Unprecedented Surge in Section 21 Notices Shaping UK’s Lettings Market
The Abolition of Section 21 and its Impact on Private Landlords and Tenants
In a significant development, the UK’s rental market is experiencing an unprecedented rise in Section 21 notices, as the looming threat of their abolition raises questions about the future landscape of the industry. National law firm Dutton Gregory Solicitors has expressed concern that the proposed change is deterring many private landlords, leaving Build to Rent giants in a position of advantage.
The Landlord and Tenant department at Dutton Gregory has reported a surge in the processing of Section 21 notices since the announcement of their planned abolishment. Additionally, the Ministry of Justice recently revealed a 15.8% increase in no-fault evictions in the three months leading up to March.
The Hampshire-headquartered law firm suggests that this surge may be attributed to the fear and uncertainty prevailing among private landlords. The proposed abolition of Section 21, which allows landlords to evict tenants without providing a reason, has left many buy-to-let owners anxious. Although the government intends to strengthen the grounds for Section 8 to allow landlords to reclaim their property, without concrete reassurances, landlords remain wary.
Gina Peters, head of Landlord and Tenant at Dutton Gregory Solicitors, said, “The mounting workload hasn’t gone unnoticed, and many private landlords seem to be serving Section 21 notices as a precautionary measure. The current socio-economic situation, characterized by rising inflation, mortgages, and interest rates, has created a ripple effect on the housing market, leading to increased rental payments. As a result, landlords find themselves in a dilemma; while they wish to retain their property and make a profit, they fear facing months of non-payment if a tenant defaults. Many landlords are now opting to serve a notice while they still can, intending to sell their properties and exit the rental market.”
Although the proposed Section 8 grounds may appear to offer landlords the ability to reclaim their property, the process requires a court hearing, unlike Section 21, where mere paperwork would suffice. Consequently, this new process could lead to prolonged eviction periods, extending from weeks to months. Furthermore, the notice period for rent arrears is expected to increase from two to four weeks, exacerbating the situation for landlords who may endure an extended period without receiving rent.
Peters continued, “The current court infrastructure may not cope with the influx of increased possession hearings, as listing in all courts is at a premium. This could lead to significant delays, causing a decline in the private rental market. As inflation rates continue to rise, we might witness a shift towards an extremely corporate rental market, with national Build to Rent companies benefiting from economies of scale. Reports indicate that 11% of homes listed for sale on Zoopla in June 2023 were previously rented out. With fewer rental properties available due to private landlords selling up, the demand from tenants is expected to soar, further benefiting the Build to Rent sector and transforming the rental landscape.”
Moreover, the Landlord and Tenant team at Dutton Gregory Solicitors notes that fewer private landlords are expanding their portfolios this year. Additionally, some tenants served with a Section 21 notice are unable to find affordable alternatives promptly, adding pressure to the courts and increasing costs for landlords.
Peters stressed, “More needs to be done to improve waiting times at court, eliminating lengthy delays and providing private landlords with a sense of security. The Renters Reform Bill is anticipated to come into play no earlier than the end of next year. However, with a General Election expected in May 2024, the intended abolition is already influencing the rental market.”
In Summary:
– The UK’s rental market is experiencing an unprecedented surge in Section 21 notices.
– The potential abolition of Section 21 is raising concerns about the future shape of the rental market.
– National law firm Dutton Gregory Solicitors reports an increase in processing Section 21 notices since the announcement of their planned abolishment.
– The Ministry of Justice reveals a 15.8% rise in no-fault evictions in the three months leading up to March.
– Private landlords are deterred by the proposed change and fear uncertainties, leading to increased Section 21 notices.
– The government intends to strengthen Section 8 grounds for landlords to reclaim their property, but concerns persist.
– Rising inflation, mortgages, and interest rates are affecting the housing market and rental payments, making landlords cautious.
– Some landlords prefer serving notices as a precaution and consider exiting the rental market.
– The new Section 8 process may cause extended eviction periods, leading to potential decline in the private rental market.
– A rise in corporate Build to Rent companies is anticipated, benefiting from increased demand as private landlords sell their properties.
– Court delays and lack of affordable alternatives put pressure on landlords and tenants.
– Calls for improvements in court waiting times and increased security for private landlords.
– The Renters Reform Bill expected to come into play, but the impending General Election may impact its implementation.
Conclusion
In conclusion, the UK’s rental market is witnessing an unprecedented surge in Section 21 notices as the government considers their abolition. This move has created uncertainty and fear among private landlords, prompting many to serve notices and consider exiting the rental market. The proposed changes to Section 8, while offering a means for landlords to reclaim their properties, may bring about prolonged eviction periods. As the rental market continues to evolve, addressing these concerns and providing a stable environment for both landlords and tenants becomes essential. Only time will reveal the full impact of these developments on the UK’s rental landscape.