Section 21 is going, but let’s have a say on how it goes

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Tenancy Reform:

Paul Shamplina of Landlord Action urges with an interest in rental property,
landlords and letting agents in particular to participate in the consultation on
Tenancy reform which closes at 11:45pm on 12 October 2019. You views are vital
to reaching a sensible outcome.

Firstly, says Paul, let me repeat the words I said to
Richard Bilton in a TV interview I did with Panorama at my office two summers
ago (an interview which lasted just seventeen seconds): “There is no such
thing as NO-FAULT Eviction under Section 21â€�. 

There is always a reason why a landlord wants possession.  According to the survey we carried out on
LandlordZone, 58% of the time it is down to rent arrears and just 0.5% are because
the tenant has asked for repairs to be carried out – known as ‘Retaliation
Eviction’.

Most of the time tenants will not know the reason because landlords
do not have to give one.  There has never
been any specific data, but The Lettings Industry Council is calling on its members
to send out surveys to their landlords and letting agent databases to find out
how many Section 21s are being sent out and for what reason.

As I have said in previous articles, from sitting in various
meetings with trade bodies and landlord associations, the industry is coming
together and has one clear message to the government: ‘Do not ban Section 21
until we have a clear understanding that the Court System or Housing Courts have
sufficient investment to cope with the extra hearings, judges, administration
and portals.  We need better education
tools for tenants and an overhaul of the bailiff system so that landlords are
confident they can gain possession if required.�

This is the biggest change and threat to landlords in
years.  Much greater than additional
stamp duty, Section 24 mortgage interest relief or the tenant fees ban.  Whether it’s a landlord with one property, a professional
landlord with a large portfolio or a big institutional investor in the Build to
Rent sector, investors need confidence. 

The Fair Possessions Coalition, which includes bodies such as ARLA Propertymark, Safe Agent, the Residential Landlords Association, the National Landlords Association and Landlord Action, have filed a response statement to the government with ideas on what Section 8 should look like, with clear grounds for repossession that are unable to be exploited by criminal landlords or unreliable tenants.  We need a complete overhaul of the regulations and processes which enable landlords to repossess their properties if required.

Banning Section 21, longer-term tenancies and introducing a
Housing Court are all linked and must work together. In fact, next week, I have
MHCLG coming to our offices to shadow our Landlord Action solicitors, case
workers, paralegals and support staff. 
We want to demonstrate the positives but also the challenges faced with
the current system and offer our thoughts on what is needed for landlords in
terms of better lead times, so that landlords can have confidence in buy-to-let
in the future. The Ministry of Justice must invest.

If we look at 2018 statistics from the Ministry of Justice,
in total 116,500 claims were issued, 71,500 from social landlords, 22,500 from private
landlord using Section 8 with hearings and 22,500 for accelerated possession
proceedings. Out of the 116,500 claims, 89,000 had possession orders granted,
from which 60,000 went on to have a warrant issued and 32,000 were repossessions
by county court bailiffs. The ministry of Justice last year made over £7.2
million in bailiff warrant fees.

But let’s breakdown the accelerated procedure (Section 21) figures
from 2018.

• 22,500 claims were issued
• 18,000 went on to have possession orders
• 12,700 went on to have warrants issued
• 10,000 led to evictions under the accelerated
  procedure

Although we don’t know the exact figures because Section 21
is “no-fault�, we do know that a lot of these evictions are still as a result
of councils encouraging tenants to stay put until they are evicted because of
the chronic shortage of social housing. This puts the burden back on the
landlord with lost time, rent arrears and stress for both the landlord and
tenant.

So, my point is, what will happen to these tenants if
Section 21 is banned? Although many Section 21 cases are down to rent arrears, this
is not stated. If landlords are told to use Section 8 with a hearing and obtain
a money order, the councils will then see that a tenant has incurred rent
arrears and made themselves homeless, they will therefore be under no
obligation to re-house them.  What impact
will that have?

In addition, I predict that Section 8 hearings will double because
landlords who would previously have used Section 21 will use Section 8. This
will double the amount of court time before judges that is required, also
meaning that a major recruitment drive of judges to deal with the increased
number of hearings will be necessary.

