To sign up for the Landlord Law Newsletter (and get a free guide)>> Click Here

Tag Archives: buy to let

Housing Act 1988 section 21 – blessing or curse?

People Entering HouseAs Samir pointed out in his post on rent control, this month is the 25th anniversary of the passing of the Housing Act 1988.

I want to take a look at the effect of section 21 and the assured shorthold tenancy.

The bad old days

Prior to 15 January 1989 when the Housing Act 1988 came into force – you had to be very careful about letting tenants into your property as you might never get them out again.

Here are two examples from my experience.

Example 1: I can vividly remember advising a young man in about 1990.  He had bought a house a few years previously and, not being able to live in it at that time, had rented it out.

Come a few years later he wanted it back to live in himself. The tenant refused to move out, so he came to me for advice .

However after doing some careful research (and also taking Council’s opinion)  I had to advise him that his chances of getting the property back were minimal.  Short of providing ‘suitable alternative accommodation’, which he could not afford.   My client was a single young man – the tenant had a young family.

He was horrified but there was nothing we could do.

Example 2: My last piece of ‘proper litigation’ involved evicting a protected tenant from a farm workers house.  The landlord had let a friend fleeing from an abusive husband into occupation for six months in the 1970′s.  Needless to say the abusive husband then joined her and they were there for the next 30 years.

I managed to get the property back so the landlords could use it for their farm manager, but they had to buy another property to move the tenants into first.  Even so they were delighted as they had been told they would never get it back during the lifetime of the tenants.

Bad for society

The strong security of tenure for tenants under the Housing Act was great for tenants but actually bad for society.

Very few property owners were willing to rent out property in circumstances where they were unlikely to get it back again and the pool of rented property dropped dramatically.

This was hurting society as there was hardly any short term accommodation available for people who  needed it.  This affected the ability of people to move for their jobs or indeed for any reason,  Which was not good.

The new broom – and the assured shorthold tenancy

Mrs Thatcher was elected in 1979 and one of the things she wanted to do was ‘fix’ the rented property market.  This she did eventually, with the passing of the Housing Act 1n 1988 – which created a new tenancy type.  The assured shorthold tenancy.

The main driver of the current buoyant buy to let market, is the right for landlords of an assured shorthold tenancy, under section 21 of the Housing Act 1988, to recover their property provided they follow the proper procedure.

This means that landlords no longer have the prospect of losing all control over their property for the foreseeable future.  Recovering a property under s21 is not quick, but it is certain.

This massive change, coupled with the new buy to let mortgages that were developed in the 1990′s, meant that it was once again economically viable for people to invest in property to rent.

The new problem for society

So we now have lots of short term rented property available so people are no longer prevented from moving simply because there is no rented accommodation available for them to live in there.

However we now have a new problem.  This is the difficulty people have now in finding any long term security.  This is also due to section 21.

The section 21 problem

Contrary to what many people think, the majority of landlords are not rich people.  Most private sector landlords are individuals who own between 1 and 5 properties, often instead of a normal pension.  They are usually comfortably off, yes, but not really wealthy.

So they cannot afford, for example, to have people living in their properties who are not paying rent or who are causing problems in some other way.

Section 21 is their friend here, as section 21 allows them to remove bad tenants fairly easily.  However section 21 can ONLY be used after the fixed term of a tenancy has come to an end.

This means that very few landlords are prepared to grant fixed terms of more than six months or a year (even if their mortgage company were prepared to allow this, which normally they don’t).  Otherwise they would be in difficulties if their tenant started paying rent irregularly (which would cause them financial problems).

There is a ground for eviction based on serious rent arrears, but this is more problematic than the section 21 procedure and usually takes longer.  It it is in landlords’ interests therefore to grant short fixed terms, so the right to use s21 is never more than about a year away at most.

The problems of short term housing

Many tenants are perfectly happy with a short term commitment.  However others are not.

It is particularly bad for families, where it is important that children are able to remain at their schools without being moved every year.  Older people are also unhappy at being at risk of eviction within a few months.

If you have a short fixed term your right to stay in the property will never be more than two months or (if your fixed term has more than two months to run) the end of your fixed term.

