Scrapping section 21 alone will not reduce homelessness
CIH policy and practice officer David Pipe says the government’s scrapping of section 21 alone will not reduce homelessness. More needs to be done, including addressing the impact of welfare reforms that are so often the reason why people fall into rent arrears.
Government has recently announced plans to abolish section 21 (the so called ‘no fault’ ground for eviction regularly used by private landlords). This would effectively give all private tenants an ‘open ended’ tenancy, which their landlord would only be able to end for one of a specified list of reasons. This might include, for example, if they are in rent arrears or if they needed to sell the property.
One of the reasons for the proposed change is that a household being evicted by a private landlord is now the number one cause of homelessness. In 2017/18 it accounted for more than a quarter (27 per cent) of all cases where a household was accepted by their local council as homeless, up from just 15 per cent in 2010/11.
It is positive that government is considering abolishing section 21. While many households do still welcome the flexibility that private renting provides, it is clear that as the private sector grows it is housing many more people for the long term. Families with children now make up more than a third (35 per cent) of private renters, while numbers of older renters are also growing. With the average tenant staying in their home for just four years, compared to 11 years for someone living in social housing and 18 years for a home owner, it is right that government is considering ways to offer more security for those that need it.
However, it is worth examining in more detail the claim that ending section 21 will, on its own, reduce homelessness.
Reliable data on why landlords serve a section 21 notice is not easily available as, by definition, landlords do not have to give a reason for these evictions. However, a survey carried out by the Residential Landlords Association suggests that the most common reason (accounting for 62 per cent of evictions) is rent arrears. Of course, we cannot possibly know how many of these tenants might have contested their eviction, had they been able to do so, or how many might have been successful. But fundamentally, we do know that there is a problem with the affordability of private rents (the average tenant spends as much as 33 per cent of their income on rent) and there is no doubt that welfare cuts are exacerbating this.
In particular, local housing allowance (LHA) rates, which limit the amount of housing benefit or universal credit that tenants can claim to cover their rent, have now been frozen since 2016 and increased slower than rents for three years prior to that. As a result, in most areas LHA rates and rents have now diverged completely. Our analysis shows that in 90 per cent of areas, fewer than 30 per cent of properties are now affordable to a household needing to rent at LHA rates, and in the worst affected areas as few as 5-10 per cent of properties are now affordable.
In practice, this means that large numbers of low-income families have been facing a growing shortfall between their benefit entitlement and their rent. It is no surprise that many are falling behind with their payments.
Universal credit (UC) will also be a factor. There is a wealth of evidence showing that in the social housing sector tenants receiving UC are more likely to be in rent arrears and owe more on average than other tenants. Reliable data is harder to find for private renters, but we know that they face the same challenges when it comes to coping with the transition to UC. It is typically at least a five week wait from making a claim to receiving your first payment and although government have made it easier for claimants to request an advance to help them through this period, this is then deducted from subsequent UC payments. For those who have already seen their entitlement reduced by years of welfare cuts, these repayments can simply be unaffordable.
Abolishing section 21 would be a positive step and it may well protect those tenants who have less scrupulous landlords from a spurious eviction. But we should also acknowledge that the majority of landlords don’t really end tenancies for no reason and that where there are issues like rent arrears, the abolition of section 21 may simply bring about a change in the eviction process, rather than a change of outcome.
That certainly doesn’t mean that it is not a good idea or that government shouldn’t do it. But we should be clear that if government really wants to reduce homelessness, this won’t do it on its own. They also need to think about the root causes of evictions and that means looking again at some of their welfare policies. Restoring LHA rates to a level where 30 per cent of properties in every area are affordable to those receiving housing benefit or universal credit would be a great place to start, and government should also explore ways to further reduce the five-week wait for UC.