Revealed: the unintended consequences of abolishing Section 21 ‘no fault’ evections

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Chief Executive of lettings agents’ trade body ARLA Property David Cox gives LandlordZone his frank views on the proposals and what it means for landlords and agents.

LandlordZone: Do letting agents realise
how worried landlords are about the looming abolishment of Section 21 ‘no
fault’ evictions?

Agents are more terrified of this than they are about the effects of the tenant fees ban, because the fees ban affected THEM, while the Section 21 ban will make life difficult for them and their clients.

Landlords who use letting agents for
full-service management are people who want to give their house or flat
away to somebody who knows what they are doing and who they trust.

Abolishing Section 21 notice evictions will damage the relationship between landlords and their agents because in the past getting back possession was a relatively easy task. But after ‘no faults’ are got rid of, landlords will face far higher costs and longer waits. Consequently, they will ask their letting agent ‘how did you let this happen?’.

LandlordZone: Will there be any unintended consequences?

It’s strange because on the one hand the government is talking about encouraging landlords to accept pets and be more flexible about tenants in receipt of Universal Credit or on housing benefit.

But on the other hand, ministers are introducing policies that mean there is not a chance in hell they are going to take these sorts of people, who are higher risk [and therefore more likely to need evicting at some point].

The knock-on effects are that firstly, landlords and letting agents will be much choosier about who they allow to rent their properties, and secondly that more landlords will leave the market. There is no doubt about that at all.

If someone is considering renting out
their home, why would they do it when removing the tenant will become a lengthy
and expensive process?

And that’s on top of being whacked by
increased legislation, demonised by politicians and the national
media not to mention the extra taxes following the removal of relief on
mortgage interest payments.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Revealed: the unintended consequences of abolishing Section 21 ‘no fault’ evections | LandlordZONE.

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LATEST: Abolishing Section 21 notices will take at least until late 2021 to become law

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LandlordZONE understands that the huge task of sifting through 1,000’s responses to the government’s consultation on evictions reform, and the likely long process of getting the law through Parliament, will take at least 18 months.

Landlords worrying about when the government is going to turn its plans to abolish Section 21 notice ‘no fault’ evictions into law can relax a little.

It has been revealed that the Ministry of Housing has just six people sifting through the 20,000 or more submissions from landlords and other interested parties following the ministry’s consultation on evictions reform last year.

Section 21 notices are to be got rid of as part of the government’s plans to introduce a Renters’ Reform Bill, part of its manifesto commitment ‘to deliver a fairer and more effective rental market’.

Although the government’s desire to provide increased security for tenants but ensure landlords can flourish are laudable, the proposals to push all evictions through the courts have been controversial.

As LandLordZONE reported earlier this week, many landlords are growing increasingly concerned and in some cases terrified by the evictions reforms likely to be included in the bill.

The huge volume of work needed to read, process and then summarise the consultation responses for ministers, and then propose recommendations ahead of the Renters’ Reform Bill being laid before parliament this year, is a daunting one for civil servants.

This means the process of turning the proposals into law, given how long new bills need to pass through both houses of parliament and be given Royal Assent – is likely to push the measure into early 2021 despite the Conservative’s large majority.

The government’s banning of tenant fees, for example, took from 1^st November 2017 to June 1^st 2019 to gain Royal Assent and become law.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Abolishing Section 21 notices will take at least until late 2021 to become law | LandlordZONE.

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Daily politics update: Copley takes up new role and latest on cladding

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Today we look at new FOI figures on high-rise cladding and a new appointment at the London Assembly. Tom Copley Appointed Deputy Mayor for Housing Tom Copley has been appointed London Mayor Sadiq Khan’s Deputy Mayor for Housing at City Hall. The Labour Assembly Member replaces James Murray, who was elected as an MP at […]

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Murder conviction highlights tragic consequences of attempting ‘DIY evictions’

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Landlady, her partner and two accomplices are given jail terms totalling 70 years after eviction in Essex goes horribly wrong.

A landlady and her friends have been jailed for
killing a private tenant in Southend during an “eviction gone wrong” when he
was stabbed in the leg and left to die.

Ian Slater, 50 of Wayletts, Leigh-on-Sea, and Alex
Stephens, 36, of Hamlet Court Road, Westcliff, will both serve a minimum of 26
years for murdering Courtney Valentine-Brown, while landlady Kelly
King, 31, of Roots Hall Drive, Southend, and Stuart Pearson, 44, of Satanita
Road, Westcliff, were each handed nine years in prison for manslaughter.

The trial at Basildon Crown Court heard how
a dispute over a debt led King to ask her partner Slater to help evict
Mr Valentine-Brown, 36, from his property.

Slater then recruited the other two men. The
four had gone to King’s flat in Roots Hall Drive on 21 February, armed with
weapons to get her tenant to leave.

