Major changes to Section 21 coming our way - ALL landlords & Letting Agents need to read this. | Discuss

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Major changes to Section 21 coming our way - ALL landlords & Letting Agents need to read this.
07/02/2015
5:21 pm
Mary Latham
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THIS DISCUSSION IS SPONSORED BY 

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 To protect yourself from rent arrears, property damage and cost of eviction CLICK HERE

Details of amendments to the Deregulation Bill which are due to go to committee on 11th February have been published.HERE

For those who do not want to spend time reading it I will summarise the implications.

There are several amendments that will have an impact on a landlords ability to recover possession of his property from a tenant on a Section 21 Notice.

  • The much heralded protection fromretaliatory eviction”, where landlords serve Section 21 Notice on tenants who have complained about disrepair, is of course included and will prevent that small minority of landlords who actually do this. It will, however, affect landlords who would never do this and give naughty tenants a new stick to beat us with. I would be more comfortable if the legislation included a provision that only tenants who had paid all the rent that was due at time that the “disrepair” was reported were entitled to use this legislation. This is not the case and therefore we can expect tenants who are in arrears to make a complaint about disrepair to stop us from evicting them on a Section 21 Notice and force us to use Section 8 which includes court proceedings, delays and additional costs.
  • The time of service of a Section 21 Notice has now become more important. While we no longer need to worry about making a mistake on the date we require the tenant to move out, we must now take account of the timescales where we are prevented from serving the Notice and the requirements to ensure that we have complied with the minute details of ALL legislation before we serve a Section 21 Notice. My experience is that many landlords and some letting agents do not know all of the legislation and often slip up – this lack of knowledge will become more dangerous if these amendments are put into this legislation, I am a quite certain that they will, and the use of Section 21 may well become a thing of the past.
  • If we are forced to use Section 8 more often the courts will be under more pressure and delays in getting our case into court will increase which will mean that we are stuck with bad tenants for longer and that the rent arrears and cost of potential property damages will increase.
  • any rent that has already been paid for a time when the tenant no longer lives in the property, following the service of a Section 21 Notice, must be repaid to the tenant unless the tenant has continued to live in the property for more than one whole day of that period. Therefore if a tenant who has paid his rent decides to leave when he receives the Notice, despite being given 2 months as is required by law, the landlord must refund the rent payment. 
  • At the moment a Section 21 Notice is invalid if it is served before the tenants deposit has been protected and the tenant has been provided with the correct documents prescribe in deposit protection legislation. These proposals are additional requirements for the landlord to comply with other legislation in order to serve a valid Section 21 Notice. They mainly relate to the condition of the property and was expected but there a new one and relates to the energy efficiency of the property and the Energy Performance Certificate (EPC).
  •  a new prescribed Form will be issued for use when a Section 21 Notice is served – this will be similar to serving a Section 8 Notice there will also be prescribed information that we must serve.
  • A Section 21 will not be valid if it is served earlier that 4 months into the first tenancy – no more serving at sign up
  • When this legislation is introduced it will not apply to existing tenancies but 3 years later is will apply to ALL tenancies including those which were in place before its commencement.

In my opinion this is the end of Section 21 for landlords and letting agents and when we have to use a Section 8 it will cost much more as discussed HERE

See also 

Section 21 or Section 8? A simple video guide to Section 21

With the county Courts in turmoil how long is it taking to engage a County Court Bailiff

Government can forget this

New report calls for more institutional investment in property to rent – but will they supply affordable homes?

The best way to avoid having evict a tenant is not to take a bad tenant in the first place and with all these changes I certainly do not relish having to remove a bad tenant in future WE ALL NEED TO JOIN THIS SITE TO AVOID TAKING BAD TENANTS – ITS FREE CLICK HERE

And we ALL NEED RENT GUARANTEE INSURANCE WHICH INCLUDES LEGAL COSTS OF EVICTION – £110 a year is a very small price to pay to secure our income FOR DETAILS CLICK HERE

Follow me on Twitter @landlordtweets

07/02/2015
6:06 pm
David Price
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Mary we will all have to be much more careful in selecting tenants and this will result in less LHA tenants being housed and inevitably more homelessness.  The tenants I usually house have no support network, no family support and no money.  I only take them because it is relatively easy to get them out when things go wrong.  They have no family to house them when things go wrong and it is these people who will be homeless.

