Nearly 50% of Landlords Could Sell if Section 21 Abolished
Nearly 50% of Landlords Could Sell if Section 21 Abolished:
Change of Law
The Residential Landlords’ Association (RLA) carried out a survey.
It was based on the planned abolishment of the “no-fault” eviction process.
The result shows the possible reaction of English residential landlords to this abolishment.
Almost 50% of these landlords would sell some or all of their rental properties.
Section 21 “no-fault” eviction process was launched in the 1988 Housing Act.
This process led to the beginning of the growth in rental housing provision in the last 30 years.
However, following its removal, there may be uncertainty for landlords.
These homeowners may also experience delays and expense.
The landlords stated that they may have problems with evicting bad renters.
This may still be the case even if they have legitimate reasons.
The landlord membership associations also voiced their opinion on the matter.
The associations claim that the abolishment would make landlords sell their properties.
Also, it would lead to undersupply of rented apartments.
Notably, rented apartments are already undersupplied.
Therefore, the abolishment would cause increases in rent for available units.
Hence, the effect would affect both the homeowners and prospective tenants.
Recent RLA Survey
This recent RLA survey was the biggest ever survey conducted by the association.
Over 6,500 homeowners and agents took part in it.
From the findings, 46% of the landlords have plans to sell their properties.
Apart from section 21, there are other reasons for this desire to sell their properties.
The private landlords feel that the current government has a campaign against them.
One of the reasons is the recent several changes in the regulations.
Moreover, private landlords are dealing with many tax increases, especially Section 24.
As a result, this could be the deal-breaker for lots of private landlords.
In fact, many of them are giving up on property investments already.
About 40% of the landlords surveyed noted that they were looking at the situation.
They were hopeful that the government would change the plan soon.
After the decision of the government, they would then make a decision.
The decision may be to stop offering rental properties or continue.
The warning from the Royal Institution of Chartered Surveyors (RICS)
Also, the Royal Institution of Chartered Surveyors (RICS) reacted to this situation.
This body issued a stringent warning.
It claimed that there would be an average increase of 3% annually in private rents.
This increase is projected to happen over the next five years.
Based on the warning, this increase would depend on if landlords leave the market or not.
This is because the demand for housing will still be on the increase.
The government took a new decision two months ago.
It announced the plans to abolish the “no-fault Section 21 repossessions.
It reiterated its plan to improve the adversarial Section 8 process.
Nevertheless, the homeowners are not confident of these plans.
There is a justification for this lack of confidence.
There is a 30% reduction in the budgets for the Justice Departments.
So, this would only lead to a slow, stressful county court system.
At the moment, to serve an eviction notice and repossess, you need about five months.
Hence, the budget reduction will likely even make the process slower and more cumbersome.
Suggested Solutions to the Issues
There are several suggested solutions.
One involves the establishment of a national chain of special housing courts.
This will cumulate all housing disputes under an organization.
As much as 91% of all respondents agreed with this suggested solution.
Nevertheless, there is scepticism over the implementation of this solution.
This is due to the cost and resources it will require.
When you consider the current public sector economic situation, the scepticism is justified.
More Opinions on the Challenges
The policy director of RLA, David Smith, made a contribution to this.
He stated that landlord confidence is very important.
Smith noted that security of tenancy is irrelevant if there are no homes to rent.
He said the demand for private rented housing is increasing.
Hence, the landlords must have confidence that they can repossess their rentals.
However, they must have legitimate reasons.
He mentioned there is a need for the system to treat renters fairly.
Nonetheless, this should not be at the expense of landlords.
Therefore, the system must encourage and support great homeowners.
Mr Smith highlighted that their survey reveals the complexity of repossession.
The court system must ensure repossession is purposeful and appropriately resourced.
However, at the moment, this is not so.
Hence, he claimed that the government must consider their planned reforms carefully.
This will ensure that they do not have to reopen the problem later in the future.
Meanwhile, the founder of Landlord Action, Paul Shamplina, sent an invitation to Housing Minister, Heather Wheeler.
Mr Shamplina wanted her to have a better knowledge of the possession process.
This knowledge will help her when making any drastic reforms.
Additionally, he encouraged the Housing Minister to consult landlords.
This will help any changes to the possession process.
He explained that landlords will think about selling their properties if the government abolishes Section 21.
Currently, the debate about the abolishment of Section 21 continues.
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