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Section 21 Reform Causes Alarm Among Landlords, Survey Reveals

A recent survey conducted by Mortgages for Business, a leading buy-to-let broker, reveals that a third of landlords are significantly concerned about the impending abolition of Section 21 under the Renters Reform Bill. The reform will require landlords to provide valid reasons, along with evidence, for evicting tenants, effectively creating open-ended tenancies.

The scrapping of Section 21 has generated more anxiety among landlords than other issues such as the stamp duty surcharge or the loss of tax relief. Gavin Richardson, Managing Director of Mortgages for Business, argues that the fear surrounding the reform is prompting landlords to sell their properties instead of remortgaging.

Under the new legislation, all tenancies will become assured tenancies that can only be terminated based on new Section 8 grounds for possession, such as the landlord’s intention to sell or move into the property, or a breach of the tenancy by the tenant.

Richardson believes that landlords have less to fear from the reform than they think. He asserts that Section 21 has been misused for years and that the upcoming changes will primarily affect “bad landlords” abusing the system, rather than the reputable end of the market.

Additionally, Richardson highlights that the government plans to introduce a new ombudsman to settle disputes between tenants and landlords without resorting to court proceedings. This, along with the digitization of the courts’ agenda, will ensure a speedy resolution to possession cases.

The survey found that landlords’ chief concerns were higher mortgage rates (63%), followed by Section 21 reform, EPC regulations, and tax (32% each). Richardson criticizes the government for its role in exacerbating these concerns, stating that the UK is becoming a less conducive environment for property entrepreneurs to build and grow their businesses.