Section 21 Evictions

Margaret Greenwood Excerpts

Tuesday 25th October 2022 Westminster Hall

[Kevin Hollinrake]

I have spoken to every single Government Minister about my opposition to their plans. Section 8 uses a court-based process. It takes around eight months to get somebody out of a property using section 8. If a person is guilty of antisocial behaviour or is well behind on the rent—measures cannot be taken until somebody is about two months behind—it will take months. It is not that much of a problem for Legal and General, Grainger, Fizzy Living or whatever. They have thousands of properties. If they have a few dodgy tenants, they can blend that problem across their whole estate, so everybody pays for the tenants who make trouble, do not pay their rent or behave in an antisocial manner. What about the small landlord?

I like it when the Opposition talk about business. They always talk about small and medium-sized businesses, as do I. They say that we should abolish section 21, but if someone with one or two properties has a tenant who does not pay their rent for eight months, for whatever reason, that can be devastating to their investment, so lots of SMEs will exit the marketplace, particularly if we abolish section 21 without first reforming court- based process.

When the section 21 measures were introduced in the Housing Act 1988, we saw a massive increase in supply, which has been very good for tenants. The reality is that in most parts of the country, most yields on properties—the return on capital investment—are pretty low. We are looking at a rental yield of 2% to 4%. Interest rates will be 5%, 6% or higher, so if landlords borrow money to buy a property, most will not get an annual return. Most landlords are not profiteering from the private rented sector—far from it.

[Margaret Greenwood (Wirral West) (Lab)]

Is the hon. Gentleman suggesting that it is appropriate for people who live in rented accommodation to be subject to the vagaries of the market? We are talking about people who live their lives in these homes. What exactly does he envisage they will do in this scenario?

[Kevin Hollinrake]

That is an interesting point. The vast majority of people in the private rented sector are happy with the shorter-term nature of rented accommodation. I wish the hon. Member for Liverpool, Walton, would not shake his head and would listen to what I say. There is a cohort of people who want to live in rented accommodation permanently. They want it as their family home. I absolutely agree that the Government should provide accommodation for those people. The Government should invest in this much more, and provide long-term, affordable rented accommodation and social rented accommodation. That is definitely the Government’s job where there is market failure.

I concede that there are market failures for people who want to live in permanent rented accommodation. I am not against the Government stepping in and ensuring that can happen. However, if they step in, tell the private rented sector to ensure that, and set out the rules that apply to someone who wants to make an investment in the sector, the reality is that we will get a reduction in investment in the private rented sector, which will mean a reduction in supply, which will make it more difficult for the tenants on whose behalf Members are speaking. That is the reality of the situation. So, yes: we should make greater public investment in long-term rental accommodation to deal with this issue. However, we should not tell landlords, who invest their private money in the private rented sector, that they have to let their property for life, which is what the hon. Member for Liverpool, Walton is considering.

If the hon. Gentleman wants the private rented sector to do that, a way of dealing with the issue would be to offer incentives for that. We could look at capital gains tax, for example; perhaps people who are willing to rent their property for a much longer period—for five or 10 years, or maybe even for life—could get beneficial capital gains tax treatment. Alternatively, we could reverse some of the changes we made in the Finance (No. 2) Act 2015, in which we restricted mortgage interest in the private rented sector; that was pretty damaging for lots of landlords in the sector. We could say to landlords, “We are no longer limiting the way you can deduct interest against your annual rental income, as long as you’re willing to rent your property out for longer, or for life, to give security of tenure to those kinds of tenants.”

I will conclude very shortly, Ms Nokes. The other unintended consequence of what the hon. Gentleman proposes is that private rented sector landlords will prioritise the best tenants. They will not take a risk because of concerns about non-payment of rent. You are going to disadvantage the people you seek to protect through the measures that the Government are planning and that the Opposition—

--- Later in debate ---

[Margaret Greenwood (Wirral West) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Ms Nokes. I congratulate my hon. Friend the Member for Liverpool, Walton (Dan Carden) on securing this debate and on his excellent opening speech; he is a powerful advocate for his constituents.

All private renters deserve a safe and secure home. According to the charity Crisis, 4.4 million households live in the private rented sector, including 1.3 million families with children and 382,000 households over the age of 65. Government statistics show that nearly 20,000 households in England faced homelessness in the last financial year, after having received a section 21, or no-fault, eviction notice. It shows that evictions more than doubled in the last year and are a leading cause of homelessness in England. Although there are landlords who use section 21 properly—for a host of reasons, including to combat things such as antisocial behaviour—Shelter has highlighted that there is a significant proportion of rogue landlords, who use section 21 as an excuse to shirk their responsibilities, preventing tenants from accessing safe, decent and secure homes.

In its 2019 manifesto, the Conservative party pledged a “better deal for renters”, including abolishing no-fault evictions. This year’s Queen’s Speech included a rental reform Bill, one of the main elements of which was to abolish no-fault evictions by removing section 21 of the Housing Act 1988. According to the Government, doing so would provide security for tenants in the private rented sector, and empower them to challenge poor practice and unfair rent increases without fear of retaliatory eviction. That Bill was meant to be introduced during this parliamentary Session, but just a few weeks ago it was reported that the then Secretary of State for Levelling Up, Housing and Communities, the right hon. Member for Middlesbrough South and East Cleveland (Mr Clarke), was reviewing the policy, and that banning no-fault evictions could be delayed or even scrapped altogether. Two weeks ago, the then Prime Minister was forced to confirm that the ban would go ahead as planned. It is interesting to note that the then Secretary of State said last week that the Government would

“introduce the rental reform Bill in the course of this Parliament.”—[Official Report, 17 October 2022; Vol. 720, c. 355.]

That was echoed by the Under-Secretary of State for Levelling Up, Housing and Communities, the right hon. Member for Pendle (Andrew Stephenson), who said in response to a written question just yesterday:

“Ensuring a fair deal for renters remains a priority for the Government. We intend to legislate in this parliament.”

I hope that the Minister can give us a guarantee today, given that we have another new Prime Minister—our third in a matter of months—that the commitment to banning no-fault evictions will remain the Government’s policy. I hope he can show that the matter needs dealing with as a matter of urgency and commit to bringing forward a ban as soon as possible, because private renters really cannot wait.

Crisis is clear that banning no-fault evictions will help to reduce the number of people pushed into homelessness. However, a ban could risk an increase in evictions through unaffordable rent rises. The Government need to ensure that there are effective protections against that. Rents are increasing sharply across the country. According to the property website Rightmove, in July this year the average advertised rent outside London was 11.8% higher than the year before; in London, it was up by 15.8%. In August, Shelter reported that more than 3,400 households in the private rented sector were evicted by bailiffs between April and June this year—up 39% on the previous quarter.

Research by Shelter found that 64% of private renters said the current economic climate meant that, if they were evicted, they would struggle to afford the cost of moving. This could put more people at risk of becoming homeless. It could also risk private renters being pushed into illegal renting arrangements to make their rent more affordable because they feel they have no other choice, creating situations whereby renters are not named on tenancy contracts and are therefore powerless to get in touch with landlords over mould, damp and other maintenance issues.

Eviction causes misery, bringing uncertainty, upheaval and financial anxiety. The Government must take action and reaffirm their commitment to ending section 21 no-fault evictions as a matter of urgency. I hope the Minister will be able to give us some solid news this afternoon and a date by which that is going to happen.