Unprecedented Number of Section 21 Notices Shaping the Lettings Market, Says Dutton Gregory
The looming threat of the abolition of Section 21 is raising questions over the future shape of the UK’s rental market. National law firm Dutton Gregory Solicitors fears the change is already deterring swathes of private landlords, with Build to Rent giants coming out on top.
Dutton Gregory’s Landlord and Tenant department is processing an unprecedented number of Section 21 notices, which have been issued to tenants since the announcement of the planned abolishment. The Ministry of Justice also recently reported that no fault evictions were up by 15.8% in the three months to March.* The Hampshire-headquartered law firm notes that this workload increase could be due to fear and uncertainty felt by private landlords.
A Section 21 notice, commonly known as a ‘no fault’ eviction notice, allows landlords to evict tenants without declaring a reason. This is currently carried out through the accelerated possession process and does not generally require a hearing to be listed by the courts. It gives landlords an automatic right to regain their property and an order can be obtained in a matter of 6-8 weeks in most courts outside of London. As a result of the proposed abolition, the Government has said the grounds of Section 8 will now be strengthened, to allow landlords to recover their property. However, this hasn’t offered peace of mind to many buy-to-let owners.
Gina Peters, Head of Landlord and Tenant at Dutton Gregory Solicitors, said: “Our increase in workload hasn’t gone unnoticed, and we feel many private landlords are now suddenly serving Section 21 notices as a safety precaution. The current socio-economic situation has seen inflation, mortgages, and interest rates sore, which is having a knock-on effect on housing stock and forcing rental payments to go up. This has left many landlords in a tricky position, as they want to retain their property and make a profit, but fear they could potentially go for months without receiving rent if a tenant defaulted. Many would now rather serve a notice – while they still can – with the intention of selling their property and exiting the rental market.
“The proposed Section 8 grounds on paper give landlords the ability to get their property back, however, any court claim for possession will require a court hearing, without the possibility of just the presentation of paperwork. This could see the whole process take significantly longer - months, rather than weeks.
“The length of the notice for rent arrears is due to increase from two weeks to four, which means a landlord could experience rent not being paid for an even longer period. The Civil Procedure Rules currently provide for all possession claims to be listed for hearing within eight weeks, though this was suspended during the pandemic and has never recovered in certain courts. As the court infrastructure currently stands, the system would not be able to cope with the influx of increased numbers of possession hearings, as listing in all courts is at a premium. I fear the inherent delays with Section 8 could bring about the significant decline of the private rental market.
“Inflation rates may continue to rise further, and we could see the private rental market turning extremely corporate, with national Build to Rent companies benefiting from economies of scale. Zoopla reported in June 2023 that 11% of homes listed for sale on the site were previously rented out.* With less rental properties available – as a result of private landlords selling up – the demand from tenants will continue to soar, allowing Build to Rent to triumph. This will change the rental landscape enormously.
“The Landlord and Tenant team at Dutton Gregory Solicitors has also seen far fewer private landlords expanding their portfolios this year. Furthermore, some tenants being served a Section 21 notice are not actually able to vacate the property in a timely fashion, due to the lack of affordable alternatives, which continues to put pressure on the courts and increase costs for landlords. Much more needs to be done to help improve the waiting times at court to eradicate lengthy delays and give private landlords an increased sense of security and surety.
“The Renters Reform Bill is expected to come into play at the end of next year at the earliest, but with a General Election anticipated for May 2024, this intended abolition is already skewing the rental market.”
Dutton Gregory Solicitors is a full-service legal firm for private and corporate clients. The multi-award-winning practice has offices in Bournemouth, Chandler’s Ford, Poole, Liverpool, London, Winchester, and Woking.