That’s the view of LegalforLandlords MD Sim Sekhon, voiced after an apparent change of plans regarding the abolition of Section 21.
One minute, The Times was reporting that the Renters Reform Bill wasn’t seen as a priority and wouldn’t be brought forward during the current parliamentary session, the next, Liz Truss was restating her commitment to the manifesto pledge.
While many agree that Section 21 isn’t a perfect instrument, the threat of its abolition has caused upheaval. Concerned that the bill would reduce the control they had over their income and assets, landlords have been selling up, leaving the sector and restricting the supply of rental properties.
When suggestions that the reforms wouldn’t be going ahead emerged, many landlords felt relieved. It was a small boost that was much needed. The view that landlords are big businesses with endless reserves, able to tolerate rent freezes or non-paying tenants is nothing like the real picture.
A substantial proportion of the UK’s landlords own between one and three properties. Over 55% of landlords have buy-to-let mortgages where interest rates are already averaging 6%. Importantly, Section 24 of the Finance Act means that this mortgage interest isn’t tax deductible. Then there’s the 3% surcharge on stamp duty on buy-to-let property. Landlords aren’t immune to financial pressures. These changes are impacting them, and losses can only be tolerated for a limited time.
Sim Sekhon points out that he’s not opposed to changes. He said, “What we have now isn’t perfect. The sector does need reform. Landlords’ professional bodies have already made suggestions that will improve things for all stakeholders. They’re fair to landlords, will serve and protect tenants’ interests and stimulate growth in the private rental sector.”
We asked Sekhon why, if he is in favour of reform, he welcomed the initial reports that the Renters Reform Bill would be shelved. He said, “Section 8 evictions are now taking over 12 months. It’s too much for landlords to tolerate, both financially and emotionally. Section 21 provisions give landlords some control and flexibility. The idea of losing that was causing them immense worry.”