During the ensuing struggle, Stephens stabbed
Mr Valentine-Brown through the femoral artery in his leg. He suffered massive
blood loss and later died from his injuries.

All four had denied murder, with Stephens claiming
he had acted in self-defence. They had alleged it was an “eviction gone wrong”
and that they never intended to hurt anyone.

Senior Investigating Officer Detective Chief Inspector,
Daniel Stoten, said afterwards: “Slater,
King, Stephens and Pearson acted together to confront [the victim]. Slater and
Stephens armed themselves – a clear indication of their intent to cause harm.

“Their callous and cowardly
actions have left another family devastated as a result of knife crime.” 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Murder conviction highlights tragic consequences of attempting ‘DIY evictions’ | LandlordZONE.

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ARLA predict 500,000 PRS homes could be lost to short-term lets

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Arla Propertymark have released a report on the impact of the growth in short-term lets such as Airbnb on supply in the Private Rented Sector. Arla predict that 500,000 homes could be lost to short-term lets, because of the increasing costs of anti-landlord regulation and taxation.

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Up to £1.2 billion in deposits could be unaccounted for!

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The latest research by Hamilton Fraser’s
deposit replacement provider, Ome, has revealed the huge sums of tenant money
that is estimated as being held by landlords and agents without protection via
a deposit protection scheme.

Ome’s sister company, mydeposits, manages 25%
of the total deposit protection market and their latest records show they
currently protect more than 876,000 live deposits, suggesting there is an
estimated 3.5m deposits protected across the entire market which equates to
some £3.9bn in value!

This means that with 3.5m protected tenancy
to a value of £3.9bn, the average tenant is paying £1,139 for a tenancy
deposit.

Ome compared these statistics with the latest
English Housing Survey report which shows an estimated 4.60m tenancies in the private
rental sector in 2019. With only 3.5m of these tenancy deposits accounted for
in protection schemes, there are potentially 1.1m tenancies that either have
not had a deposit protected, do not have deposits, or are using deposit
replacement products. At worst, there could be as much as £1.2bn in deposit
monies that are not protected.

However, the latest report
into deposit protection compliance rates by the Center for Economics and
Business Research (CEBR) estimates that 14.5% of all deposits held are not
protected by landlords or agents. This means of the estimated 1.1m tenancy
deposits that are unaccounted for, just over 500,000 (14.5%) cash deposits
could currently be unprotected, putting £578m at risk.

However, this would suggest there are still
some 586,000 tenancies in the private rental sector that are neither compliant
nor unprotected, suggesting a growing preference amongst landlords to ditch the
traditional cash deposit.

Landlord’s deposit taking
habits are changing

This could be explained by two factors:
firstly the increased acceptance of deposit replacement products such as Ome
and, secondly, some landlords opting to request no deposit at all, with the
latest research showing as many as 600,000 tenancies in the private rental
sector currently opting for one of these two options.

The lack of a rental deposit is already a
theme becoming popular with “Build-to-Rent” providers who operate large numbers
of rental units and forgo a traditional deposit, mitigating the risk by
providing additional complimentary services such as cleaning to their tenants.

As the industry becomes more
service-orientated and changes to legislation lead to tenants receiving more
consumer protection, landlords and agents are looking at ways in which they can
streamline their businesses, with innovation in the deposit sector looking to
be fertile ground.

But for those 500,000 landlords across the
nation that have taken a deposit and failed to place it in a compliant
protection scheme, there are consequences. They run the risk of fines of up to
three times the deposit plus the deposit itself. At £1,139 for the average new
deposit, it could cost them to the tune of £4,556 per unprotected deposit!

Co-founder of Ome, Matthew Hooker,
commented:

“The reality is that the private rental
sector is changing, and has been changing gradually through the formal
introduction of deposit protection in 2006 and the subsequent launch of the
more traditional protection schemes.

It’s impossible to tell just how many
deposits are still sat unprotected in the bank accounts of either rogue
landlords or agents but based on market data we can make a conservative
estimate that this total value runs into the hundreds of millions of pounds.

We’d always advise tenants to check which
deposit protection scheme your agent or landlord is part of and to make sure
they give you the documentation confirming the deposit is protected.

For landlords and agents that would rather
not have to worry about the often arduous and risky process of managing a
deposit, we’d recommend looking at products such as our own deposit replacement
membership rather than hoping they don’t get caught. It removes the need to
take cash deposits but keeps you protected should the worst happen.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Up to £1.2 billion in deposits could be unaccounted for! | LandlordZONE.

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Six-month reprieve for Scottish landlords on energy efficiency standard.

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EPC:

The Scottish
Parliament is introducing regulations which will delay the deadline
for meeting the new standards.

Landlords groups in
Scotland have welcomed the move which will give landlords an extra 6
months to prepare their properties to meet the new standard. The
deadline will be pushed back from its original 1^st of
April date, to the 1^st of October 2020.

