The Government has confirmed it will hold off on plans to scrap Section 21 until improvements have been made to the court system. What else have the Government pledged, and what does this good news mean for landlords?
In a surprising U-turn, the Government has agreed to hold off on its plans to axe Section 21 ‘no fault’ evictions until the court system is improved. This comes after extensive lobbying from the NRLA amidst concerns over a mass exodus of landlords should plans to scrap Section 21 go ahead.
The Government also confirmed it would introduce new grounds for possession for student landlords following concerns over how the new periodic tenancies will impact the student rental market.
Section 21 and Court Reforms
The abolishment of Section 21 evictions was announced as part of the Renters’ Reform Bill published earlier this year. As the most contentious reform, industry experts urged the Government to rethink the plans to scrap Section 21 or offer a more plausible alternative than Section 8.
Many landlords were understandably concerned about only having Section 8 to repossess their property. It takes an average of over half a year for the courts to process possession claims where landlords have good cause, for example, rent arrears or anti-social behaviour.
The NRLA argues that responsible landlords would exit the sector without an improved court process. At a time when rental demand continues to outstrip supply, many tenants would struggle to find a home should property investors choose to leave the market.
However, last week, the Government confirmed that the abolishment of Section 21 “will not take place until we judge sufficient progress has been made to improve the courts”.
Student Landlords and Periodic Tenancies
The Government has also agreed with the NRLA that more needs to be done to better support the student market with the implementation of periodic tenancies.
The concern is that scrapping fixed-term tenancies will cause significant supply issues within the market and void periods for student landlords. As fixed-term tenancies typically start in time with the academic year and end as students break up for summer, landlords had sufficient time to market the property, and there was always ample supply for the increasing cohort of students relying on the PRS whilst at university. However, as periodic tenancies have no end date, the concern was whether tenants would decide to leave the property in time for new students to move in.
The Government has pledged to “introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies”, which “will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year”.
Ben Beadle, the Chief Executive of the NRLA, commented, “Following extensive campaigning by the NRLA, we welcome the approach taken by ministers to ensure court improvements are made before Section 21 ends. The Government is also right to protect the student housing market. However, more is needed to ensure student landlords are treated the same as providers of purpose-built student accommodation.”
What this news means for landlords
Many of you will be relieved to hear that plans to scrap Section 21 have been put on hold for the time being. It’s also incredibly positive to hear that the Government are considering the implications of periodic tenancies on student landlords. What’s important now is that the Government continues to work alongside the NRLA and property investors to ensure suitable measures are put in place to support the PRS at a time when demand for rental properties continues to increase.
Once we have further details on the changes to the court systems and the repossession grounds for student lets, we will let you know.
25th October 2023