The proposed scrappage of Section 21 could result in the loss of 20 per cent of dwellings in the English private rental market, according to a new report on the proposed policy, by the National Landlords Association (NLA).
Such a decrease in supply was estimated to be equivalent to 960,000 dwellings.
The report, written by Capital Economics, having been commissioned by the NLA, detailed how government plans to scrap no-fault evictions could potentially result in a decline in available rental properties, as landlords move out of the private rental sector (PRS).
Another potential unintended consequence of Section 21 being scrapped is a 59 per cent reduction in the supply of housing available to those who rely on housing benefits or Universal Credit, as well as a possible rise in rents for 13 per cent of properties in the PRS. This potential rise in rents across the PRS would affect as many as 600,000 homes as a result, the NLA revealed.
The government has been intending to scrap Section 21 since an announcement to do so in April. All three of the UK’s main parties now support the idea, after the Liberal Democrats voted on a motion to scrap Section 21 in September. No matter who forms the next government, following any upcoming election, the political climate is decisively moving against no-fault evictions.
Increasing rental pressure
The NLA’s report identified rising pressures faced by landlords over the past few years, as the government has sought to re-engineer the workings of the housing market. Removal of Section 21 would simply add to these pressures, according to the NLA.
In 2017, the number of dwellings in the PRS declined by 46,000, the first fall recorded since 1999. Landlords have been expecting subdued increases in house prices for rental and for sale, the NLA claimed, which has led to rising mortgage costs and modest returns for landlords overall.
With the potential scrappage of Section 21, landlords would be required to turn to Section 8 instead, something the NLA identified as costly, time-consuming and potentially inconsistent. The NLA recommended that the government should reform the court process, ensuring that Section 8 cases could be dealt with faster, and address the concerns landlords have about the removal of Section 21.
Consequences of Section 21 removal
If the government was able to follow the NLA’s own recommendations, the NLA claimed that private rented sector supply would fall by no more than 180,000 to 390,000, and rents would increase for a smaller proportion of the PRS, between 110,000 to 240,000 homes instead.
Chris Norris, director of policy at the NLA, commented on the report: “The government has clearly failed to recognise the realities of the PRS by proposing the abolition of Section 21. Any government which thinks it is appropriate to risk the loss of nearly one million rental homes at a time of housing crisis needs to reassess its priorities as a matter of urgency.”
Mr Norris concluded: “Rather than playing to the gallery, the government should be looking to support and incentivise good landlords to remain active and provide homes to those who need them, rather than making it harder and causing these landlords to exit the market.”
A government-led consultation on Section 21’s proposed scrappage has been open for a number of weeks, and is expected to close on 12th October.