The fate of Section 21 – the industry responds to Labour government’s impact on landlords

With the 2024 General Election now decided and Keir Starmer’s Labour party announced as the next British government, all eyes in the property industry are on what’s next for the housing market. Here we explore how industry experts predict the new government will impact landlords – and what we might expect from the next twelve months.

Related topics:  Landlords,  General Election 2024
Amy Loddington | Online Editor, Financial Reporter
5th July 2024
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Section 21 was the biggest topic of discussion – Labour had promised to scrap the legislation allowing ‘no fault’ evictions if elected, following the outgoing government’s failure to pass the Renters (Reform) Bill before election campaigning began.

Paul Shamplina, founder of Landlord Action, said that – with this in mind – the election victory for Labour would mean there is ‘significant concern within the landlord community today about the future of their properties and tenancies’. However, he acknowledged that deputy leader Angela Rayner had recently admitted that ending Section 21 was more complex, with the Rayner telling LBC we must also ‘ensure the courts system is working and that we’ve got a fair balance between landlords and renters’.

Shamplina said landlords would be acting accordingly, however:

“Nevertheless, given Labour's pledge, we now anticipate a further surge in the number of landlords serving Section 21 notices in the coming months. Landlords are likely to act pre-emptively to protect their interests before any legislative changes take effect. At Landlord Action, we have already seen an increase in instructions for Section 21 notices as many landlords move to secure their rental income or prepare their properties for sale.

“The primary concern for landlords is that without the ability to use Section 21, they might face significant challenges in managing problematic tenancies effectively. The uncertainty surrounding the timing and implementation of these changes is likely to drive more landlords to take action now, rather than risk being unable to address issues swiftly in the future.”

Ben Beadle, chief executive of the National Residential Landlords Association, said the body looked forward to working ‘constructively’ with the new government on the changes to ensure they were ‘fair and workable’ for both tenants and responsible landlords, as well as being sustainable long term.

He added:

“It is vital however that reform does not make worse an already chronic shortage of rental properties to meet demand.”

 

Others stressed the need for the sector to be kept informed about any potential changes to avoid disruption, with Oli Sherlock, managing director of insurance at Goodlord, suggesting that the market needs ‘clarity’ and adding: “If similar legislation to the previous Bill is set to go through, we need clear information on details and timelines.”

In other areas, experts said the new government must support landlords in order to support the vital role played by the private rental sector, with Allison Thompson – national lettings managing director at Leaders Romans Group -  noting that:

“The role of the PRS in addressing homelessness cannot be overstated. With a growing deficit in affordable homes, the PRS is pivotal in providing homes for those in need. Labour must shift its focus from penalising rogue landlords to supporting and encouraging fair and honest landlords who contribute positively to the housing sector.

"Energy efficiency demands are another critical area that requires clarity. Landlords need a realistic and manageable timeframe for implementing energy efficiency improvements, considering the associated costs and rental voids. Clear guidelines and reasonable expectations are essential for the long-term sustainability of the sector.”

Isobel Thomson, chief executive of safeagent, agreed that the government should show support for Landlords, commenting:

"We urge the Labour Government to shed what has been perceived up until now to be an anti-landlord/agent agenda. In so doing, the sector will respond in working with the Government to continue to deliver both security and quality of homes for tenants."

Other experts considered the impact of changes to taxation on landlords, with Perry Jax, marketing director at Alesco,  saying that there was ‘caution and uncertainty’ while waiting to see what impact future taxations could have.

He added:

“We will wait with bated breath to see what and who will be the focus but our preference is to see second home owners, landlords and investors incentivised. This would lead to a surge in transactions, which in turn will boost the public purse and that is ultimately Labour’s number one priority for the next five years.”

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