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Farewell Section 21???

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AleisterCrowley
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Farewell Section 21???

#215095

Postby AleisterCrowley » April 15th, 2019, 9:07 am

https://www.bbc.co.uk/news/uk-47927706
"Private landlords will no longer be able to evict tenants at short notice without good reason under new government plans.
The change is intended to protect renters from "unethical" landlords and give them more long-term security.
Section 21 notices allow landlords to evict renters without a reason at the end of their fixed-term tenancy.
"

May be 'a good thing' in some cases, but what's to stop landlords doubling the rent to get tenants out?

monabri
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Re: Farewell Section 21???

#215114

Postby monabri » April 15th, 2019, 10:19 am

As far as I understand it....

After the tenancy agreement comes to an end and the tenant goes on to a rolling monthly basis , a landlord can only increase rents once per year and by a fair and reasonable amount. Fair and reasonable might be determined by looking at rents of similar properties in the area.
So, doubling a rent would not be possible ( assuming that the current rental was fair and reasonable).

Now, if there was sufficient social housing ...

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Re: Farewell Section 21???

#215119

Postby AsleepInYorkshire » April 15th, 2019, 10:26 am

AleisterCrowley wrote:https://www.bbc.co.uk/news/uk-47927706
"Private landlords will no longer be able to evict tenants at short notice without good reason under new government plans.
The change is intended to protect renters from "unethical" landlords and give them more long-term security.
Section 21 notices allow landlords to evict renters without a reason at the end of their fixed-term tenancy.
"

May be 'a good thing' in some cases, but what's to stop landlords doubling the rent to get tenants out?


https://www.bbc.co.uk/news/business-44041999

Lootman
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Re: Farewell Section 21???

#215126

Postby Lootman » April 15th, 2019, 10:41 am

monabri wrote:As far as I understand it....

After the tenancy agreement comes to an end and the tenant goes on to a rolling monthly basis , a landlord can only increase rents once per year and by a fair and reasonable amount. Fair and reasonable might be determined by looking at rents of similar properties in the area.
So, doubling a rent would not be possible ( assuming that the current rental was fair and reasonable).

Now, if there was sufficient social housing ...

Yes, I believe it has always been the case that an "unreasonable" rent increase can be regarded as a "constructive eviction" and therefore subject to legal challenge.

What is interesting is whether it is the percentage increase itself that is considered unreasonable or the new rent. Clearly if the rent was low before then a relatively high percentage rent increase could still leave the rent at market and therefore OK. But I don't know for certain.

There seems to be a trend these days, even with the Tories, to be seen to be doing something for tenants. The problem is that the "something" in most cases is more about punishing landlords than helping tenants (stamp duty changes, the removal of the ability to deduct mortgage interest from rents for tax purposes, and now attacking the ability of an owner to reclaim vacant possession of his properties).

Whether it makes sense to deter owners of housing units from renting them out long-term is a genuine concern. If I still owned my units now I'd probably convert them to Airbnb units rather than deal with this. I feel more sorry for my sons who are both already BTL landlords. But they are resourceful and will find ways around these ideological gestures.

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Re: Farewell Section 21???

#215163

Postby forgotusername » April 15th, 2019, 1:11 pm

I agree that it's fair to remove the option for a landlord to unreasonably evict a good tenant. By "good" I mean someone who abides by the terms of their tenancy. My, somewhat limited experience of being a landlord has shown how "bad" tenants exploit the law at the expense of the landlord. My son had tenants who paid the first month's rent and then stopped. They knew how limited his courses of action were and strung out their free accommodation for another 5 months.

I had a tenant who had been properly given notice because I needed to and had agreed to sell the property. He did not leave so was subject to a possession order but ignored this too. Finally he was evicted by the court after seven months. At each step the court took time to act then gave the tenant a period of grace before action. In conversation with my solicitor, my tenant revealed he wanted to be evicted so he could qualify for council accommodation having been advised by the council not to leave voluntarily.

Yesterday I learned that a relative has a tenant who hasn't paid rent for three months, won't answer the door, phone or respond to emails. Already £2k in arrears and likely much more to follow before due process removes him.

