The second reading of the Renters’ Reform Bill in October took many landlords by surprise, with an unexpected announcement regarding Section 21 eviction notices - the method used by landlords to regain their property without having to have a specific reason. We have poured over the details and have provided answers to your most common questions.
Q. Where is the Renters’ Reform Bill in terms of progress?
A. The Renters’ Reform Bill had its second reading in the House of Commons on Monday 23rd October 2023. The Bill was debated but a vote was not made, as can be customary at this stage. Progress of the Bill will now continue in a new session of Parliament, with committee, reporting and third reading stages to take place in both houses before the Bill gains Royal Assent and becomes law.
Q. Is the ban on Section 21 notices still happening?
A. No, not in the foreseeable future. Before the second reading, the Government announced that the ban of Section 21 notices would be delayed indefinitely and would not form part of the Renters’ Reform Bill as it stands.
Q. Why has the Government decided to keep Section 21s?
A. There are three main reasons why the Government has decided to retain Section 21 notices. The first, and perhaps sceptical reason, is to keep landlords onside with the Conservatives in the run up to a General Election. The proposed ban on Section 21s was very unpopular with landlords, who wanted full, unfettered rights to regain their property. Records show a fair number of Conservative MPs are also landlords, so the delay in introducing a ban on Section 21s may also prevent a predicted mutiny within the ruling party.
The second reason – and the one formally given by Housing Secretary Michael Gove – is that the court system in England and Wales needs reforming before a ban on Section 21s can take place. It is thought relying on Section 8 evictions would place extreme pressure on an already strained court system, therefore keeping Section 21s for the time being was the most sensible option. There is no time table for reforms to happen but the Government wants the digitisation of the court process, improved bailiff recruitment and retention, earlier legal advice for tenants, a new way of prioritising eviction cases involving anti-social behaviour and amendments to the current Section 8 notice.
Lastly, there has been anecdotal evidence and a raft of survey results that suggest a significant number of landlords would exit the private rental market if Section 21s were abolished. Some agents have already reported that the mere suggestion of a ban was behind a drop in the supply of rental properties. Keen not to restrict the availability of rental properties any further, the Government hopes by shelving the ban on Section 21s, more landlords will be encouraged to stay in the private rental market and attract new investors to the sector.
Q. Can landlords still evict tenants without reason?
A. Yes they can. The Government has backtracked on its original proposal to ban Section 21 notices, which are sometimes referred to as ‘no fault evictions’. The retraction means landlords can continue giving tenants two months’ notice to leave a property without reason or grounds.
Q. Are there any other announcements planned?
A. Possibly. The Chancellor will make his Autumn Statement on 22nd November 2023 and this is considered to be a mini Budget. With the Conservatives keen to win as many votes as possible before a General Election, experts are speculating about what other property positives could be announced.
It is thought the Chancellor could reverse plans to reduce the capital gains tax allowance, which would help landlords who want to sell an investment property. Property investors who hold buy-to-lets in limited companies may also see a freeze or a cut to corporation tax in order to create goodwill. Finally, there is speculation we could see a return of the stamp duty holiday to stimulate property sales, as transaction numbers have fallen due to high mortgage rates.
If you would like to know how the Renters’ Reform Bill and the Autumn Statement may affect your landlord activity, get in touch with our team for clarification.
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