In earlier articles in this series, I have looked at claims for possession based on rent arrears and on ‘bad tenant’ grounds.
However, there is another category of possession – the various situations where a landlord will want possession where the tenant is not at fault. These include:
- Owner occupiers wanting their home back to live in
- Offers of suitable alternative accommodation
- Landlords wanting possession so they can carry out renovations and repair work which cannot be done with the tenant in situ.
- Landlords wanting to sell
All of these, apart from the last, are already included in the current system.
The problem with no-fault grounds …
If the object of removing section 21 is to give tenants more security, then I think we need to be careful about no-fault grounds for possession.
I am particularly worried about any new ground allowing the landlord to recover possession if he wants to sell. If we remove section 21, I can see unscrupulous landlords using this ground and then, deciding not to sell after all.
There may be penalties for landlords who do this – but as we know, local authorities are very slow to enforce the law and in the meantime, the tenant will have lost their home.
I understand this ground has been introduced in Scotland (which has already got rid of section 21) – what are people’s views on how this has worked out there?.
Notice in advance
My view is that if landlords are to have the right to evict tenants where they are not at fault, this should be flagged up in advance. For example
- If the property is let by an owner-occupier who will want it back to live in
- If the property is bought as a retirement home by someone who cannot live in it at the moment (eg if they are in the forces or foreign office and resident abroad), or
- If the property is let as a genuine student let
The notice would have to be prominent in the tenancy agreement, ideally towards the top, and the clause should be individually signed and dated by the tenant at the time they sign the tenancy agreement.
There should also be a limited number of allowable circumstances and the landlord would need to prove these in any claim.
Two types of tenancy
So this would mean that there were two types of tenancy
- Those which could be ended early by virtue of the advance notice – provided the circumstances covered by the notice applied, and
- Other tenancies which could only be ended on rent or other ‘bad tenant’ grounds.
This may result in fewer landlords deciding to invest in the private rented sector. Which may or may not be a good thing.
The government will need to decide whether they want to encourage the private rented sector or not. As at the moment, it seems unclear about what it wants.
I agree about the idea of two types of tenancy and think that the planning system could be used to achieve this and other benefits.
I watch a lot of property shows where the owner casually says “If I can’t get the price I want I will let it for a while until the market rises” – I wonder how many tenants are told this.
But the latter position is not an unreasonable one from the point of view of the landlord, who wants to make the most efficient use of their asset.
Anyone managing assets has a duty to maximise their yield. The problem arises if and when this gives rise to unreasonable prejudice on the part of tenant, but since most tenancies seem to be AST’s, and since most AST’s seem to run for 12 months, I’m not sure why a landlord is held to have a duty to inform a tenant that they may wish to sell their house after the end of the tenancy.
Certainly, it is courteous to do so, and it ought to be done, but since s21 doesn’t apply until after the end of a fixed-term tenancy, I don’t see how it can be abused in order to unfairly truncate a fixed-term tenancy for the landlord’s benefit and to the tenant’s detriment.
For example, I have just had a (completely unsuitable and unreasonable) application from a prospective tenant, who, among his more reasonable demands, wants a 2 or 3 year tenancy.
The problem is that I am tired of being an accidental landlord, since I am still dealing with a nightmare tenant £10’s of £1000’s in arrears, and I want to sell the property if and when the market recovers after the Brexit process is a little clearer. For that reason alone, I have put it to the agent that my (reasonable) objectives are in conflict with the tenant’s (in this case, reasonable) objectives and therefore we are not a good fit.
As someone mentioned in a comment on this site recently, some tenants want longer term security of tenure, and some want flexibility.
“The government will need to decide whether they want to encourage the private rented sector or not.”
I think they’ve decided this one a long time ago.
Home owners tend to vote Tory. So curtail social housing, drive out private landlords, push up rents and make home ownership a more attractive option thus creating more Tory voters.
-All cheered on by the Left who are ideologically opposed to private landlords, whatever the consequences.
If the Tories are considering abolishing no-fault evictions it is an indication they accept that the Thatcherite agenda behind the HA 1988 has failed. That should give even the most extreme free marketeer pause for thought.
I recently had a look at some statisitics and the graph showed that the number of dweliings being let privately is the same now as it was in 1970. The idea that removing security of tenure would make more property available to let has proved in the long term to be wrong.
There was a period after 1988 when the graph spiked. People were lured into BTL as a foolproof way of providing for retirement or for their grandchildren. They did a back-of-an-envelope calculation working out what return they would get taking into account only the purchase price and the estimated rent. They soon found that they had to pay tax, that the property might need expensive repairs; that the tenant may not pay the rent on time or at all; that there would be void periods which apart from not producing rent may involve having to pay the rates; that they had to pay an agent if they did not want to manage the property. They failed to appreciate that BTL was not just an investment where you can check how it is doing by looking in The Times, but a business which involves risks.
Whoever is in power, the need for private renting is going to be around for the foreseeable future, if not longer. What is needed is a system which balances the reasonable expectation of investors with the need for reasonable social stability which has to involve renters feeling they have a decent home from which they are not liable to be evicted at short notice.
“If the Tories are considering abolishing no-fault evictions it is an indication they accept that the Thatcherite agenda behind the HA 1988 has failed. That should give even the most extreme free marketeer pause for thought.
I recently had a look at some statisitics and the graph showed that the number of dweliings being let privately is the same now as it was in 1970. The idea that removing security of tenure would make more property available to let has proved in the long term to be wrong.”
That’s blatantly nonsense as a quick glance at a substantiated, reliable source easily shows;
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/658923/EHS_50th_Anniversary_Report.pdf
Can’t do quotes or bold on here but the critical bit omitted to mention;
“In both 1967 and 2015-16, 20% of homes were in the private rented sector. However in the intervening period,
**the proportion of households in the private rented sector declined to around 9%, remained at that level from the mid-1980s until the mid-2000s, and then rose again to its current 20% same as it was in 1967**
,the absolute number has increased considerably as the size of the stock has increased.”
A coincidence that occurred following Facher’s Housing Act? C’mon!
@lawcruncher That is an exemplary contribution to the debate. Thank you for sharing it.
“In both 1967 and 2015-16, 20% of homes were in the private rented sector. However in the intervening period, the proportion of households in the private rented sector declined to around 9%, remained at that level from the mid-1980s until the mid-2000s, and then rose again to its current 20%
same as it was in 1967, the absolute number has increased considerably as the size of the stock has increased.”
Landlord’s circumstances can change. The ability to sell (at a reasonable notice) is essential for many people to reduce the risk of investing in such an illiquid investment as property. I wouldn’t have started unless I knew I could change my mind after six months and get most of my money back again.
It worked well and has provided almost all my income for the last five years, and will continue to provide most of it in the future when my pensions start (any day now). I have a tenant who has been with me over 5 years and another almost as long. But suppose I became ill and needed to go into care. Then I might need to sell one or more to pay for it. Or when I die would my heirs be forced to become landlords?
Not being able to sell is almost certainly the reason the PRS declined so far, Scotland has recognized that, but is unlikely to prove it for a few years yet as the new rules there have only applied to new tenancies for a couple of years so far.
That about sums it up Pete.
Who would invest in such a loaded market?
@PeterJackson That is a brilliant, reasonable, contribution. It reflects my own feelings exactly.