By all means clamp down on bad landlords but for pity's sake, do something to help landlords deal with bad tenants too.

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Re: Farewell Section 21???

#215454

Postby UncleEbenezer » April 16th, 2019, 4:35 pm

forgotusername wrote:I agree that it's fair to remove the option for a landlord to unreasonably evict a good tenant.

Who decides "unreasonably" there? Noone should be evicted from their home without good reason. And someone threatened with eviction needs to have recourse to a court or other independent arbitration.
By "good" I mean someone who abides by the terms of their tenancy. My, somewhat limited experience of being a landlord has shown how "bad" tenants exploit the law at the expense of the landlord. My son had tenants who paid the first month's rent and then stopped. They knew how limited his courses of action were and strung out their free accommodation for another 5 months.

My landlord had a tenant like that before me. So he knows he's onto a good thing with a tenant who pays the rent, gets on with the neighbours, etc.
I had a tenant who had been properly given notice because I needed to and had agreed to sell the property.

Now that's the kind of abusive practice they should indeed stop. If you need to sell the property, you sell to another landlord (or to your tenant, if interested). If you have a problem with that, you're not fit to be a landlord.
He did not leave so was subject to a possession order but ignored this too. Finally he was evicted by the court after seven months. At each step the court took time to act then gave the tenant a period of grace before action. In conversation with my solicitor, my tenant revealed he wanted to be evicted so he could qualify for council accommodation having been advised by the council not to leave voluntarily.

Yeah. There was at least one time in my life I should've done that.
Yesterday I learned that a relative has a tenant who hasn't paid rent for three months, won't answer the door, phone or respond to emails. Already £2k in arrears and likely much more to follow before due process removes him.

Now that's the kind of case where landlords should have an expedited process. But not Section 21: an improved process for Section 8 eviction protects both sides.
By all means clamp down on bad landlords but for pity's sake, do something to help landlords deal with bad tenants too.

That's exactly what they claim to be doing. Better late then never - if it ever happens.

Section 21 - or something like it - was needed 30 years ago to kick-start a totally moribund market. But it should have been abolished 20 years ago, when BTL was clearly becoming a racket.

From distant memory, there was a separate provision to reclaim a house when it's the landlord's own residence they've let while away from home for an extended period. It required the landlord to give notice (in advance of the tenancy) that it was his own home, and offered no advantages for the landlord over Section 21, so fell into disuse. But resurrecting it - including crucially the advance notice - should do nicely for the only case where a landlord should legitimately be able to evict a good tenant.

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Re: Farewell Section 21???

#215464

Postby James » April 16th, 2019, 5:32 pm

UncleEbenezer wrote:Now that's the kind of abusive practice they should indeed stop. If you need to sell the property, you sell to another landlord (or to your tenant, if interested). If you have a problem with that, you're not fit to be a landlord.


Er, why? You're presuming an static market of BTL, where rental property can only be sold to another landlord. And if the supply is higher than demand? Good for the new landlord who can undercut a potential buy-to-live buyer because they cannot buy it. It just pushes down the price for prospective landlords and does nothing to help housing demand. Command economies don't usually end well.
Last edited by tjh290633 on April 16th, 2019, 6:13 pm, edited 1 time in total.
Reason: Tags corrected - TJH

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Re: Farewell Section 21???

#215483

Postby scrumpyjack » April 16th, 2019, 6:36 pm

and if a Conservative government is removing the right of a landlord to his own property without having to go to court, just think what it will be like under Labour.

Of course there are more tenant voters than landlords so you can guess how it will go. Fairness doesn't come into it

I'm not a landlord, nor a tenant, so I have no prejudice on this

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Re: Farewell Section 21???

#215488

Postby GoSeigen » April 16th, 2019, 6:49 pm

Let me rearrange that for you:

scrumpyjack wrote:I have no prejudice on this: if a Conservative government is removing the right of a landlord to his own property without having to go to court, just think what it will be like under Labour.


Yeah right, no prejudice at all!

If the Cons have a stupidarse policy you cannot excuse it by saying it might hypothetically be less rubbish than someone else's.