How is a landlord supposed to deal with antisocial behaviour when eviction is so difficult?  I could go on but we are all aware of the pitfalls of this threatened legislation, and I use the word threatened deliberately rather than proposed.  I said we are all aware and that was an approximation to the truth, there are 600 or so who are either not aware, oblivious or stupid.

This WILL result in rents being collected with a baseball bat (present posters excepted).

My rant is finished for this entry but it is far from over.

07/02/2015
7:47 pm
Paul Barrett
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If this stupid legislation is introduced then we will see lots more LL bankrupted!!

LL will have to have a larger contingency fund per property per tenancy.

So last year there were 38000 LL repossessed and 138000 tenants evicted due to rent arrears.

So this will mean about 200000 tenants evicted for rent arrears and about 60000 LL repossessed  a year after the new legislation is introduced.

It will provide a fantastic opportunity for wrongun tenants to game the system at LL expense.

Many tenants will use it to live for free before moving onto the next mug LL.

Tenants will just pay the advance rent and then stop paying rent the following month.

They will be able to live rent free for about a year and and a half

RGI will be even more important for LL who do NOT have the resources to cover long eviction periods.

Any properties where a tenant can easily cite disrepair to prevent eviction will mean these properties have to be improved or sold.

With impending EPC and this S21 legislation and possibly rent controls means that for many L their properties will NOT be worth investing in.

This will affect tenants in poorer areas and mean less rental property will be available  which could possibly increase rents!!

All in all very bad news and probably devastating for PRS LL and tenants alike.

Mortgage lenders may well introduce stricter tenant type requirements.

If a LL can’t pay the mortgage the lender will wish to repossess ASAP ; but will be prevented from doing so quickly if disrepair is cited.

Lenders may even have condition requirements for mortgaged properties to ensure as best as possible that disrepair cannot be cited to delay eviction.

Lenders may also require confirmation that the tenant is NOT on HB as per mortgage conditions.

HB tenants tend to be the ones that cause rent arrears problems.

Tenants and LL will be in for a rude awakening when the  mortgage lenders start enforcing their conditions!!!

08/02/2015
1:44 pm
Jo
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David Price said
Mary we will all have to be much more careful in selecting tenants and this will result in less LHA tenants being housed and inevitably more homelessness.  The tenants I usually house have no support network, no family support and no money.  I only take them because it is relatively easy to get them out when things go wrong.  They have no family to house them when things go wrong and it is these people who will be homeless.

How is a landlord supposed to deal with antisocial behaviour when eviction is so difficult?  I could go on but we are all aware of the pitfalls of this threatened legislation, and I use the word threatened deliberately rather than proposed.  I said we are all aware and that was an approximation to the truth, there are 600 or so who are either not aware, oblivious or stupid.

This WILL result in rents being collected with a baseball bat (present posters excepted).

My rant is finished for this entry but it is far from over.

The new  legislation for ASB provides the section 8 with A mandatory ground for ASB

Alternative to s8 proceedings within the fixed term period can apply in 5 circumstances:

The tenant, household member or visitor has been convicted of a specified crime

The tenant, household member or visitor has an ASB injunction which has been breached

The tenant, household member or visitor has a Criminal Behaviour Order which has been breached

Closure Order at property

Breach of an Environmental Act Power

The 19 different methods that could used to prove civil ASB have been reduced to 6 which tackle all areas and make the opportunity for eviction easier. Although the section 21 may not be available to us it may be that these changes can assist with faster removal but will still be subject to the judges’ understanding.

