The proposed scrapping of ‘no-fault’ evictions is leading to a spike in landlords evicting tenants under current laws, experts have warned.
Announced in the Fairer Private Rented Sector white paper released last month, Section 21 ‘no-fault’ evictions are set to be abolished under the Renters’ Reform Bill, meaning a tenancy can only be ended if the landlord has a ‘valid ground’ for possession.
But many experts within the property industry are warning that the proposals are already leading to a spike in landlords serving Section 21 notices before the new laws come into place, potentially leading to ‘hundreds of thousands’ of evictions.
What’s Happening to Section 21 Evictions?
In June, the government announced plans to radically reform the rental industry, with a range of measures designed to ‘level up’ the Private Rented Sector and give more rights to tenants.
As part of the proposals, the government has pledged to outlaw Section 21 evictions, which currently allows landlords to evict a tenant without needing to provide a reason.
Under the new plans, landlords would instead have to serve a slower Section 8 notice in order to end a tenancy agreement, meaning they must prove that the tenancy terms have been broken.
Valid reasons for eviction include things such as rent arrears, property damage or anti-social behavior. Tenancies can also be terminated if the tenant chooses to end it themselves.
What Does Banning Section 21 Mean for Landlords and Tenants?
Although the government has promised to also reform grounds for possession to help landlords gain possession of a property when necessary, it is not yet clear what the measures will include – or indeed if they will go far enough.
Many landlords are concerned that the eviction process will become unnecessarily complicated and time consuming, meaning many will choose to do it now before the new law comes into force.
There are also fears that the outlawing of Section 21 could mean tenants have less incentive to pay their rent on time, knowing that their landlord cannot evict them as easily.
In addition, the reforms could also potentially make it harder for tenants to find properties in the first place – especially for those on lower incomes. If landlords know future evictions are much harder, they may become more choosy about who they accept.
As an added note, it’s also worth pointing out that the reforms include plans to legislate against blanket bans on renting to tenants receiving benefits or those with children – so landlords may have less control over this than they’d like.
Altogether, it is likely the Section 21 ban will lead to many investors opting to sell up completely. Many landlords will simply not want the hassle of relying on slower and more complex Section 8 notices.
The proposed reforms come amidst great uncertainty for landlords, with pressures from all angles that are having a serious impact on the profitability of buy-to-let investments.
The rising cost of buy-to-let variable rate mortgages combined with uncertainty about future house prices and upcoming legislative changes has led to a perfect storm that is seriously threatening the buy-to-let business model.
If you’re thinking about evicting a tenant, it is wise to seek professional legal advice as soon as possible and weigh up the options that may be available to you.
For those worried about the future profitability of buy-to-let investments, now may also be a good time to investigate different investment avenues and the potential pros and cons of each.
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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.