t afford to buy. Meanwhile, 15% said that it gave them greater flexibility to move more easily.”
In summary, Richard Rowntree says:
“Landlords are already reacting to the changing demographics of the PRS and, with older tenants becoming more commonplace, will have to increasingly do so. Landlords will need to consider longer tenancy agreements, the location of their property and any adjustments the property may need for later life tenants.”
It is therefore imperative for landlords to consider the suitability of their properties for later life tenants, to capitalize on this growth.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.