Section 21 – Abolishment

The Renters Rights Bill will be actioned by parliament in 2025, nothing currently is set in stone with dates, but they are not rumours anymore. It will be coming into effect between the Spring and Summer in 2025.

This essentially means that landlords must be prepared for what is about to happen, the biggest threat and change to the UK Rental Market is that the abolishment of the Section 21 is upon us.

What is a Section 21?

Section 21 is a provision in the Housing Act 1988 that gives landlords the legal right to regain possession of their property without providing a reason.

The key features of a Section 21 are:

• 2 Months’ Notice to your tenant to evict
• You do not need a reason to evict
• Must be used at the end of a fixed term tenancies or a periodic
• Written Notice via a Form 6A is required on notice

The abolishment means that you cannot serve the Section 21 anymore.

What are the issues with this?

The bottom line is that if you do not like your tenant and want to evict your tenant, you can’t! This means it is more important than ever to be on good terms and good communication levels with your tenant, you must sort of be nice to your tenant now.

It means that you shouldn’t get greedy with the amount of rent that you want to receive, it is better to have the right quality of tenant living in your buy to let property because the law sides with the tenant even more so now. The reasons that this has been brought into effect by the recent government is to combat the homelessness issue we have here in the UK.

Honestly, I do see this as a major issue in the rental market and the real issues will arise should a landlord have an argument and fall out of favour with a tenant living in their property.

Preparation is key to the rental market more than ever now.

No Fixed Term Tenancies

The abolishment of fixed terms tenancies I do not think are the end of the world, but it does mean that it is again sided towards the tenants as opposed to the landlord.

What it means is that a tenant can leave a property straight away giving a landlord a one-month notice, but due to the section 21 abolishment, a landlord cannot evict the tenant unless they have failed on a Ground of the Section 8.

This also means that there is a possibility of a lot more movement within the rental market, if a tenant obtains a new job and has only been in a property for a matter of months, then there is nothing stopping them moving on and a landlord will have to pay to find a new tenant. It could cost a landlord a lot of money.

Another issue could be that there is an argument with the tenants; if there is a scenario where there is damp and mould in the property, then it means the tenants will probably leave and give notice to move on, meaning a landlord will have to sort the issues out.

Alongside the bill will also be a Decent Homes Standard introduced meaning should a property not be in a decent condition, then a tenant will have a claim against the landlord too.

Landlords will have to be a part of an ombudsman which will give the tenants transparency to look a landlord up prior to a renting a property, a bit like a scorecard. If the landlord has been a bad landlord, then they will have a bad score and less likely to attract a tenant.

Section 8s are still valid

Landlords shouldn’t worry too much, if they are good landlords. You can still evict a tenant due to unpaid rent, unsociable behaviour and breaching the tenancy agreement. But you will have to go through the courts meaning it will still cost landlords a lot of money.

Personally, I have a residential property portfolio, and I have never ever had one of my tenants forfeit on their rent, nor had to evict them through the courts. Some say I am lucky; I say that I give tenants nice properties, and I am not greedy on rent, I understand the market and how to play the game, many landlords do not.

However, I always pay for the Rent Protection Insurance with Legal Cover because there could be an eventuality that I need to evict, and a tenant doesn’t pay. I have seen this happen and I have seen rent protection work, I have also seen the legal cover work so that landlords do not pay to evict a tenant, a surefire investment!

Landlords are leaving the market in droves, so if you hang in there, it is not all doom and gloom. I believe that sunshine will arise, and it won’t all be bad.

FEAR is False Expectations Appearing Real – is that a silly acronym or truth?

Whatever it is, life is not always as bad as you imagine, not to get morbid or philosophical but we are all entering the same place in the ground and being a landlord does still have its benefits which as an asset which you can leave to your children or whoever, it is still an inflation hedge. My advice is not to sell, hang in there and you will win.

Rents have still increased!

If you need any more information on what we do here at Keystones and why we are different, get in touch with me on [email protected]