The End of Section 21 – re-thinking our values

In the first post in this series, the history post, we saw how the entire private rented sector is based on the fact that landlords can if they wish, recover possession of their properties after the end of the fixed term granted to tenants, without giving a reason.

In the next two posts I pointed out two circumstances where section 21 can be considered a good thing, or at least not unhelpful for tenants:

In ‘the Evil Rule’ post though, we took a look at the effect of section 21 – which is clearly negative in many ways.  This was reinforced by Ben’s post about his experience as a tenant.

So, this is why the decision has been taken to remove the section 21 no-fault eviction ground. However, we need to be very careful about this.

If section 21 is the linchpin of the private rented sector – what will its removal do?

If done badly it could result in landlords selling up and a dramatic reduction in the availability of rented accommodation.

Which would be very bad indeed for the 20% or so of households who depend upon it. Many of whom are not in a position to buy.

There are three elements to be taken into account with rented property:

• The needs of the occupiers -the tenants
• The needs of the owners – the landlords, and
• The needs of society as a whole

However, before discussing this I want to look briefly at some of our general values as a society and how these impact on how we treat property. As I think we have a problem.

Three negative values

I don’t know about you, but when I look at many aspects of our society today I don’t like what I see. Three things, in particular, bother me:

• The ‘accountancy’ mindset
• Short-termism and
• I’m all right Jackism

What do I mean by these? Let’s take a look at them

The ‘accountancy mindset’

This is a mindset that believes (and considers it right and proper) that the financial return is the most important measure of an activity – any activity.

Everything is based upon getting more and more profit from the minimum input possible. Indeed this is baked into our commercial system as the legal purpose of a company ultimately is to create a profit for its shareholders.

With property, the ultimate and logical expression of the accountancy mindset is an HMO where you cram as many people as possible into a property charging the maximum rent they can stand while doing the minimum amount of maintenance.

The accountancy mindset is the same mindset that sets software to spy on employees to make sure they are not spending too long in the toilet (when they should be working) or which continues to produce products which are damaging to the environment because it would cut profits to do anything else.

Short-termism

This is also endemic. It comes from the top as politicians are mainly concerned to garner votes so they can be re-elected in a few years time.

It manifests itself in a desire for immediate results and a disinclination to plan for the long term.

I’m all right Jackism

We all see the world from inside our own head. If our head is in a good place – what does it matter (to us) if others are not? We are all right.

I suppose the ultimate I’m all right Jacksim is the reluctance to change our ways to save the planet from climate change as we will all be dead when it happens.

Considering property and land

Land is unique and special. For a start there is a limited supply of it, and it can be used in different ways by different people at the same time (for example, a freeholder, a leaseholder and the leaseholder’s tenant all, in a sense, own the same land)..

Although floating cities are a technical possiblity they are still some way off, so solid land is all we have right now to live on.

Because it is so unique, land has always been treated differently by the law and indeed was known in the past as ‘real property’ as opposed to all other forms of property which were merely ‘chattels’.

Ownership of land is usually a long term thing. Few people own property for less than a year and some families and corporations will own it for hundreds of years. Most landlords that I speak to tell me they see their property as a long term investment.

So this conflicts with the short term values which permeate society.

It is interesting that many of those converting family homes into money-making HMO machines are not actually the property owners but hold it under some form of ‘rent to rent’ arrangement.

So let’s take a look at the needs of the three elements identified above, tenants, landlords, and society.

The needs of tenants

This will to a large extent, depend on the type of tenant in occupation. Although all will want a property in good condition (with ‘fitness for human habitation’ being the minimum) and to be allowed to live in the property without interference.

However, the period of time they need to live there will vary depending on the type of tenant:

• Some, typically younger, tenants will not want to be tied down to a long contract and will want to be free to leave when their circumstances change or (for student tenants) at the end of the academic year
• Others, typically families and older people, will want to remain in their properties long term, and will want the security of knowing that they can do so.

The needs of landlords

It is arguable that the needs of landlords should take precedence over the needs of tenants. Because if property owners are not prepared to rent to tenants (as happened under the Rent Act 1977) we will not have a private rented sector at all. Or only a substantially reduced one.

Landlords will normally want the following:

• Rent paid regularly
• Tenants who look after the property and preserve its value
• The right to remove promptly tenants who fail to do either of these

They will also want the security of knowing that if at any time they want to cease being a landlord – either because they need to realise their investment or because they want to live in the property themselves – they can.

Under the current system this is provided by section 21.

The needs of society

People writing about the private rented sector generally do so from the point of view of either landlords or tenants.

So the Residential Landlords Association will, based on their experience, have one point of view and Shelter will, based on their very different experience, have another.

However, if you are drafting legislation you have to consider the needs of everyone and of society as a whole. It’s not an easy thing to do.

In my last post I identified three issues which are bad for society:

• A substantial percentage of the population feeling disconnected from the place where they live due to a lack of long term security,
• The negative effect which constant moves and poor accommodation can have on children – who are our future, and
• The destabilising effect of the failure to deal with bad and rogue landlords – which allows them to continue unchecked

However these are not the only things. Others include

• The need to ensure that sufficient rented accommodation will be available for those who cannot afford to buy their own home
• The need to improve the housing stock generally – as poor housing has a negative effect on
  • The health of the occupants (which will increase the costs to our National Health Service), and
  • The economic health of the neighbourhood as a whole

There is also another very important issue. We are faced with a climate catastrophe and need urgently to reduce carbon emissions in the atmosphere. One cause of this is domestic properties.

Landlords, therefore, have a responsibility to reduce the carbon footprint of their properties – which should be enforced by legislation. To be fair, we do have some legislation in place, although unfortunately, it is not, along with so much of our protective housing legislation, being properly enforced.

This is important though, not just for us but for the planet as a whole, as carbon emissions know no boundaries. I think it should be given greater attention.

The Big Question

The big question therefore is – how can the government, when drafting up the new legislation that will be needed, if section 21 is to be revoked, balance the needs of landlords, tenants and society as a whole?

I’ll take a look at some ideas in future posts. Let me have your thoughts in the comments below.