I have been very vocal for many years on Section 8 and I
strongly believe that when a money order is made, a County Court Judgement
should be registered. This would help landlords to gauge if their tenants have
had rent arrears possession cases made against them in the past and possibly
save them from repeat circumstances, but I cannot see the government agreeing
to this.

The government has now launched a 12-week consultation on Tenancy Reform in England which will consider proposals to scrap Section 21, improve the court system and an alternative process for regaining possession of a property via Section 8. This change is one of the biggest reforms in the PRS for many many years. I urge as many landlords and letting agents to complete this survey and HAVE YOUR SAY NOW. I believe the number of participants in this survey will be one of the highest the government has ever received.

CLICK HERE https://www.surveymonkey.co.uk/r/52JFF5T

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Should I sell or take a Lifetime BTL mortgage ?

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I am a 65 year old single female, no children and my only incomes are state pension, carers allowance and rental income from my former home in London. The property is worth around £1.3 million and rents for £3,000 a month.

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Landlords will ‘flee the market’ if taxes aren’t reduced

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Landlord Flight:

You could be forgiven for thinking that this is a message
addressed to the UK government, no, it’s a stark warning issued this week to
the government of the Irish Republic.

The Republic has been way ahead of the UK government, years in fact, in introducing restrictive legislation, higher taxes, strict regulations and a form of rent control in the Irish rental market. Result: not surprisingly, landlords have been leaving like rats from a sinking ship, and tenants are struggling to find suitable accommodation.

A group representing Irish auctioneers are now so concerned
that they are warning the Irish government that its combination of high taxes
and over-regulation in the Irish rental market are the cause of landlords
leaving.

The Institute of Professional Auctioneers and Valuers (Ipav)
has been citing figures produced by the Irish Residential Tenancies Board that
show that there were over 1,700 fewer landlords in Ireland recorded in 2018
than there were three years ago.

Is this a lesson for the UK government? Will they take
notice when introducing changes resulting from the current consultation on
tenancy reform in England?

A New Deal for Renting Resetting the balance of rights
and responsibilities between landlords and tenants: A consultation, can be
viewed here

The Irish Ipav described their situation as the “tip of
the iceberg” as they expect the number of landlords offering rental properties
to the Irish public to have dropped yet again when the 2019 figures are
released.

Ipav’s chief executive Pat Davitt says that high taxes,
excessive regulation and irresponsible tenants were the top reasons given by landlords
for leaving the market, when he told the Irish
Examiner:

“This very much ties in with the experience of our
members,”

“Many private landlords pay tax rates of 55% on rental
income and are subject to stamp duty and capital gains taxes on sales,” he
explained.

“Yet commercial landlords in the build-to-rent sector pay
little or no tax.

“Investment in the private rented sector has become a deeply
unattractive proposition for the private landlord, despite record high rents,�
he added.

Reflecting what appears to be exactly the situation in
England and Wales, Mr Davitt said that perceptions rather than reality often
influence political debate and ultimately, policy. Perhaps the media can be
blamed for some of this? He called on the Irish government to improve the tax
situation for landlords in the forthcoming Budget.

He also issued the warning that if the situation, as far as
landlords are concerned, is not improved: “We can expect more private
landlords, who are the primary providers of accommodation for the less well off,
to flee the market.”

In 2017, nearly one-million people (895,600) were living in
rented accommodation in Ireland. The equivalent figure in England is much
higher.

According to the latest available figures from the ONS for
the UK:

• The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.
• Younger households are more likely to rent privately than older households; in 2017 those in the 25 to 34 years age group represented the largest group (35%).
• Households in the private rented sector are getting older; between 2007 and 2017, the proportion of household reference persons aged 45 to 54 increased from 11% to 16% while those aged 16 to 24 dropped from 17% to 12%.
• As at financial year ending (FYE) 2017, 62% of households in the private rented sector in the UK had spent under three years in the same accommodation and only a small proportion (4%) had been in the same residence for 20 years or longer.
• Northern Ireland has the newest private rented dwelling stock (38% built after 1980) in the UK, while Wales has the oldest (43% built pre-1919).

[Image: The Ha’penny Bridge, or the Penny Ha’penny Bridge, and officially the Liffey Bridge, is a pedestrian walkway built in 1816 over the River Liffey in Dublin, Ireland. It’s a cast iron bridge from Shropshire, England.]

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords will ‘flee the market’ if taxes aren’t reduced | LandlordZONE.

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