IMV there is not much wrong with the current system, apart from being difficult to understand. Why fix something that is not broken?


Of course there are more tenant voters than landlords so you can guess how it will go. Fairness doesn't come into it


Here I agree: the Tories are simply trying to get cheap votes: landlords will vote for them anyway, using the Scrumpyjack Defence; and they hope to pick up a few cheap tenant votes. Pretty pathetic really.


GS

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Re: Farewell Section 21???

#215491

Postby scrumpyjack » April 16th, 2019, 6:53 pm

Well it is hardly 'prejudiced' to expect Labour to be harder on landlords than the conservatives would be.

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Re: Farewell Section 21???

#215492

Postby Lootman » April 16th, 2019, 6:57 pm

scrumpyjack wrote:Of course there are more tenant voters than landlords so you can guess how it will go. Fairness doesn't come into it.

I'm not a landlord, nor a tenant, so I have no prejudice on this

In theory anyone who owns a property should be opposed to more control over rents or evictions because, even if they live in their only property, they may in the future wish to rent it out.

But of course BTL LLs have become a class of people to blame for everything wrong with housing, even though they are primary and prolific providers of housing. It makes no sense to me to try and punish and deter those who make housing available.

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Re: Farewell Section 21???

#215508

Postby GoSeigen » April 16th, 2019, 8:57 pm

scrumpyjack wrote:Well it is hardly 'prejudiced' to expect Labour to be harder on landlords than the conservatives would be.


The tories have proved themselves inept at practically everything they've touched. Yet you still think they will do better than Labour. That is prejudice if ever I saw it, ignoring the evidence of nine years of cock-up. And that's from me, a natural Tory voter.


GS

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Re: Farewell Section 21???

#215531

Postby JonE » April 16th, 2019, 11:07 pm

scrumpyjack wrote: removing the right of a landlord to his own property without having to go to court

The landlord doesn't have a right to take possession of his property without 'going to court'. Only a court can order the occupier to surrender possession. Actually achieving possession can be another matter.

Grounds for possession may be mandatory (where the court must order possession if all conditions are satisfied) or discretionary and are listed in the 2nd Schedule to the Act (published online - which enables fact-checking):
http://www.legislation.gov.uk/ukpga/1988/50/schedule/2

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Re: Farewell Section 21???

#215549

Postby BBLSP1 » April 17th, 2019, 6:38 am

JonE wrote: Only a court can order the occupier to surrender possession.


So what is the point of a six month assured shorthold tenancy (AST) if the occupier is not expected to leave at the end of it (unless there is mutual agreement for renewal)? Are ASTs now history?

From another angle, I’m sure many Landlords would be more than happy to agree much longer tenancy contracts – but what then if the occupier wants to move out before the end of the tenancy (and can’t find a replacement tenant)? It works both ways!

As a landlord, with a good tenant, the longer they stay the better as far as I am concerned. The best I’ve had were four Latvians who were working every hour available. The worst, an Irish guy who had a cannabis farm going and did a runner just before the police raided the place. No end of trouble and costs sorting that one out.

I’m concerned because, after having worked abroad for over 20 years, I expect to return to the UK in the next couple of years and I will need the property, or the sale proceeds, so as to have somewhere to live.

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Re: Farewell Section 21???

#215614

Postby JonE » April 17th, 2019, 11:20 am

BBLSP1 wrote:
JonE wrote: Only a court can order the occupier to surrender possession.


So what is the point of a six month assured shorthold tenancy (AST) if the occupier is not expected to leave at the end of it (unless there is mutual agreement for renewal)? Are ASTs now history?


This has always been the case with ASTs. There may be an expectation that the tenant will leave but so what? The tenant can just walk away at the end of the fixed period of the agreement while the landlord can serve the necessary notice at/by the required time that possession is required at the end of the fixed term (or subsequently). Usually tenants agree to vacate but there are a few members of the awkward squad who will stay in occupation until the court order eventually leaves them no real option. As already noted, some will have been advised that they would have made themselves 'intentionally homeless' if they vacate without the process having gone all the way to a court order.

