Half of landlords likely to leave private rented sector

Michael Lloyd

May 22, 2019

reopening housing market

Nearly half (46%) of landlords and letting agents are more likely to remove some or all of their investment in the private rented sector according to new research by the Residential Landlords Association (RLA).

These findings are seen as a result of government’s plans to end of Section 21 repossessions, under which landlords can repossess properties on grounds such as rent arrears or anti-social behaviour.

David Smith, policy director for the Residential Landlords Association, said: “With the demand for private rented housing showing no signs of slowing down it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances.

“Whilst the system should clearly be fair to tenants, it needs also to support and encourage good landlords.”

Of those landlords with experience of Section 21 repossessions, 79% did not consider the courts to be reliable and most (91%) supported the establishment of a special housing court.

The research also found that over 40% of landlords are waiting for other planned changes by the government to become clearer before they make decisions on their ability to provide homes to rent.

Smith added: “Our survey shows how complex it will be to ensure that the grounds on which landlords can repossess properties are both clear and comprehensive.

“This needs to be underpinned by a court system that is fit for purpose and properly resourced. At present it is neither.

“It is vital that the government’s planned reforms are carefully considered to avoid finding ourselves needing to reopen this whole issue later down the line.”

This research comes after the Royal Institution of Chartered Surveyors warned of private rents increasing by an average of 3% a year over the next five years as a result of landlords being less prepared to rent property whilst demand from prospective tenants increases.

Mark Pilling, managing director at Spicerhaart Corporate Sales, added: “Whilst I understand the reasons for scrapping section 21, I fear it could exacerbate the problem, already being felt in the private rented sector.

“The truth is, there is always a reason why a landlord ends a tenancy – and in our experience, the reasons for a section 21 are usually due to the fact that the landlord wishes to the sell the property, and also potentially due to the fact that the tenants have missed rent, they are late on rent or they are not treating the house well.

“Where tenants are being evicted through no fault of their own but rather because of their landlords’ circumstances, it must be very upsetting for them, but if landlords themselves are having financial difficulties, scrapping section 21 could leave them trapped. Their lender then may have no choice but to appoint a receiver or ultimately repossess the property which puts the tenant in an even worse situation.

“The UK has a housing crisis, so the private rented sector is more important than ever and with the tax changes a number of landlords are leaving the sector. By scrapping section 21 you could deter landlords even further, and that is not a good situation to be in.”

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