Section 21 Why You Can Keep Using It… For Now

So the government announced this reform, of itself it’s nothing dramatic as long as they do a much better job on the Court Reform and the Section 8 strengthening.

The problem we know is that the government is inept at reform so it’s likely to have further negative effects on the market.

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Video Transcription:

Hey, guys. Brett here, Brett’s Property Rants. What I want to do is, I want to just go through the Section 21, the end of Section 21, because the government’s come out and announced that, effectively, Section 21 is going to be no more. Now, importantly, that doesn’t mean now. They still have to go through a whole in processes and so it’s unlikely to happen before … certainly not in 2019, especially with Brexit. 2020 is more likely, but sort of back end, I imagine.

I just think that the government’s going to be so focused on the Brexit stuff that this will become a backdoor issue. But literally, they’ve hardly done any consultation. They’ve already made the decision, even though … It’s almost like to come out and say, “This is what we’re doing,” right after. And actually what they’ve said is that they want to do a further consultation on longer tenancies, and so this is one of the things that they want to do, is actually get the longer tenancies.

So basically, it’s still way long way off. Right now, I think the important thing is, as landlords, and what is going to start to hear more from me now, is we need to get together, and we need to become one voice as an industry, as a body, so we actually get heard. Because I think we’ve got to realize, the government is arrogant, and they think, “Well, there’s no way landlords are going to vote with Labor because Labor’s talking about all these rent controls and restrictions and things like that. So we’ve got them. We don’t need to worry about them. They’ll vote for us.” But I think what we need to start doing is saying, “Uh-uh, you’re not guaranteed. What we will do is disrupt you by voting for a third party or somebody else.”

Because I think they have to understand that what they’re doing is they’re trying to appease tenants, because Labor, they feel Labor’s been taking the tenants away, so, therefore, they’re doing these things to try and get the tenants back on side. Meanwhile, they’re saying, “Stick it to you, landlords.” They’re so arrogant about everything they’ve done, and that’s the thing that really peeves me off. In most businesses, you have a business and this is your income, you can deduct your expenses. If something goes wrong, you’re given a chance to put it right.

All the legislation that’s coming out now, it’s not a question of putting it right. It’s a question of, “Here’s the fine.” And the local councils are going to do it, and here’s … Effectively, what we’ve become is we’ve become the punching bag for the local councils to extort money out of. And make no mistake, most of this stuff is extortion. I mean, the very fact that one of their proposals is that with the tenant fee ban if a tenant is late 14 days, you can’t charge them interest. So basically, tenants can have an interest free loan. It’s ridiculous. Nowhere else are you able to get an interest free loan for 14 days. But, hey, punching bag landlords, that’s what they’re doing.

Anyway, back onto the Section 21. So it’s unlikely to happen straight away. There’ll be some further consultations, and that’s why I’m saying we need to come together as one voice. Really, what this all about … And look, to be fair, the whole Section 21 thing, how this affects us will depend on, number one is, how they strengthen the Section 8 and how they solve the court problems. Because make no mistake, this whole issue is not about Section 21. Section 21 has been one the most effective ways to get a tenant out, because you don’t want to rely on Section 8, as much as you would like to. There are so many times I’ve seen in court now where the judge rules with the tenant and gives them so much leeway at the expense of the landlord.

It’s like there’s no chance of getting that money back, and this is the problem. It’s almost like, “Oh, yeah. Oh, it’s a tenant. Oh, okay. I know you did the wrong thing but have another chance. Go away. Come back in two weeks time or three weeks time or six weeks time.” And then what a tenant starts to do, it starts then, “Oh, I’m sick today, and here’s my doctor’s note. So I can’t turn up. Let’s put it off.” So it’s another time. This is the sort of stuff that’s going on in the courts. Not only that, it takes so long to get. So they need to strengthen this.

One of the things that I’m now looking at is not using the court bailiffs, but actually using the High Court bailiffs. In other words, private institutions to go and get that debt. So when you’re in court, you actually ask to say, “Can you give it to the High Court?” It costs you money. So the other way’s free, there’s an admin fee. This way costs you money, but actually, you get it quicker, because with a High Court bailiff there’s no 14 days warning. It’s, “Right, get out now. We can go round there and execute that possession warrant.” There’s all these sorts of things, the questions around that.

The major thing is, okay, Section 21 goes, fine. Actually, it doesn’t matter. What we need is a way to end the tenancy when there are issues, which is Section 8. The problem with Section 8 is, most people will tell you how things go in court, which is that the tenants get lots of leeways. The problem is, it takes so long to get to court that it costs so much money. This is all about court reform and what they’re going to do there. The problem is, there’s no money in the courts. There’s no money. It’s ridiculous. I mean, it’s so underfunded. One of my best mates, he used to be a barrister in the criminal prosecution service, and it’s amazing how his income went from this down to where he actually got out of the industry voluntarily early, become a university lecturer because there was no money in it. Because the governments were austerity and austerity for like 10 years.

Look, the problem for me is what’s going to happen and what’s going to happen with Section 8. They’re the two keys issues that you need to consider and you need to continue to watch out for. But it’s not happening straight away, so you hear [inaudible 00:05:45] for it. So don’t expect definitive answers right now. Nothing changes. You can still use your Section 21s in the appropriate way. And look, for me, this is another landlord bashing thing is, most landlords don’t misuse it. Most landlords use it correctly and properly and do the right thing. But unfortunately, a small percentage do, and that’s what the shelters and the governments and that are jumping on and using, “Oh, look, this is happening all the time. We need to fix this.” It’s like, rubbish. You’re a bunch of idiots. Anyway. All right, guys, have a great day and live with passion. See you later.

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.