BBLSP1 wrote:From another angle, I’m sure many Landlords would be more than happy to agree much longer tenancy contracts

The S in AST stands for 'shorthold' and extra rules apply if the initial agreement is for more than 3 years with another set of rules coming into play if the agreement is for 7 years or more. I used to offer new tenants the choice of 6 or 12 months initial terms so they had the option of flexibility if they might need to relocate soon or a bit more security if they preferred that. I agreed to the tenancy of one couple ending after 4 months when a relationship breakdown happened while another tenant stayed for over 12 years on a rolling SPT until buying her own place.

BBLSP1 wrote:I’m concerned because, after having worked abroad for over 20 years, I expect to return to the UK in the next couple of years and I will need the property, or the sale proceeds, so as to have somewhere to live.

Assuming you are non-resident in UK for tax purposes, you should investigate the CGT (or equivalent) laws of your country of tax residence as, while still non-resident, you could sell without exposure to UK CGT and, perhaps, with little or no local CGT. Given the likely gains over 20 years or so, the (increasingly) limited availability of Private Residence Relief, the possible end of Lettings Relief for your circumstances and so on (including changes to the area and to your housing needs over time), it may be worth incurring the frictional costs of selling and buying somewhere else to crystallise your gain without a heavy tax burden - do the sums. Just allow sufficient time to ensure you have vacant possession before needing to occupy or to market rather than try to squeeze the last drop of juice from it in the hope everything goes smoothly and tenants are 100% co-operative.

You're probably using a lettings agent so are reliant on them having done a good job for you (as opposed to serving solely their own interests) by having selected responsible, reasonable people as tenants who will discuss and negotiate the terms of their departure with goodwill. I only ever served s21 notice when ceasing BTL activities and wanting vacant possession prior to marketing the properties for sale but also took into account tenants' circumstances to achieve my desired outcome. I agreed upfront to tenants moving out and ceasing to pay rent at a time of their choosing before the expiry of those notices because the market was such that prospective tenants had to give an immediate yes/no decision when viewing: if they saw somewhere they wanted I made it easy for them to grab it immediately without having to pay rent on two places (or only undertake viewings right at the end of the notice period). They all got 5-star references and all went well with goodwill all round and properties left in excellent condition ready for viewings by prospective purchasers.

Cheers!

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Re: Farewell Section 21???

#215621

Postby BBLSP1 » April 17th, 2019, 11:45 am

JonE - Thank-you for your extensive commentary. I fully agree with your comments regarding being reasonable with tenants - Whilst abroad I have also been a renter, so I know both sides, and always made sure I was a good tenant and found that my landlords responded accordingly when it came to repairs etc.

JonE wrote:Assuming you are non-resident in UK for tax purposes, you should investigate the CGT (or equivalent) laws of your country of tax residence as, while still non-resident, you could sell without exposure to UK CGT and, perhaps, with little or no local CGT. Given the likely gains over 20 years or so,


As to cgt - If only that were a problem!!

It's not a large property, but it is a 3 bedroom detached house with small front and rear gardens plus garage at the end of a quiet cul-de-sac. However, it is in Wigan. Bought in 2006 (I was out of the housing market between 1999 and 2006, another of my good moves), I'll be lucky to wash my face with it.

(I'm not so sure non-resident landlords are nowadays exempt on cgt anyway - in fact I think they have to settle their tax within 30 days of completion, not the normal 31 Jan tax deadline, so in some ways it is worse - Anyway, this will not be my problem! https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property)

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Re: Farewell Section 21???

#215645

Postby JonE » April 17th, 2019, 12:51 pm

BBLSP1 wrote:I'm not so sure non-resident landlords are nowadays exempt on cgt anyway


Only the gain since April 2015 is taken into account for NRCGT on residential - and in the areas with which I'm familiar that doesn't amount to much if using the default rebasing option for the computation and any tax due on the gain doesn't amount to much once annual allowance is deducted for each vendor plus the odds are that other UK taxable income hasn't blown HR threshold.

