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This week, the Government published its ’Fairer private rented sector‘ white paper outlining a series of measures intended to improve the lives of renters across the UK, a move that it calls the “biggest shake-up of the private rented sector in thirty years”.
Whilst I’m in no doubt these measures have been drafted in good faith, I fear there may be wider reaching implications that could spell significant trouble ahead for many of the 2.3 million landlords operating in the UK, and their unsuspecting tenants.
The Renters Reform Bill seeks to improve living conditions for renters, ending the injustice of unfit homes, unscrupulous landlords, and helping to support tenants as the cost of living continues to rise; some of the measures outlined include:
These measures are critical for improving the overall wellbeing of our nation. A study in 2021 by housing charity Shelter suggested that approximately 1.9 million households in the UK could be suffering physical and mental problems as a direct result of poor housing. Something needs to change and this bill, if passed, will go a long way to redressing the balance for many people in need.
However. I believe one area of the white paper could prove problematic, particularly in the short-term, and that’s the ban on Section 21 notices, or so-called ’no fault’ evictions.
The Section 21 notice allows landlords and letting agents to issue an incontestable notice of eviction once a tenant comes to the end of their tenancy agreement, and many landlords rely on this to regain control of their property from problematic tenants. Of course, there are those who would use this notice to evict tenants without good and just reason, or in retaliation to a tenant complaining about their poor housing conditions, but I believe these are in the minority. In fact, one BBC report this week suggested that of all private renters leaving their accommodation in 2019 and 2020, just “8% had been asked to leave by their landlord”, and of this percentage, I do wonder how many were legitimately asked to leave on account of their own actions.
After the Section 21 notice is abolished, the only way for a landlord to recover possession of a property is to rely on a breach of the tenancy agreement by the tenant – which of course can then be defended. We’ve already seen the impact of the suspension of Section 21 notices over the course of the pandemic, massive backlogs of cases waiting to be heard by the courts led to months of unpaid rent for landlords. We were hoping to see things return to normal this year, but it looks increasingly likely that these delays will continue. If all evictions now must be pursued via the courts, landlords will face a protracted battle to regain their property and recover the rent payments they weren’t receiving from their tenant during that time, as well as the cost of their legal expenses, at least for those who don’t have a Legal Expenses and Rent Guarantee (LERG) policy.
In our experience, we do see people ’gaming’ the system, using their recourse to defend Section 8 notices as an opportunity to stay in their property rent-free whilst the claim makes its slow progress through the courts. That’s simply unfair for landlords who have a legitimate reason to regain control of their property – and with the abolition of the Section 21 notice, we will see more of this as people are given the opportunity to fight, even if they are clearly in breach of their tenancy agreement.
In the short-term, I’m concerned that with a ban on Section 21 evictions slated to be in place some time in the next year, we could see a sharp rise in the number of notices served as landlords look to get ahead of the legislation, the antithesis of what the Government wants to achieve.
All things considered, despite stating in the white paper that the new measures will give private landlords “greater clarity and support”, this does not feel like a balanced piece of legislation. As much as the bill rightly seeks to support tenants at a time of economic squeeze, it fails to consider the long-term impact on private landlords stuck with nightmare tenants. The introduction of the new Private Renters Ombudsman appears to offer the promise of quick, low-cost out-of-court settlements, but I’m concerned about the additional delays this step builds into an already lengthy process.
The financial pinch of these measures will be lessened for landlords who have a LERG policy in place, offering rent protection in the event of a tenant defaulting on their tenancy agreement, and covering any legal expenses incurred whilst evicting a tenant.
This is an ideal opportunity for Legal Expenses Insurance (LEI) providers like us to champion the benefit of a LERG policy, after all, it seems that more landlords than ever will find themselves in need of its support in the future. And while I can wax lyrical on the benefits of this policy, the expert help it provides landlords, and the speed at which we can tailor our products to meet market conditions, fundamentally, I’m not sure this is a win for LEI providers when our clients are facing an ever-uncertain future – and of course claims costs potentially increase in line with court delays.
What will happen over the next year? Will we see living conditions improve for millions of people living in sub-standard housing, or at the mercy of unscrupulous landlords? Emphatically yes. Will we see greater security for people struggling financially? Yes. But will we also see a logjam of the court systems, a glut of unfair evictions and an increasing number of private landlords unable to recover lost rent? I really hope not, but if we do, I’m glad I’m able to help redress that balance for those honest, hard-working landlords when they need us the most.
Richard Finan, Director of Strategic Development, Arc Legal Group
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