Note – this was written before the publication of the government’s consultation paper.
As discussed in this series, the government have announced that they want to end landlords rights to recover possession under section 21.
As I understand it, they don’t know how they are going to do it and they have done no research or impact assessments – they have just decided to do it.
The story I have heard tell (which may or may not be true), is that James Brokenshire had a conversation with a homeless man who told him he was homeless due to being evicted under section 21. The Minister was so moved by this he decided to do something about it. Hence the decision to remove section 21.
That sounds very nice and honourable.
However one can’t help wondering whether the fact that there are a lot of tenants (ie voters) around who are unhappy about section 21 and the lack of security it gives them in their homes, might have had something to do with it.
Since then Mrs May (in her final days as Prime Minister) has made a speech saying that if they want they could remove section 21 by the end of the year. However, this rather conflicts with promises which have been made to landlords organisations that section 21 will not be removed until the problems with eviction and the courts have been sorted.
As there is no money to fund any changes to the courts, this indicates that section 21 removal is actually some way off. But it’s hard to place any reliance on anything this government says, particularly as at the time of writing, the party is in the process of electing a new leader.
But if this government is actually going to remove the right to eviction under section 21 – how could they do this?
Options for change
Let’s look at two options
- A quick way, and
- A longer way
Changing the law – the quick way
The quickest and easiest thing to do would be to just pass legislation which would remove section 21 in its entirety. This would mean that all new tenancies would be assured tenancies with limited rights for landlords to recover possession.
There would no doubt be a transitional period and I expect that landlords of current ASTs would retain their rights under section 21 either for the life of that tenancy, or for a specified period of time, say one year.
If the government were to do that, I suspect that the private rented sector would contract, maybe dramatically. Many landlords are poised to sell up, and are waiting to find out what happens first. The recent report from the RLA suggests that a large percentage of landlords will be unwilling to rent to tenants in a regime which does not contain the right to evict under section 21, or something very similar.
Probably the worst result for tenants would be if section 21 were to be phased out for all tenancies within a period of say, one year. This would result in mass evictions by landlords looking to sell up which would cause a huge spike in homelessness.
Granted, the flood of properties going on the market might result in a drop in price, making homes more affordable for families in a position to buy. However, this option will not be available for those with lower incomes.
Alternatively, landlords may:
- Use properties instead for holiday lets, or
- Let on residential licenses (which is possible if you do it properly) where occupiers would have fewer rights and less security of tenure than they would have done as assured shorthold tenants.
This is probably the worst possible scenario, although from Mrs May’s speech it would appear that it is not entirely off the cards.
Changing the law – the longer way
The longer and (in my view) the better course of action would be to carry out a thorough review of the entire housing sector and draw up a new housing code.
Ideally this would include:
- Longer tenancies for tenants who want them, but
- More effective eviction procedures for rent arrears and ‘bad tenant’ grounds, and
- More favourable tax treatment for landlords renting on long term tenancies
I would also like to see
- A registration scheme for landlords – essential if the government is to be able to plan properly as they need to know the size of the sector, and
- Mandatory training for landlords who want to self manage
However, these are just suggestions. The body which undertakes the review would need to take evidence and come to its own conclusions (although the recent report from the Regulation of Property Agents working group indicates that regulation and licensing for landlords is on the cards).
However, we have already had such a review.
In, I think, 2002, the Law Commission were given their ‘Renting Homes’ project. This was a huge undertaking and involved consultations with all known relevant organisations at the time. It took several years to complete.
A final report was published in 2006 which was acclaimed by most commentators and relevant organisations. However, the report was totally ignored by the government of the time, although parts of it were later taken up by the Welsh Assembly.
Conclusion
My view is that housing is so important that we should not keep patching the law whenever a problem arises. This has resulted in a system which is very complex and hard for non-lawyers to understand.
We need a properly thought out housing code, which should include tax incentives for landlords letting a property on longer tenancies.
The Law Commission would be a good organisation to do this research. However, if we once again undertake a project such as this, there should be a commitment on the part of the government to follow its findings.
Otherwise, we have the situation which we have had for the past 20 years or so where reports are constantly being commissioned and then ignored, presumably until they come to what those in government at the time consider to be the ‘right’ answer.
Which has led to no action being done other than more ‘patches’ to the existing laws.
I hope that a long term solution can be found for the problems we have but am not optimistic. We shall have to see.
In the meantime, we have the looming problem of climate change which will, if we take it seriously, change everything.
