ARLA Propertymark Q&A: Changes to Section 21 and Section 8
ARLA Propertymark CEO David Cox answers letting agents' questions on the Government's plans to repeal Section 21, which would put an end to "no-fault evictions", and the proposed improvements to Section 8 to make it easier for landlords to regain possession of their properties.
Hundreds of letting agents submitted questions to Goodlord about the possible repeal of Section 21 and the end of "no-fault" evictions, a proposal the Government confirmed in its Renters' Reform Bill, as well as the changes to Section 8 to improve the grounds for repossession. Goodlord's legislation webinar with ARLA Propertymark CEO David Cox.
When would we expect the repeal of Section 21 to come into law?
I’m not yet willing to cede that Section 21 will be abolished. However, we’re probably talking three years before this starts to see the light of day as an actual change. The Tenant Fees Act was announced in November, 2016 and came into law in June 2019. I wouldn't worry too much and I would encourage you tell your landlord's not to approach not to worry too much about it at the moment. It's probably not going to impact many existing tenancies.
If the repeal of Section 21 is successful, do you think the law would be retrospective?
It's probably not going to be retrospective any way and would only affect new tenancies.
Under Section 8 proposals, how would a landlord ask a tenant to leave if they need the property back for an employee?
One of the things they are looking at is extending the grounds under Section 8. ARLA Propertymark will be arguing that a lot of discretionary grounds should be turned into mandatory grounds. We are also going to be suggesting that there is no point in the discretionary grounds, as nobody ever uses them and it's almost impossible to actually get a possession order through the court using a discretionary ground.
Do you think that the repeal of Section 21 and other legislation changes will mean that, moving forward, the private rental sector is reduced in terms of the number and availability of properties?
Yes I do - if you look at the last time we had these sorts of restrictions on rents and being able to regain possession, the private rented sector (PRS) shrank. The two things have allowed the PRS to grow to the level it is today are the regulatory liberalisation with the creation of assured shorthold tenancies and the fiscal liberalisation with the introduction of buy-to-let.
How could the repeal of Section 21 affect buy-to-let lending?
There’s potential for it to be much more difficult to regain possession of a property if Section 21 is repealed. There is certainly going to be moral pressure being placed on the lenders not to evict tenants if the landlord goes into mortgage arrears, which means the risk to the lender will go up, because there’s increased risk they won't be able to regain possession of the property if they have to repossess it from the landlord.
Do you think the repeal of Section 21 could impact the types of tenants landlords take on?
Landlords will have to be much more selective in the type of tenants that they take. At the moment, landlords might be willing to take upon on somebody that doesn't have the best references. If Section 21 is repealed, they won’t, and therefore the people the Government are trying to help the most will be stuck out in the cold or forced into the hands of bad landlords and agents.