The end of the Private Rental Sector as we know it ?Practically all of the 'experts' in the field of property have described the move by the government to abolish Section 21 as Devastating and ridiculous, but will it be as bad as the expert forecast ? Bodies like the National Landlords Association, the Residential Landlords Association and ARLA have all slated today's announcement.
The equivalent changes to legislation in Scotland did not work and has already been scrapped.
The increase in SDLT (Stamp Duty) a couple of years ago was a warning of things to come. Then section 24, the ability to offset the cost of the mortgage interest against rental income, was described as a 'nail in the coffin' of the rental market. We are 3 years into the 4 year implementation of Section 24 and from next year none of the mortgage interest will be allowable against income, effectively making all income profit and taxable.
Today's announcement by the government of their intention to abolish Section 21, known as the 'No fault eviction' effectively removing the ability of a Landlord to gain back possession of their property by serving their tenant with 2 months notice will undoubtedly drive more Landlords from the property market than all the other so called 'Landlord Bashing' tactics combined. The ability to gain possession of their property can be the last ditch attempt a landlord has to evict a tenant from their property.
Although in the majority of cases there is no need for Section 21 to be used, there are times when a landlord has no choice but to take action and evict tenants from a property.
So could this be a positive move effectively making more property available for first time buyers and renters that wish to buy ? Absolutely, it is already a buyers market, prices are being driven down and there will be many more properties brought to the market in the coming months which will drive prices down even further.
Great news if you are not already a home owner that will be pushed into negative equity, and these numbers are increasing rapidly. Also fantastic if you are renting and can get a mortgage lender on board and you are able to buy a property, we have access to some of the best 'whole of market' mortgage brokers both in the residential and investment housing markets.
Unfortunately not so good if you are already renting and rents will have to increase to pay for the governments changes in legislation. Also not so good if you are not able to buy and your landlord exits the market and you are asked to leave the property (before section 21 changes) On the plus side you may be able to stay longer in your next property. The down side ? There will be fewer landlords out there making for less choice and increased rents.
There has also been talk of introducing a 'Tenants Passport' type of system where rent arrears and a tenant not taking care of a property will be recorded and available to future landlords and their agents. There has also been mention that the financial details of rent arrears will be recorded with Experian making it very difficult for bad tenants to find accommodation in the future.
The property market is currently going through sizeable changes affecting a very large proportion of the population. In over 30 years experience in the field of property I have never seen as many problems affecting so many people in so many different ways.
If you have any worries or concerns as a Landlord or a Tenant please give us a call. We are here to help and our advice is free.