A quarter of landlords plan to sell some or all of their buy-to-let properties if ‘no fault’ Section 21 evictions are scrapped under the government’s proposed rental reforms, new research has found.
Earlier this year, the government finally published its long-awaited ‘Fairer Private Rented Sector’ white paper, outlining many sweeping reforms that have been described as the biggest shake up to the rental market in 30 years.
But while the abolishing of Section 21 would give tenants more security, many landlords are understandably concerned it will leave them vulnerable to difficult tenancies, forcing them instead to rely on more complex Section 8 notices.
Now, a new poll of 700 landlords conducted by The Mortgage Works, Nationwide’s specialist buy-to-let lending arm, has found that a quarter of landlords (25%) will sell some or all of their properties if the reforms are made law.
Meanwhile, 56% say they will be more particular about the tenants that they will accept, rising to 62% of those polled who had a larger portfolio of 20 or more properties. Just 22% of landlords supported scrapping ‘no fault’ evictions, highlighting the very real concerns landlords have over the position it could leave them in.
Scrapping Section 21: What Would It Mean for Landlords?
At present, Section 21 allows landlords to evict tenants, terminate a rental agreement and regain possession of a property without needing to cite or prove a breach of the tenancy agreement.
Together with a number of other wide ranging reforms announced in the white paper, the government proposes that these so-called ‘no fault’ evictions would be abolished, leaving landlords instead relying on Section 8 notices. Crucially, this means a tenancy would only end if the landlord has valid grounds for possession. A valid reason such as rent arrears, property damage or anti-social behaviour would need to be provided for eviction.
The scrapping of Section 21 is just one reform proposed in the white paper, which aims to ‘level up’ housing quality and crack down on unscrupulous landlords while also giving more security to tenants. Other proposals include doubling the notice period for rent increases and ending the use of arbitrary rent review clauses.
Another major reform unveiled is the proposal for the Decent Homes Standard to be applied to the private rented sector for the first time, aiming to raise living standards for tenants across the board. According to this latest poll, more than 80% of landlords were supportive of this plan – and more than two thirds believed their properties would already meet the new standard.
Dan Clinton, Director of Landlord at The Mortgage Works, said:
“While landlords appear to be largely in favour of a National Landlord Register and Decent Homes Standard, it is revealing that one in four would consider selling in the event of Section 21 being abolished. This highlights the importance of listening to landlords’ concerns as these policies take shape, particularly when considering the broader set of regulatory changes already affecting them.
“A mutually beneficial private rented sector needs to offer tenants the security they will not be evicted without good reason, yet also provide landlords the confidence they can gain possession of a property quickly and efficiently if something does go wrong, such as anti-social behaviour. As a buy-to-let lender, we are keen to understand how the changes will be implemented, to ensure we fulfil our role of helping to balance the needs of landlords as well as tenants.”
What Can Landlords Do?
Most would agree that landlords have had a tough time of things of late. From rising interest rates pushing up the cost of buy-to-let mortgages to tax crackdowns and a raft of legislative changes, it’s becoming harder and harder to make a profit from traditional buy-to-let investments.
It’s worth stating that Section 21 notices can currently still be served with the requirement of at least 2 months’ notice. But given the nightmare currently being faced by many landlords, it’s unsurprising that so many are considering selling up or reducing their buy-to-let portfolio. Now could be a good time to weigh up your options and consider alternative, more hands-off investment models.
If you’d like to discuss the different investment options available, please give us a call to speak to one of our property portfolio managers – or get in touch to request a callback.
Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.