Section 21: Implications for Landlords and Tenants
A recent investigation conducted by Leaders Romans Group sheds light on the limited usage and infrequent misuse of Section 21. The study, encompassing landlords from various estate agency brands, revealed that a substantial 80% of landlords have never resorted to invoking Section 21. Among those who did, 63% did so due to lease violations by tenants, while 38% opted for a ‘no fault’ eviction.
Leaders Romans Group (LRG), in alignment with most of its landlords, actively strives to elevate standards within the industry. However, while endorsing the professionalization of the private rental sector, LRG acknowledges that proposed alterations, such as the repeal of Section 21, may introduce fresh challenges for certain landlords in specific scenarios, potentially impacting both landlords and tenants adversely.
It is crucial to bear in mind that private landlords play a pivotal role in meeting the escalating rental demands. Imposing unnecessary measures that might trigger an exodus of landlords from the market would ultimately undermine rental affordability.
Reevaluating Fixed-Term Contracts: Introducing the proposal for tenants to serve a mere two-month notice at any given time would introduce significant uncertainty for landlords, further burdening an already challenging market. To address this concern, there has been a proposal to revise the approach by allowing a two-month notice only after the tenant has resided in the property for a minimum of four months. This compromise would provide landlords additional security while allowing tenants the desired flexibility.
Establishing a Landlords’ Register: The primary objective behind this initiative is commendable, as it aims to identify and weed out unscrupulous landlords, providing prospective tenants with crucial information to make informed decisions.
Amplifying Notice Periods for Rent Increases: Investing in the buy-to-let sector involves not only capital returns but also monthly rental yields. It is crucial for landlords to have the ability to adjust rents in accordance with market conditions and ongoing property improvements. It should be noted that rent increases typically occur once a year, often in conjunction with lease renewals where negotiations typically commence two to three months in advance.
No Discrimination Based on Benefit Claimants or Families with Children: Leaders Romans Group (LRG) firmly opposes discrimination against tenants receiving Housing Benefits. We actively prioritize staff training to ensure they can readily accommodate such requests and work diligently to educate landlords on this matter, implementing regular monitoring to uphold these standards.
Consideration for Pets by Landlords: The matter of allowing pets in rental properties has already been carefully addressed. In most cases, where a property is suitable for pets, appropriate measures are in place to accommodate them. These measures often include clauses regarding professional cleaning and disinfection at the conclusion of tenancies.
Investing in Rental Property: Investing in an investment property or expanding one’s portfolio is consistently regarded as a sound financial decision. Presently, there are two compelling reasons to invest in rental property. Firstly, there is a significant shortage of available rental stock, resulting in notable rent increases over the past few years. This surge in demand from tenants, coupled with limited accommodation options, has intensified competition for new rentals and subsequently driven prices higher. Many tenants are willing to pay above the advertised rental amount to secure a desirable home in this competitive landscape.
The second advantage is that during a period of declining property prices, it presents an excellent opportunity to secure a lucrative deal. As mortgage rates increase, some sellers may encounter financial difficulties, creating circumstances where they are motivated to sell. By offering a swift transaction, you gain leverage to negotiate a price reduction. Any discount obtained translates into immediate equity in the property, enhancing its income returns as well.
It is crucial for landlords to seek reliable guidance regarding the evolving legislation and regulations and their impact. Additionally, conducting thorough research on the supply and demand dynamics in their specific areas is essential. This ensures that the properties they acquire not only perform well in the current market but also exhibit promising prospects for the future. Tenant demographics can vary significantly from one part of a town or city to another, so collaborating with local experts is advisable to ensure a sound long-term investment.
Property investment is a long-term commitment that withstands economic cycles and political changes. Despite fluctuations in interest rates and the transient nature of regulations, a buy-to-let investment generally generates favorable financial returns.
Nevertheless, it is crucial for the government to acknowledge that addressing the housing crisis, particularly the shortage of available rental properties, cannot be achieved by imposing additional burdens on the already strained private rental sector.
*Allison Thompson, the National Lettings Managing Director at Leaders Romans Group, stated. *
