Section 21 notices in Putney, Wandsworth & Southfields

Are Section 21 notices overused or abused?

In our experience as a property management company for over 19 years Section 21 powers are neither overused, nor abused. On the few occasions we have used them under our full management service it was because our landlords wanted to move back in their home or sell up. The majority of times it's the tenants who provide us with a notice period to vacate a property.

During the first lockdown in the summer of 2020 we didn't brandish section 21 notice's to our tenants who couldn’t pay their rent and rightfully so. We welcomed government initiatives to help tenants stay in properties. By supporting those tenants, in need, with finance packages to pay back the shortfall in rent agreed over time, building strong foundations & relationships along the way. Post pandemic rents not only recovered they have rocketed in Putney, Wandsworth & Southfields. Surpassing the pre-pandemic levels in the region of 20% this has been accelerated by the government over legislating landlords who in turn have had to exit the buy to let market causing a supply shortage.

Unfortunately, when interest rates started going up last year in particular due to the mini budget crisis in Oct 22, we found many landlords who were highly leveraged needing to sell. 

This applied to any landlord who bought a property on a mortgage in either Putney, Wandsworth & Southfields anytime after 2016 with a high debt. However, back in 2016 interest rates were low at 2.19% so a loan of £375k was a manageable debt with monthly repayments of £684. And with rents on average at £2,000pcm for a nice two-bedroom apartments in Putney, Wandsworth & Southfields landlords weren't struggling.

When the mini budget crisis occurred those landlords who came out of their fixed rate mortgages of 2.19% were pulling their harir out as interest rates peaked at 5.5% bringing their monthly mortgage to an astonishing £1,718.75 on the equivalent interest only loan of £375k. Whilst rents have increased, they haven’t shot up in excess of 250% in Putney, Southfields & Wandsworth over a period of 6 months. Their is no way a landlord can service this type of debt with an interest rate of 5.5% as a buy to let. Along with other associated costs and there is a good chance that these type of landlords are also 40% taxpayers - they need to sell.

If a landlord chooses not to sell and the open market is dictating a higher rent, why would they not exercise this right and use section 21 if they need more rent to stay afloat? 

Letsf Find A Home wrote a post about this on social media a month ago stating that due to Bank Of England base rate rises landlords coming out of their fixed rate mortgages - this year - are in for a bumpy ride.to the point their buy to lets may not be profitable investments. They would either need to sell which an increasing number have and will continue to do so this year, or they would need to increase the rent to offset rising costs. We got a response from a well known MP in the area.

The politicians response: "Are you serious? ? This is absolutely dreadful and an abuse of section 21 no fault eviction rules, you are actually advertising evicting tenants to hike up rents. It's not illegal but it should be and its wrong. You signed the contract, your tenants pay the rent - don't evict them. The rogue landlord behaviour gives goods landlords a bad name"

Lets Find A Home: "Nothing to do with an abuse of section 21 no fault eviction rules. Thanks for your comments, what do you suggest landlords do when they can’t afford to keep their buy to lets and need to sell which causes more demand/supply imbalance? Tenants are paying the price for ant-landlord legislation caused by politicians."

We didn't get a response from the MP not that it would have made much sense even if they did respond.

When section 21 is abolished and it’s only a matter of time, the demand/supply imbalance will only get worse and more landlords will exit the market creating more rental unaffordability. There will also be more pressure on the courts, as landlords seek to gain possession through a section 8 especially in the case of rent arrears and anti-social behaviour.

Are you a landlord caught up in a dilemma about what to do next with your buy to let? Looking to rent or sell your property now or in the future – in Putney,  Wandsworth & Southfields, why not give us a call to see how and if we can be of service.