Some thoughts on the intention to abolish section 21 of the Housing Act 1988
12 September 2019
Peter Bourke sets out his views on the current consultation. Whatever your views are, if you are involved in letting residential property, in whatever capacity, it is imperative that you respond to the consultation.
The consultation expires on 12 October 2019, read more here.
In the first article in this series Alexandra and Mike drew your attention to what the government is intending to do. This article (the first of three) looks at some of the specifics and explores some of the consequences. Let me start by saying that it is my view that the general premise of the government's intention appears to be flawed. Landlords do not rent to tenants simply then to serve section 21 notices. They let to tenants to generate income and they want a continuous income stream without interruption. The longer the relationship works the better it is for both parties. It should be a mutually beneficial agreement but sometimes it is not. Changing tenants costs money with likely void periods and refurbishing costs.
Obviously there are examples of bad landlords in the same way that there are examples of bad tenants. Penalties should be imposed on bad landlords but these changes will cause damage to the whole system unnecessarily. The proposal to abolish section 21 is not even the proverbial sledgehammer to crack a nut as it misses the "nut". It is bad in principle and will have adverse consequences for tenants as well as landlords.
Readers should also read the summary in "Getting the house in order: How to improve standards in the private rented sector" by Hannah Poll and Caroline Rogers for Citizens Advice. This highlights problems with enforcement that the Government needs to get to grips with. Read more here.
A reminder – the 1987 White Paper
It is constructive to read the White Paper produced in September 1987 "Housing: The Government's Proposals". The first aim of the introduction of the Housing Act was to reverse the decline of rented housing and to improve its quality. This was because private landlords did not get a sufficient return to find the resources to keep the property in good repair and, along with the difficulties in recovering possession, the supply of privately rented housing shrank to below what was needed. By and large those objectives have been achieved and, whilst not perfect, standards have improved although there are arguments as to what has been the driver of those improvements: the Housing Act or other legislative provisions? That is a question for another day.
The recent changes to the AST regime
There have been numerous changes to the AST regime over the last few years (see our previous articles on the Tenant Fees Act 2019, update to the s21 notice and the "right to rent" check). The combined effect of these changes is to tighten the regulatory regime and improve standards and to give tenants more rights. It appears that the Government thinks that not enough has been done for tenants but, in my opinion, the proposed changes will have, on balance, a greater negative impact than beneficial impact on tenants.
What is the aim of the proposed legislative changes?
The Ministerial Forward states that tenants deserve high standards and landlords quite rightly expect tenants to meet the conditions of the tenancy agreement. Tenants should not be asked to leave without good reason and be protected from rogue landlords.
Will the intended outcome of this consultation make renting better for tenants?
My view, for the reasons set out in this article, is that the answer is that the proposals will fail to deliver these objectives. Overall, the proposals may well have the unfortunate consequence of making matters worse for tenants. There are other steps that should be taken to deal with rogue landlords.
The Consultation Presumption
The current consultation is predicated on the basis that:
- section 21 will be abolished,
- there will be longer fixed-term tenancies, and,
- to give landlords something in return,
- that the court system will be made more efficient.
However, in my opinion the consultation is short-sighted as it fails to consider the additional costs the new proposals will generate and the adverse consequences for tenants.
Will the court system become more efficient?
In classic Orwellian speak, the previous consultation said that 47% of landlords had experienced difficulties with the court system and therefore more than half had not. The fact that 47% have difficulties with the justice system is simply appalling. You may be interested to read the survey of county court performance carried out by the Property Litigation Association in 2015. They are compiling the results of a further county court survey carried out in 2018.
Initial indications are that despite the Government's view that matters have improved, users' experiences are that the court system continues to provide the same poor service. Can we really expect an improved service to the standard the Government says it will provide? I hope so but if past performance is any guide to future performance I do not have high expectations.
In any event, even if this happens it does not address the real problems with the proposal. These are considered in parts two and three.