Section 21 Ban is “Short-Sighted Move by Government”, Expert Claims

The Government’s proposed Section 21 ban is a “short-sighted move”, according to Marc Trup, the CEO and Founder of proptech firm Arthur Online.

With so many changes affecting the private rental sector and further proposals outlined by the Government, we decided to interview Marc about the upcoming challenges facing landlords and how they can overcome them.

Read on for his expert opinions…

Q. Is it now easier or more difficult to let properties?

A. I have found no difference in the London area, where I operate my rentals. If the price is right and the property in a good location, property will always get rented. All I can say is prices are at 2008 levels in my area.

Q. Do you think that buy-to-let will remain profitable in the future – why?

A.Difficult question. If you only plan to invest in one or two properties, I’d say no. But, as a business with a growing portfolio, there is still potential to profit from buy-to-let. If you’re in this as a yield play, then it’s a fine line. If you believe in capital growth, then yes, but there may be better places to put your money.

Q. What are your thoughts on the Section 21 ban?

A. I think it is a very short-sighted move by the Government. Landlords are already being bombarded with penalising new legislation and landlords want to feel assured that they can repossess their property, should a tenant refuse to pay rent. The lack of available housing is already becoming a national scandal, so the last thing the private rental sector needs is landlords being forced out of buy-to-let.

Q. How do you think proptech will help landlords to stay compliant ahead of new law changes?

A. Adopting proptech is the first step for landlords to ensure they are offering more transparent and consistent levels of service. Automation offers many new and exciting opportunities in proptech, eliminating any risk of human error. For example, using automated events, you can notify Council Tax and utilities of a new tenant, so that all the tenancy information is kept up to date. You can also set reminders so that you know when to renew your property’s gas safety certificate and, that way, always stay in line with regulation.

Q. How has the rise of proptech changed the property industry?

A. Proptech is all about interconnected solutions, with everything you need all in one place. Property management software on the market currently offers a way to seamlessly integrate core operational systems, allowing better collaboration across teams and departments, enhancing their efficiency and flexibility to meet greater demand. Proptech offers a way to scale business operations, while reducing costs.

Q. What do you think the next year holds for landlords?

A. I think it depends on the uncertainty around Brexit. If we know where it’s going, the property market can prepare for whatever the outcome. I guess we’ll just have to wait and see what the future holds. The outcome of Section 21 is also something to watch out for. I believe that if powers granted to landlords to evict tenants in Section 8 are strengthened, scrapping Section 21 shouldn’t pose too much of a threat to good landlords. However, if the right to sell with vacant possession is not maintained, I fear there may be a substantial number of landlords leaving the sector for good.

Q. If landlords leave the sector as a result of Government intervention, how will the housing market adapt to high tenant demand?

A. Good question. The sector is bringing in build to rent and there is an increasing number of smaller units – Houses in Multiple Occupation (HMOs) – time will tell how these work out. HMOs offer cheaper accommodation but with greater churn, as tenants strive to afford large accommodations. It is certainly an interesting time.

Q. Do you have any advice for those looking to enter the buy-to-let sector?

A. For those looking at entering the sector, my advice would be, be very careful. A lot has changed in the property sector within the last couple of years. Before you invest, I would urge you to get clued up about new rules and regulations around tenants, such changes to HMO licensing, and changes that are coming or are likely to come, so that you aren’t breaking any laws.

Marc Trup is the Founder and CEO of Arthur Online

After selling his business to BUPA in 1998, Marc started investing in rental properties in London. Over the next 15 years, Marc grew his portfolio to over 85 properties. While successful, self-managing his portfolio became increasingly difficult. Following a long search, he found that nothing quite cut the mustard. So, being an entrepreneur, he started Arthur Online to make not only his life easier, but also that of other property managers.