Under the new rules,
homes in the private rented sector (PRS) will need to meet a minimum
EPC rating of “E” by 1 October 2020 before they can be re-let.

The new standards
are intended to improve the energy efficiency of, in particular,
older housing stock known to be inefficient and expensive to run in
respect of energy waste, carbon emissions and tenants’ heating
bills.

The rules will mean
that private rented sector properties in Scotland must achieve:

• An EPC of E at
  change of tenancy from 1 October 2020
• All currently
  rented properties an EPC rating of E by 31 March 2022
• An EPC of D at
  change of tenancy from 1 April 2022
• All currently
  rented properties an EPC rating of D by 31 March 2025

Local authorities
will be responsible for enforcing the standard and where appropriate,
granting exemptions. Failure to comply will result in liability to
fines of up to £5000 per property.

The Scottish
Association of Landlords (SAL) told the Scottish Housing News
that it has worked closely with “the Scottish Government and other
stakeholders, with requirements for rented properties now far
exceeding those for owner-occupied homes and the Scottish Government
providing loan funding to private landlords for EPC related works…
landlords will now have the time they need to check their properties
are compliant and carry out remedial work to bring them up to
standard if needed in time for the revised deadline.”

John Blackwood,
chief executive of the Scottish Association of Landlords (SAL), had
said:

“Privately rented
properties in Scotland are often held to much higher standards than
other types of housing so it is important that any new measures are
proportional and realistic.

“The change in the
timetable for landlords to improve energy efficiency standards is a
sensible one, and we are also very keen to see the correct level of
support for landlords to achieve these challenging goals.

“It is only proper
that tenants in Scotland have the reassurance of knowing that their
properties are energy efficient, their bills are reduced and that
their landlord is helping to tackle the climate emergency. We are
pleased that the government is allowing more time to get this
initiative right.”

There will be
exemptions in specific circumstances, see the legislation guidance
below.

Landlords will
generally only be required to carry out work to improve energy
efficiency where the cost of providing it can be financed by funding
provided by a grant or loan.

The Energy Efficiency (Private Rented Property) (Scotland) Regulations 2019: draft guidance

Energy Saving Trust – Landlords

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Six-month reprieve for Scottish landlords on energy efficiency standard. | LandlordZONE.

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Skewed policy favouring holiday homes

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Growth in the number of short-term lets across the country is a symptom of skewed policy that favours holiday homes over long-term properties to rent.

A new report published today by ARLA Propertymark suggests that nearly half a million properties could be left unavailable for longer-term rent as more landlords exit the market in favour of short-term lettings.

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Growth in holiday lets symptom of a skewed housing policy

admin    Uncategorized     agents

Growth in the number of short-term lets across the country is a symptom of skewed policy that favours holiday homes over long-term properties to rent. A new report published today by ARLA Propertymark suggests that nearly half a million properties could be left unavailable for longer-term rent as more landlords exit the market and in […]

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Your shout: Why don’t tenants understand lightbulbs aren’t my problem!

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Brighton HMO and student specialist Amanda Smith recounts some of the more amusing ‘light bulb’ moments from her 20-year career as a professional landlady.

Does this sound familiar? It’s
winter time, dark and cold outside and your tenant calls somewhere between
5.30pm and 10pm to say it’s also dark inside their home.

If you’re lucky enough to
have a switched-on tenant (excuse the pun), they will have done the following
before calling in, asking for help.

• checked to ensure
  there isn’t a power cut by opening the front door and looking down the rest of
  the street;
• checked their fuse
  box to see if an appliance has triggered the RCD switches and made amends with
  the offending article;
• changed the lightbulb
  in the room which is presenting as dark!

However, your caller may not
have done any of the above in which case you may print off the above checklist
and go through it systematically with them to evaluate, educate and inspire.

My best stories are those
you couldn’t make up: 

• The HMO tenant who
  couldn’t wash up because she couldn’t see, i.e. “the light wouldn’t light up”
  (sic) – for three weeks.
• The student who
  didn’t notice the first bulb in the kitchen had stopped working and called us
  out as an emergency on a Saturday night when the remaining one gave up.
• The HMO tenants who
  had taken the bulbs from the communal hallway when their room bulbs failed then
  complained when they ran out of bulbs to take.

A lightbulb is a consumable
which effectively means that the tenant is responsible for taking the old one
to the shop when it fails, match it up and pop the new one back in. But this
seems to be a hard one for many tenants to grasp.

Taking into account the
above scenarios, do you (a) leave a box of spares in the kitchen cupboard
running the risk that, in changing the bulb, the tenant pulls out both the
light fitting and surrounding plaster and leaves the bare wires dangling or (b)
sigh, grab the keys and do it yourself?

Are you a landlord with a
pet hate or an issue you’d like to shout about? Then call the editorial team on
07971814233.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Your shout: Why don’t tenants understand lightbulbs aren’t my problem! | LandlordZONE.

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