I agree with David that the more legislation that is introduced the harder it will be for some individuals to find homes.

http://www.slcng.org.uk I heard Janine Green from Resolve ASB (formally slcng) speak this week and it was enlightening…

08/02/2015
2:16 pm
LyndonBaker
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Mary Latham said

  • any rent that has already been paid for a time when the tenant no longer lives in the property, following the service of a Section 21 Notice, must be repaid to the tenant unless the tenant has continued to live in the property for more than one whole day of that period. Therefore if a tenant who has paid his rent decides to leave when he receives the Notice, despite being given 2 months as is required by law, the landlord must refund the rent payment.

Mary, I may have my thick head on today. Wink

Does this mean that if a tenant pays one month’s rent in advance on say, 1st March, is given notice on 2nd March and moves out on 3rd March they get 28 days rent back?

08/02/2015
2:33 pm
Mary Latham
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No Lyndon it means that if we serve a Section 21 on 1st March and the tenant has already paid on 1st March but moves out later than day we must repay the rent. I think this unlikely but where some landlords and agents take 2 months up front – often called the first and last months rent and the tenant moves out having been served Section 21 2 months before the tenancy is due to end we must repay the rent. This quite a common practice and one which will catch out landlords and letting agents.

Another common practice is taking more advance rent – often up to 6 months  – where a tenant has poor credit rating or no references

The new legislation prevents us serving before month 4 of the first fixed term and therefore this is a double whammy.

Mary Latham Landlord

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08/02/2015
2:39 pm
ecuttle
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There are many landlords and letting agents who will need to make big changes to their normal practice when this legislation comes into force – yes I said when not if because with an election coming up no PM is going to vote against these changes and I only hope that they don’t add any more.

Yes -Deregulation now has a whole new meaning it seems!!

08/02/2015
2:56 pm
LyndonBaker
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Mary Latham said
No Lyndon it means that if we serve a Section 21 on 1st March and the tenant has already paid on 1st March but moves out later than day we must repay the rent. I think this unlikely but where some landlords and agents take 2 months up front – often called the first and last months rent and the tenant moves out having been served Section 21 2 months before the tenancy is due to end we must repay the rent. This quite a common practice and one which will catch out landlords and letting agents.

Another common practice is taking more advance rent – often up to 6 months  – where a tenant has poor credit rating or no references

The new legislation prevents us serving before month 4 of the first fixed term and therefore this is a double whammy.

Mary Latham Landlord

So effectively once a tenant receives a Section 21, they can move out and claim back any rent paid for the rest of the month, despite the AST insisting rent is paid in advance?

There will be a lot more landlords giving up if that happens.

08/02/2015
3:17 pm
Mary Latham
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Lyndon only if they move out before day one of the rent period expires – so not quite so bad and they would need to have somewhere to move to of course and that is not easy to achieve in a day.  It will work for tenants who want to move out before the tenancy ends if a landlord serves a Section 21

Mary Latham Landlord

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08/02/2015
7:42 pm
David Price
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I have been thinking about this and not being able to serve a section 21 during the first four months of a tenancy effectively means that the tenant has a secure tenancy for seven months, for it will be very difficult to get the timing exactly right for an eviction at the end of six months.  Only if the section 21 is served personally on the day before payment day at the end of month four will a six month eviction be possible and even then it will not work if that day falls on a weekend or bank holiday.  It may even be construed that the notice was served one day early and is therefore invalid.  I know that there has been recent case law which removes the need for notice to end on a payment day but I would not risk that in court until it has become a well established principle.

Make it too difficult and eviction by baseball bat will become the norm (as I said before, present posters excepted).

08/02/2015
8:29 pm
LyndonBaker
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Spot on David.

Politicians really do not have a clue. Life is difficult enough as it is. I currently house a single mother and her son. She works long hours to pay for her and her son. I also house a non-typical student – he is now in his third year of a tenancy that started as a six month AST – up yours Shelter! – plus a couple who initially wanted a six month term and are now in month eight! The final property is up for sale or rent and I really will not shed a tear if it is sold.

