Landlords fear the scrapping of s21 – and are selling up

The potential scrapping of section 21 worries a third of landlords and is a ‘driving force’ behind growing numbers selling up and leaving the private rented sector (PRS), a survey reveals.

The findings from Mortgages for Business highlights that the potential reform of section 21 as part of the Renters Reform Bill could have a devastating impact on the PRS.

Under the proposals, landlords will no longer be able to use section 21 of the 1988 Housing Act to evict renters after the end of a fixed term tenancy, with two months’ notice.

Instead, the specialist buy-to-let broker warns that the government’s plan will effectively create open-ended tenancies and landlords will have to give a reason for eviction — such as rent arrears or antisocial behaviour.

‘Fears surrounding the scrapping of section 21’

Gavin Richardson, the managing director of Mortgages for Business, said: “Fears surrounding the scrapping of section 21 are a driving force behind landlords not remortgaging and selling up instead.”

He says that with all tenancies being assured landlords will have to use one of the new section 8 grounds for possession.

These will include the landlord wanting to sell the property, move into it or if there has been a breach of the tenancy by the tenant.

However, Mr Richardson says landlords have less to fear from reform of section 21 than they realised.

‘Section 21 notices have been abused for years’

He explains: “Section 21 notices have been abused for years. They have been used as a vehicle for ‘revenge evictions’, for instance, where renters who have complained about their property are evicted in retaliation.

“I don’t think the reforms will prove to be that bad.

“Tenants didn’t have to do anything wrong to justify a section 21 notice — they could have been paying the rent on time and taking good care of the property.

“Sensible landlords rarely turf out good tenants who pay their rent as they want them to stick around.”

He adds: “So this reform will disproportionately hit bad landlords abusing Section 21, rather than the reputable end of the market.”

Tenancies can be ended if the tenant breaches the tenancy

Mr Richardson also says that tenancies can be ended if the tenant breaches the tenancy and the government’s plan or a new ombudsman to settle disputes between tenants and landlords without a court process should be welcomed.

He also says that landlords can still sell a property which the potential reforms had put at risk.

He said: “The loss of full tax relief on mortgage interest payments for individual landlords, the stamp duty surcharge on additional property purchases, and the need to ensure properties meet energy efficiency rules expected to apply from 2025 are all far more significant for landlords.”

‘Government rhetoric’

Mr Richardson continued: “You’d never guess that from the government rhetoric though.

For instance, I don’t think for a moment that section 21 exacerbated homelessness as one Tory community secretary claimed.

“The politicians are irresponsibly trying to curry favour with tenants: the country will suffer as the private rented sector — with its efficient use of property stock — dries up.

“The government needs to stop trying to gain cheap brownie points by taking a pop at the private rented sector and needlessly spooking landlords.

“It is the reason the government has lost the confidence of responsible landlords.”

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