There's a retired 'ex-pat' couple I meet occasionally who retained a property in the UK that had been their home and now split their time between here (where they are both tax-resident) and the UK (whey they submit SA returns) plus another EU country where they also have a residence (which might present some 'freedom of movement' and similar problems in future). They now ensure they retain evidence that their 'holiday home' in the UK is their (joint) PPR for at least 90 days each tax year to qualify it for relief for the full year. There is no CGT here on disposals of real property located elsewhere in the world.

I've idly wondered whether each of them could, independently, be in the UK for less than 90 days (for non-resident purposes if their number of ties alters) but, because a couple can have only one PPR, stagger each individual's arrivals/departures so that at least one of them (but not necessarily both) was resident there throughout a period exceeding 90 days. Not relevant for my circumstances so haven't tried to explore full chapter & verse regarding such a ploy - just a whimsical notion (and probably better on the Taxes or International boards).

Cheers!

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Re: Farewell Section 21???

#215862

Postby brightncheerful » April 18th, 2019, 10:05 am

To quote s22 HA88, "a tenant under an assured shorthold tenancy may make an application in the prescribed form to a rent assessment committee for a determination of the rent which, in the committee’s opinion, the landlord might reasonably be expected to obtain under the assured shorthold tenancy."

That rents rarely are is because tenants fear eviction. Remove the fear and maybe we'll see more challenges?

A move away from 'eviction' for the sake of it is similar to the security afforded to businesses with qualifying tenancies under Landlord and Tenant Act 1954 Part Ii.

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Re: Farewell Section 21???

#215868

Postby brightncheerful » April 18th, 2019, 10:22 am

So what is the point of a six month assured shorthold tenancy (AST) if the occupier is not expected to leave at the end of it (unless there is mutual agreement for renewal)? Are ASTs now history?


Before ASTs and to a lesser extent assured tenancies, in the era of the Rent Acts with controlled and regulated tenancies, the landlord could only get possession under stipulated grounds in the Acts or if the tenant terminated or as was common in those days the landlord paid the tenant to leave. Rents were fixed by the Rent Officer and appeal to the Rent Assessment Committee. Rents could be registered every 3 years or so. The only way for a landlord to get more than the registered rent (which itself was capped and the basis ignored scarcity) was to improve the property.

Generally, rent control and security worked well for landlords and tenants.Things change when capital values increased whereupon it paid landlords to get rid of the tenant so as to sell the property with vacant posssesion.

ASTs were introduced to enable landlords to let residential property safe in the knowledge that at the end of the contractual term the tenant could be required to vacate. By doing away with tenant security of tenure, and to an extent with rent control, landlords were more likely to let than sell, thereby maintaining and increasing the supply of private sector rented accommodation.

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Re: Farewell Section 21???

#215881

Postby GoSeigen » April 18th, 2019, 10:43 am

brightncheerful wrote:
So what is the point of a six month assured shorthold tenancy (AST) if the occupier is not expected to leave at the end of it (unless there is mutual agreement for renewal)? Are ASTs now history?


Before ASTs and to a lesser extent assured tenancies, in the era of the Rent Acts with controlled and regulated tenancies, the landlord could only get possession under stipulated grounds in the Acts or if the tenant terminated or as was common in those days the landlord paid the tenant to leave. Rents were fixed by the Rent Officer and appeal to the Rent Assessment Committee. Rents could be registered every 3 years or so. The only way for a landlord to get more than the registered rent (which itself was capped and the basis ignored scarcity) was to improve the property.

Generally, rent control and security worked well for landlords and tenants.Things change when capital values increased whereupon it paid landlords to get rid of the tenant so as to sell the property with vacant posssesion.

ASTs were introduced to enable landlords to let residential property safe in the knowledge that at the end of the contractual term the tenant could be required to vacate. By doing away with tenant security of tenure, and to an extent with rent control, landlords were more likely to let than sell, thereby maintaining and increasing the supply of private sector rented accommodation.


I very much doubt this version of events. It could be made more credible with references. As just a single example, ASTs did not do away with security of tenure. The landlord still cannot require a tenant to vacate, only a court can do that. However, if the LL complies with the requirements of the law she can be sure that in most cases the tenant will leave voluntarily to avoid a futile and costly process in court.

Is BNC perchance mixing up residential and commercial tenancy law?


GS


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