This discourages people from putting down roots into the community.  You do not feel the same about somewhere if you are at risk of having to move on within a couple of months.  Which is not good, long term, for society.

A more serious problem for some

Then there is the more serious problem of ‘retaliatory eviction’ where landlords deliberately evict tenants under s21 when they ask for repair work to be done on their property (or in ‘bad landlord’ parlance, when they are ‘troublemakers’).

There is no point in investing money in bringing a claim for an injunction ordering the landlord to carry out repair work, if the tenants are shortly going to be evicted under s21.  Until the next tenant moves in – and has the same problem.

Solutions?

Lots of people have made suggestions about solutions for this problem.  Some people suggest mandatory longer tenancies – but some tenants don’t want this.  I made a few suggestions in my ‘Bigger picture’ ebook (which you can >> download from here).

But it is a problem. What do you think?

David Lawrenson – Notable Property People in their own words

David Lawrenson

I am delighted to have industry specialist David Lawrenson as my Notable Property Person this week.  Here is his story. 1. Please introduce yourself. Say a bit about yourself and your company I’m David Lawrenson, owner of property consultancy, landlord advice and buy to let information website, www.LettingFocus.com I’m author of the UK’s top sellingContinue Reading

John B. Corey Jr – Notable Property Persons in their own words

John B Corey Jr

Our Notable Property Person this week is software engineer and property investor John B Corey Jr, from ‘over the pond’.  Anyone in property who is on twitter will know John, he is a prodigious twitterer with nearly 15,000 followers.  He is also a sharp cookie – for example from his entries on the 4Walls propertyContinue Reading

Oliver Romain – Notable Property Persons in their own words

Oliver Romain

My Notable Property Person this week is Oliver Romain who is MD of the highly successful Landlord & Buy to Let Shows and editor of the associated Landlord & Buy to Let magazine. 1. Please introduce yourself. Say a bit about yourself and your company I edit Landlord & Buy to Let magazine and organiseContinue Reading

Buy to let landlords – mortage advice to help you protect your investment

Guest post

Mortgage advice for buy to let landlords who have problems meeting their mortgage paymentsContinue Reading

Kate Faulkner – Notable Property Persons in their own words

Kate Faulkner

Kate Faulkner from Designs on Property My second ‘Notable Property Person‘ is Kate Faulkner, a well known property person, particularly for her books for the consumer organisation, Which and her association with Channel 4. Here are her answers to our questions: 1. Please introduce yourself. Say a bit about yourself and your company I liveContinue Reading

Property rental adverts – a guest post from UPAD

Guest post

I am delighted to be able to bring you this guest post from James Davis, of the well know letting portal Upad.  Note that all opinions expressed are those of the author. ***** I was talking to one of our newest landlords recently; he’d just got his first buy-to-let property and he was excited toContinue Reading



The Landlord Law Blog from Tessa Shepperson

Tessa is an English lawyer specialising in residential landlord and tenant law.


Legal Services

Legal services are provided via Tessa's online service Landlord Law. Some advice services are provided by Tessa, other legal services are provided by specialist housing firm Anthony Gold.


Disclaimer

The purpose of this blog is to provide information, comment and discussion. Although Tessa, or guest bloggers, may from time to time, give helpful comments to readers' questions, these can only be based on the information given by the reader in his or her comment, which may not contain all material facts. Any comments or suggestions provided by Tessa or any guest bloggers should not therefore be relied upon as a substitute for legal advice from a qualified lawyer regarding any actual legal issue or dispute.


Nothing on this website should be construed as legal advice or perceived as creating a solicitor-client relationship (apart from the Fast Track block clinic service - so far as the questioners only are concerned).


Guest bloggers

Please note that any opinion expressed by a guest blogger is his or hers alone, and does not necessarily reflect the views of Tessa Shepperson, or the other writers on this blog.


Other websites from Tessa

Lodger Landlord | School for Landlords | Google+ | Your Law Store | Google | Landlord Law facebook page | Tenancy Agreements Manual | How to Evict Your Tenant website | the Which Tenancy Agreement Guide | Landlords Tips | Tenants Tips