What impact with the Section 21 ban have on the market?

The UK Government continues to take steps towards banning section 21, including with a consultation on how to replace section 21 and what landlords and tenants need, to provide fair and effective rental repossession proceedings. But some industry experts are warning that once Section 21 has been banned, there could be a broad range of consequences, both expected and unexpected, on the UK’s still growing rental market.

It’s no secret that as the private rental sector (PRS) has been growing for some years. And, as more tenants across the country rely on it to provide them with a home, the current Government has sought to make changes that ensure tenants aren’t simply viewed as cash cows by landlords.

Numerous measures have already come into force to make sure that tenants in the PRS have safe and secure homes and tenancies. However, some people are concerned that without the right measures to update Section 8 as an eviction and repossession process, then the PRS could shrink as landlords lose confidence in their ability to safeguard their investment.

Unintended consequences of Section 21 ban

Paul Shamplina, founder and spokesperson for Landlord Action has spoken about his worries that the removal of Section 21 and ineffective reform of Section 8 could devastate the PRS.

Specifically, he said that if Section 21 is banned too early, before the right reforms and investment to support improved court proceedings are made, then landlords could lose confidence in the system. That’s particularly the case if landlords and property investors feel Section 8 still can’t help them protect their property in the face of many months of rent arrears, or anti-social behaviour from tenants.

“We want to … 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,” Shamplina said in a recent LandlordZone article.

“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,” Shamplina said, adding “The Ministry of Justice must invest.”

Could more social tenants be at risk?

Another potential consequence of banning Section 21 ‘no fault’ evictions, where landlords don’t give a reason for their need to evict a tenant and repossess their property, is that more social tenants could end up without a home and a council that don’t need to house them. Why? Unofficial figures suggest hat many of the successfully executed Section 21 evictions are begun by landlords whose tenants are months in arrears.

Indeed, according to Shamplina, due to the drastic shortage of housing, social tenants are often encouraged to remain in PRS properties, even when rents are in arrears. However, if all evictions and tenancy repossessions are carried out under Section 8, then the landlord must give the reasons for the eviction. If it is due to rent arrears, the council will have evidence that the social tenant who is in receipt of housing benefit to pay that rent, has gone into arrears and effectively made themselves homeless.

Under current rules, that would mean the council is under no obligation to re-house them, leaving those social sector tenants, homeless and with nowhere to turn.

The removal of Section 21 evictions without a thorough and effective reform of Section 8 could not only result in landlords losing confidence in the PRS, but also in even more social sector tenants without a home.

To help avoid this, Shamplina is urging everyone involved in the PRS to share their views on what reforms should be made to Section 8 to ensure the PRS works for landlords and tenants in a fair and effective way.