If this bill gets passed then we will have to take a decision and it could mean three or four homes lost to the private rented sector. On the plus side, Shelter, Generation Rent and the Labour party will carry on oblivious! Yell

08/02/2015
9:26 pm
alex J
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I am speechless about this bill.!!  

I had a tenant miss two months rent.  She had been a  very good tenant for over two years and it was circumstances, huge utility bill and losing her job that resulted in unpaid bills and rent. 

I decided to issue a S21 because it would be quicker . Because i missed her rent date,  the automatically generated S21 gave her 3 months before she had to move out. If she was to dig her heels in i would lose a lot of months rent. I then decided not to give her a S21

The tenant  had a really good credit score and decided to move out when i explained what the implications to her credit score and references etc would be if i had to go to court. She has a good family behind her and they will house her. I was very reluctant to lose her but cannot keep a property on with no rent.

I really despair what this will do to small landlords . 

09/02/2015
2:09 pm
ringi
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At least now any tenant that gets a S21 notice should know it means something, unlike all the “just in case” notices that are given out at the start of tenancies.      But I think a S21 should be able to be served after 3.5 months, rather then 4, as otherwise if the post arrives too quickly…

Repaying the rent (paid in advance) if a tenant moves out quickly when they get a S21 is not an issue, as we should only use them when we wish the tenant to leave.   This is really just what must be done, so that the same amendment can remove the need for a S21 notice to end on a “magic date”.   (May don’t landlords also spot the good bit in the amendment…)

09/02/2015
2:11 pm
ringi
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David Price said
I know that there has been recent case law which removes the need for notice to end on a payment day but I would not risk that in court until it has become a well established principle.

This is covered in the new law, so there will never be a requirement for a S21 to end on a payment day, there will also be a standard format for the S21 notice.    Hopefully the “saving text” will still be allowed.

09/02/2015
3:20 pm
Paul Routledge
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I say to all our members that even if they have a new tenant or an old tenant things can go wrong and that is exactly why a RGI, legal expense and property damage recovery policy at just £100 a year is a very good bet in such a volatile market.

RENT SAFE UK KEEPS YOUR RENT SAFE FOR JUST £100 FOR THE WHOLE YEAR (Click)

09/02/2015
4:10 pm
girltalk
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I am really worried about all this and I haven’t got Rent Guarantee Insurance on my tenants what can I do?

09/02/2015
4:28 pm
Paul Routledge
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You can take out retrospective RGI insurance as long as the referencing you carried out at the beginning is 100% and the tenant’s status is that they are still a good tenant. Please do not try and take out the insurance if the tenant is in arrears or already a problem as the insurers will not pay out.

The only difference with the retrospective insurance is that they will not pay the claim for the first three months.

If you want anymore details please call me on 0800 9994 994

09/02/2015
4:30 pm
girltalk
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Thats great Paul but I am not sure how the referencing was done because a letting agent do it when they found my tenants. Can I reference them again with you?

09/02/2015
4:41 pm
Paul Routledge
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You could ask you letting agent for the references but they may not be able to provide you with the proofs and just a pass report from another referencing company as unlike us they may not archive the originals for you.

However if that is the case you can carry out the whole process with us and if you just explain to your tenant that you need a up to date references for your insurance they will probably be fine. I did it to 28 of my tenants and the only one that complained was the one who was being bankrupted so I could not get the insurance but it was nice to have his up to date status anyway. He has always paid so I never issued a section 21 I suppose I will just keep my fingers crossed on that one..

09/02/2015
8:36 pm
LyndonBaker
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Paul, there is NO excuse for the agent not revealing this information to their CLIENT landlord.

If they try quoting DPA* they should be asked which part of the Act they are hiding behind and advised that their CLIENT landlord will be making a formal complain to the ICO**.

 

DPA= Data Protection Act

ICO= Information Commissioner’s Office

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