One of my favourite Charles Dickens novels has to be A Christmas Carol, a reflection of one’s life, past, present and future. Other than watching a Christmas Carol on the television, one other tradition I like to stick to is watching the Queen’s speech. However, I’m not going to favour her announcement on the impending ban of the Section 21 notice, the landlord’s ‘no fault’ eviction process.
My biggest frustration is how landlords have been portrayed as modern-day Ebenezer Scrooges. I’ve said it before and I’ll say it again, I’ve never heard of a case where a landlord served notice on their tenant for any reason other than that they were selling the property or their tenants had not paid rent or looked after the property. For the avoidance of doubt, property is an investment and an empty rental property is a wasted asset class, landlords want their property occupied.
Like the renowned Dickensian tale, let’s take a look at the past of the Private Rental Sector, the present and what we can expect from the future.
The above graph illustrates that over 100 years ago, the private rental sector was one of the prevalent types of tenure and the percentage of people owning their own home was significantly lower than it is now. Prior to this time there was little protection for tenants from being evicted by their landlords.
With the introduction of the increase of Rent and Mortgage Interest (War Restrictions) Act 1915, this was one of the first implementations of rent control in the sector as well as prohibiting landlords from being able to serve notice to gain vacant possession from their tenants.
Prior to the 1915 Act, landlords could gain vacant possession of their properties much like they can today, at the end of the fixed term tenancy.
Under the Act, as long as the tenant paid their rent and complied with the terms of the tenancy agreement, they could only be evicted if the landlord was able to prove in courts that, the landlord could reasonably demonstrate a requirement to obtain possession of the property or if the tenant had been a nuisance to neighbours.
However, between the First and Second World Wars, new Acts were implemented which reversed the control of protected tenancies.
That being said, this was again reversed with the introduction of The Rent and Mortgage Interest Restrictions Act 1939 which, much like the 1915 Act, seek to control rents and protection of tenure during war efforts.
Following the Second World War, leading up to the mid to late 1970’s, several Acts were introduced which turned the tide but mainly the 1954 Landlord and Tenant Act which created new forms of protection for tenants and this with the introduction of the 1977 Protection from Eviction Act, these have had a detrimental impact on the Private Rental Sector.
It wasn’t until the 1988 Housing Act introduced 15th January 1989 which borne the Section 21 notice, what is commonly referred to today as the ‘no fault eviction procedure’.
So, what can we expect now that the Section 21 notice is seemingly on its way out? Should we all sell our portfolios? Well currently there are two legitimate ways landlords can gain vacant possession of their properties, through Section 21 and through Section 8.
According to The Association of Residential Letting Agents, of which I am a member, 57% of ARLA members have issued less than 10 Section 21 notices in the past two years. Furthermore, 39% of members have issued no Section 8 notices at all in the last two years. Lastly, 48% of ARLA members said that the cost of a single case at a hearing is between £1,000 and £4,999.
If the government stick by their promises of strengthening the Section 8 notice and having a dedicated housing tribunal service, this should significantly reduce the time taken for a landlord to gain vacant possession and make the process far less problematic for both tenants and landlords.
However, I would expect this to depend on how many landlords speak to their local MP’s. This is certainly something I will be doing as without a regimented court process and without a strenghening of the grounds under the Section 8 notice, this could present dire consequences for the Buy to Let market.
I’ve written this article more so for any landlords who are considering selling off amidst the Section 21 concerns. Remember why you got into Buy to Let in the first place. Suffice to say the profitability is there in terms of yield and capital growth, property investment is still a superb asset class to invest in.
Certain organisations and media hysteria may refer to landlords as modern-day Scrooges evicting tenants left, right and centre. To that I say, Bah! Humbug! Reiterating my comments above, I’ve never seen a case in my 11 years in the industry where a landlord has evicted a tenant when the rent remains paid each month on time and the property is looked after by the tenant.
One voice alone won’t carry much heft but the fact that 18% of York property is privately rented, so if I could ask one favour, it is that if you dear reader are a York landlord, that you pop down to York City Council and book in an appointment with the local MP to express your concerns. If you require help in drafting this response, you know where I am.
I’m off now to have a two week break with the family and I wish you all a Merry Christmas and a prosperous New Year ahead!