Liberal Democrat peers want to make it harder to evict tenants
Proposals by Liberal Democrat peers to make it harder for landlords to evict a tenant will cause landlord legal expenses premiums to increase, insurance companies have warned.
An amendment to the Deregulation Bill, tabled at the House of Lords to the Deregulation Bill, would stop landlords using a section 21 notice to force out tenants who have complained about the poor condition of their home.
Currently tenants are not able to defend a section 21 notice - which gives a tenant two months notice to leave a property when the rental agreement expires. But if the amendment is approved tenants will be able to defend the order.
In most cases landlord legal expenses includes rent guarantee and covers the monthly rent during the eviction process, as well as legal costs which typically cost around £1,000.
Legal Expenses Insurer ARC Legal Assistance, which writes up to £3m in legal expenses premiums, warned that elongating the eviction process would lead to higher premiums and claims costs for insurers as they would have to cover the rent and legal costs for a longer period of time.
Finan said the delay would also punish good landlords and allow bad tenants, savvy with their rights, to play the system.
“It would be a massive increase in risk to us as an insurer,” Finan added. “If we cannot use a section 21 we have no way of getting the tenant out which means we will keep paying rent until we can and that will have a direct impact on increasing the premiums.”
Legal expenses specialist Rentguard managing director Steve Jones said an increase would also make the product too expensive and less attractive to customers.
The proposed amendment follows a defeat suffered by Lib Dem MP Sarah Teather, who failed to get her private members Tenancies (Reform) Bill past the second reading in Parliament last month.
Private members’ bills which are introduced by individual MPs, rarely become law, but are one way MPs have of attracting attention to an issue.
Government Bills which get more priority give the amendment a better chance of success.