The future of the Section 21 Housing Act – a cycle that needs to be broken?

The law on Section 21 of the Housing Act 1988 became a hot topic of debate on BBC One’s Question Time programme in April. With a general election now looming, what could a potentially new government mean for the future of Section 21 and how will it impact the rental market in the UK?

Just to recap, the Housing Act 1988 made significant changes to the law regulating relationships between landlords and tenants of residential property. Section 21 gave a landlord a right to serve notice on a tenant to end the tenancy, subject to certain requirements by law, but without having to prove fault on the part of the tenant.  That provision in itself was likely to have increased the market for private landlords.

In more recent years, the government has introduced other laws relating to

• tenancy deposits
• gas safety and energy performance certificates
• the provision of the government issued How to Rent guidance leaflet
• measures concerning retaliatory eviction.

These have all had an impact on the landlord’s ability to serve a Section 21 Notice on a tenant.

More recently, the government has proposed the complete abolition of Section 21, the purpose of which is to improve the security of the tenant and to encourage longer term relationships between landlords and tenants. However, the anticipated change in the law won’t take place during the life of the current parliament.

I anticipate that the Labour party, if elected, would revive the abolition of Section 21 which would give tenants who observe the terms of their agreements, the security that they might have enjoyed before the 1988 Act came into force.

What would the effect on the market be of this change?  I predict that small time landlords would exit the market and sell their properties instead.  This would not help with the rented housing shortage in the UK.  If there are fewer properties available to rent, then the chances are that rents would increase.  That in itself might require the government of the day to intervene and impose a form of rent control.  That in itself might have an effect on reducing the number of properties available to rent.  In other words, there is a cycle that needs to be broken.

Will this result in the growth of properties available to buy and will that growth drive down property prices? Time will tell.