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Section 21 changes and how they will impact landlords

Published: 19th June 2019

Section 21 changes and how they will impact landlords

While there has been much ado about the ban on fees being charged to tenants, in reality, this change is likely to be of minimal long-term impact for the simple reason that it does nothing to alter the fact that the costs inherent in letting properties are, ultimately paid by the tenant.

They may be charged directly as they are incurred or they may be factored into the rent, in either case, the tenant pays. By contrast, changes to the rules around Section 21 have the potential to cause major disruption in the rental market.

The controversy of “no faults evictions”

Evictions under Section 21 are often known as “no faults” evictions (in contrast to evictions under Section 8, where the landlord seeks to regain possession of a property on certain, specified grounds, which generally relate to breaches of the tenancy agreement).

Unfortunately, the term “no faults evictions”, can be used as a basis for misleading media articles, conjuring up images of families being dragged, sobbing, into the streets, whereas in actual fact, a bit of common sense would make it fairly obvious that landlords will only evict a tenant where they have good reason to do so, after all, it’s the income from tenants which pays their bills.

The real reason landlords generally opt to use Section 21 evictions, is because they are generally quicker, easier and more affordable than their Section 8 counterparts.

The big problem with Section 8 evictions

In simple terms, Section 8 evictions are slow (an average of 145 days as opposed to an average of 104 days for Section 21 evictions) and expensive (an average of £5,730 as opposed to £3,525 for Section 21).

Part of the reason for this is that the nature of Section 8 evictions is such that they can be disputed and tenants are often motivated to do so, even if they do not have any reasonable chance of success, in order to delay the inevitable.

This is particularly likely in cases where the problem is rent arrears as tenants may try bringing down the arrears to below the 2-month minimum default period in order to counter the Section 8 claim, which would be fine if they then made their payments in full and on time, but if they then proceed to run up further arrears then landlords have to make a fresh Section 8 claim - or use Section 21.

The way forward

The government has promised to reform the Section 8 process, however at this point it is far too early to know what that will actually mean in practical terms. On the positive side, there is hope that they will simply look north of the border for an example as to how an end to “no faults evictions” can be made to work in practice.

Scotland put an end to this system in December 2017, but it put necessary infrastructure (in the form of tribunals) in place before it did so, with the result that landlords do have a clear, reasonable and affordable path in place to deal with problem tenants.

If you would like to discuss any property investment opportunities or are looking to sell your investment, feel free to call us on 0161 464 7530 or email us on enquiries@pureinvestor.co.uk 

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Pure Investor - Property Investment