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Section 21 Ban


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What’s everyone thoughts and plans with this future implementation of the politically motivated Section 21? 

I have always provided good property and service to my happy tenants but personally I am selling up- selling 1 shortly to be empty property, the tenant has decided not to renew (perfect timing), and undecided a second. The second property, the tenants have only just signed and renewed the contract for further 12 month. They are good long term tenants that love the property, and are very keen to remain long term- the question is do I carry on with them or cancel the contract ( not sure of the process most probably S21? as the new contract is just signed but doesn’t start until June??) if I allow them to stay and S21 ban is in force the tenants may never want to leave, refuse and the thought of having to take them court if I decide to sell next year would be ridiculous. Do I take control of my assets now or take the risk, I’m sure I am not only landlord in this position today- I need to think this one through and reassess but in short I want control of my hard earned money before this BTL business becomes even riskier and I lose control of my savings- tired and sick of this rubbish government strangling us landlords. 

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If we follow the changes made in Scotland, wanting to sell your property is likely to be one of the reasons you can use to get your property back. To my mind selling now before we even know what's going to happen is a bit short sighted. If you have good tenants I would keep them & enjoy the income - you will always be able to sell the property even if it is with its current occupiers.

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It's hard to see what's going to happen longer term when the ban/restriction comes in, as suggestion is that Section 8 will need to be improved. If we end up in a situation where you couldn't remove a tenant if you wanted to sell, the properties would be unmortgageable, so the whole sector will collapse and millions will be homeless.

I'mtherefore ignoring some of the things being mentioned in the press or by spokespeople for renters who seem to be labelling all landlords as scum - good luck finding a house if we were to all leave the sector! There seems to be some idea that we're stopping people buying houses, which certainly isn't the case outside the SE and probably isn't in it either. My last purchase was of a house which had been on the market for a number of months and came with a tenant who'd lived there for a few years and continues to live there - if they wanted to buy it, they had plenty of chance to but, for whatever reason, chose not to. They're great tenants, enjoying rent that's below the market value, but I know they'll stay fairly long term, so why upset them (other than I can, because I'm a landlord and we just kick people out for a laugh,). 

I think some of this is the increased professionalisation of the sector, to assist the big pension companies doing build to let. They won't want the sort of yields a private landlord will accept, so they need the cheap landlords out. If there remains no easy way to remove a tenant who just stops paying, and only a limited deposit, then the solution is rent guarantee insurance. Comes as an additional cost, but if everyone is doing it, then rents will creep up anyway. Problem is that tenants with poor credit records or other issues won't pass the checks for the insurance, so they're going to struggle to rent privately, but the government will sort that out with all the social housing it's building...

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Govt statistics say tenants stay on average just over 4 years & 90% of tenancies are ended by the tenant. Section 21 is usually served for a reason - late rent, ASB etc - because it is easier than a section 8.

I don't think we should over react until we see what the whole picture is. Tenants are still going to need rent & the market needs LL. The bottom end of the market may struggle - so aim for good quality accommodation & do due diligence before taking on new tenants.

I'm staying in!

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Absolutely the property can be reclaimed to sell at the end of the fixed term with a business case, but how easily? We won’t know until the policies are fixed.

It is a shame as the last thing I wanted to do was to sell tbh but I can reinvest the capital in a commercial holiday let business which now seems a safer business, less risk and more control. I may leave the second BTL tenanted, leave one foot in and the other out and see what happens when all changes are in force, but better not to have all my eggs invested in one shaky basket!  Who knows maybe next thing will be rent caps to control the rent rises or even Right to buy!   

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I was considering this thought process on behalf of the Government:

(a few years ago....)

Govt - "Hmmmm, what can we do to make sure landlords look after their houses better - I know, we'll introduce better powers for local authorities to enforce standards...."

(then they cut massive chunks out of local authorities, and introduce a fairly labour intensive enforcement regime.

Govt - "Hmmm, now landlords evict tenants as soon as they contact the local authority.... how can we stop this?... I know - we'll introduce protection from eviction so that landlords can't evict people after they have complained to the local authority about them"

(they introduce protection from eviction where the LA serves an enforcement notice, and make a few more cuts to local authority)

Govt - "Hmmm, local authorities aren't serving many enforcement notices, and landlords are still evicting their tenants after they complain to local authority... what else can we do? Maybe we can give powers to the tenants to take action themselves"

(they introduce the Homes act, enabling tenants to sue landlords directly using hhsrs, and make a few more cuts to local authority)

Govt - "oh, landlords can still kick out their tenants after they try to sue them, because its not covered by protection from eviction, how can we stop this?"

(they introduce the S21 ban)

Govt - "ah yes, perfect, now tenants can sue their landlords with impunity, and probably even get repairs done themselves and take the money out of their rent, and their landlord won't be able to do anything about it without a court hearing... sorted!".

 

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For Beanie - I think the bottom end of the market will be more affected because tenants without good references & credit will find it harder to rent if LLs are concerned about being stuck with a tenant they can't get rid of. Those tenants on HB or with CCJs may find less property available to them as LLs opt to rent to tenants who can prove they will be able to pay their rent. Good quality properties will command a higher price & only be available to tenants with sound finances.

Couple this with a reduced availability of property as some LLs decide to leave the market and I believe the bottom end of the market may be a difficult place to be for LLs & tenants alike.

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