Patrick Mooney looks at the unintended consequences of changing the law on evictions
With election day this week, we will very soon know the make-up and likely direction of the next government.
Trying to forecast what it will actually do about the crisis in the housing market is something of a fool’s game, as we know events will always come along and knock politicians off course.
Nevertheless it will be fascinating to learn from the post-election analysis of experts and pundits if any specific private rented ‘issues’ proved influential in determining the outcome, particularly in key marginals and swing seats.
And if so, which issues?
With 4.8 million households privately renting, it is the second biggest tenure in the country after owner-occupation and tenants’ views clearly matter.
Reflecting this we saw a number of housing specific promises in the manifestos of all the major political parties.
No fault evictions to be axed?
It was no surprise to see that the Conservatives, Labour and Liberal Democrats all promised to abolish Section 21 ‘no fault’ evictions, where landlords can evict tenants from their homes without giving a reason.
But before we all assume that regardless of who wins the election, that Section 21 will be abolished or reformed, we should consider the following forecast.
The private rented sector will shrink by 20 per cent if Section 21 evictions are abolished.
This prediction appeared in an economic analysis report published in the Autumn, but which appears to have passed under the radar and out of most politicians’ notice.
In somewhat stark terms, ‘A new deal for renters? The unintended consequences of abolishing Section 21’, written by Capital Economics on behalf of the National Landlords Association, warns of the following outcomes, in the event of Section 21 being abolished:
- 960,000 fewer dwellings available to private renters;
- 770,000 fewer dwellings available to tenants on housing benefit or Universal Credit; and
- 600,000 dwellings could see rent increases.
A double whammy
These figures represent a whopping 59 per cent reduction in the housing available to tenants on housing benefit or Universal Credit, and a potential increase in rents for 13 per cent of privately let properties.
The main reason for these hugely pessimistic predictions is that in an increasingly challenging market, the proposed axing of Section 21 will act as a further disincentive for investment in the sector, with significant numbers of landlords saying they will either exit the rental market completely, or reduce the size of their property portfolios.
Those who remain in the market are likely to become more choosy about the tenants they let to, to reduce their investment risks in the absence of the certainty of the Section 21 process.
In short this could see the poorest and most vulnerable tenants squeezed out. I don’t recall any politicians advocating this during the election campaign!
Reality bites
When the report was published, Chris Norris, Director of Policy and Practice at the NLA, said: “The Government has clearly failed to recognise the realities of the private rented sector by proposing the abolition of Section 21.
“Any government which thinks it appropriate to risk the loss of nearly 1 million rental homes at a time of housing crisis needs to reassess its priorities as a matter of urgency.
“Rather than playing to the gallery, the Government should be looking to support and incentivise good landlords to remain active and provide homes to those who need them, rather than making it harder and causing these landlords to exit the market.”
Given the strength of Chris Norris’s words, it is perhaps surprising that all three major parties in England have adopted this measure as their headline reform of the private rented market.
Possible solution
The report also suggested a possible solution – a reformed court process that makes dealing with Section 8 cases faster and cheaper, nullifying the removal of Section 21 for many landlords.
This could be achieved by establishing a specialist Housing Court, with expert judges and staff equipped with the resources to deliver quicker judgements and a more consistent service for landlords and tenants.
However, the private rented sector would still see a likely reduction of between 180,000-390,000 homes, between 130,000-300,000 fewer homes available to benefit claimants, and rent increases for between 110,000-240,000 properties, according to the Capital Economics report.
A cautionary tale
I was reminded of the law of unintended consequences recently by a number of building surveyors who were discussing the unfortunate spate of fires in recent months at various medium and high-rise blocks of flats.
Their hypothesis was that the Decent Homes Standard and its demands for higher levels of energy efficiency in our housing stock may have inadvertently contributed to the recent incidence of fires.
While the installation of cladding panels of various types has undoubtedly improved the energy efficiency of flats in blocks, the use of flammable materials in their manufacture and the incorrect fitting of fire breaks, cavity barriers and other safety features, has badly compromised the safety of many blocks – in both the private and public sectors.
This could yet prove to be one of the greatest scandals of recent times, with the new government under huge pressure to put things right for the many thousands of people currently living in unsafe accommodation. It has been 30 months since the terrible loss of life in the Grenfell fire and hundreds of blocks are still ‘at risk’.
The surveyors also complained that many new double-glazing and external wall insulation schemes had been fitted without compensatory ventilation systems included. This meant the air within homes failed to circulate properly, producing ideal conditions for the build-up of condensation and mould.
Unplanned consequences
No-one ever intended these outcomes to be the result of otherwise well-meant policies. But they can be the consequence of policies made in haste, or in solutions delivered at a low cost without sufficient input in the design and implementation stages from experienced building professionals.
All of the political parties have promised to take firm action on tackling climate change and as part of this to spend huge sums on reducing carbon emissions from our homes (largely through new heating systems replacing gas boilers) and making them more energy efficient.
While it is important that effective actions are taken and not unduly delayed, recent experience in other areas suggests that we also need to proceed with some caution and be mindful of ‘unintended consequences’.
Let’s steam ahead with known solutions and work ever harder at developing new solutions – perhaps based on a collaborative and international spirit of co-operation to tackle this existential crisis.