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Landlords more likely to sell over Section 21 plan

Nearly half landlords and letting agents are more likely to sell some or all of their rental homes as a result of government plans to end Section 21 repossessions, so-called ‘no fault’ evictions. The RLA’s biggest ever survey of more than 6,500 landlords and agents revealed more than 46% plan to sell. The research also found over 40% of landlords are waiting for other planned changes by the government to become clear before they make decisions on their ability to provide homes to rent. 

Rent warning. The figures come just weeks after the Royal Institution of Chartered Surveyors (RICS) warned of private rents increasing by an average of three per cent a year over the next five years as a result of landlords being less prepared to rent property whilst demand from prospective tenants increases.

In April, the government announced plans to end Section 21 repossessions, alongside proposals on improving the Section 8 process, under which landlords can repossess properties on grounds such as rent arrears or anti-social behaviour.  This process requires landlords to apply and be granted permission to repossess via the courts, yet official data shows that it takes over five months on average from application to repossession. According to the survey, of those landlords with experience of such repossessions, 79 per cent did not consider the courts to be reliable. 

Housing court. Almost 91 per cent of landlords supported the establishment of a special housing court, bringing together all housing disputes under a single body. With concerns that landlords selling property will usually require tenants to be evicted, the RLA’s survey found that 48 per cent of respondents said that they would be encouraged to purchase a property to rent with a tenant in situ if they could reclaim the three percent stamp duty levy on the purchase of rental homes on the condition that the tenants can remain in the property for a year or more. 

The survey also found widespread support for new grounds to be established upon which landlords can regain possession of a property. These grounds could be used by landlords who wanted to sell a property, for example, or those who want to let to groups such as students – who do not require the indefinite style tenancies being proposed by the government.  Landlord confidence ‘vital’ David Smith, RLA policy director, said: “Security of tenure means nothing unless the homes to rent are there in the first place.  “With the demand for private rented housing showing no signs of slowing down it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances. “Whilst the system should clearly be fair to tenants, it needs also to support and encourage good landlords. “Our survey shows how complex it will be to ensure that the grounds on which landlords can repossess properties are both clear and comprehensive. “This needs to be underpinned by a court system that is fit for purpose and properly resourced. At present it is neither.  “It is vital that the government’s planned reforms are carefully considered to avoid finding ourselves needing to reopen this whole issue later down the line.”

Posted by MMB Finance Swindon and Gloucester on 24 May 2019