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Podcast Ep. 43 - Paul's Political Position! - Understanding the Section 21 Eviction Ban, Registers For Short-Term Lets, New Permitted Development Rules and a Possible New Planning Class



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Hello, and welcome to another episode of the essential property Podcast with your hosts Amanda Woodward and Paul Samuda. Today,we're on episode 43. And we're going to be covering two important topics, which are very relevant at the moment. The first topic is going to bethe ban of section 21, which has been an ongoing discussion for a while now. And the government are talking about bringing that in before the next election. And we're also going to be talking about the pending legislation around short term lapse and the consultation that has taken place with regards to registration and the consultation which has taken place which may or may not come in with regards to planning classes. So that's what we're touching today. The last two episodes I've been on my own but I've got Paul Samuda back with me today to talk all things government we know that he loves his government and political topics, anything economics politics, pause righthere at the forefront. So to kick off, let's talk about section 21. Michael Gove is back in the press today. So Paul, just tell us your thoughts orupdate the listeners on what the status is, as of now. I think the first thing for me to say is that, typically of this government, they flip flop a fewweeks ago, section 21 was off the table banning of section 21 was off the table. But it's been on there to be enough. And now it's back onagain. Now, I think they're doing this for political reasons. There's a an election looming, and they want to please the voters, in his case, therenters, but Notwithstanding that, if it wasn't going to be then was going to be the potential new Labour government that comes into power that implements the banning of section 21. But I think, overall, as I've said in previous podcasts, and I'll say it again, I don't think I've seen somany changes in such a short space of time in the property sector. For years and years. It's literally every few months, Amanda said wewere going to focus on two things. I think there's a third thing I think there was the government is suggesting a relaxing of requirements for permitted development for extensions, both out and up as well, which influences people in the HMO space, which we're in and you're inas our listeners. So there's so much going on so much going on. I think the key thing is, will this stick beyond going up to the election and postelection with the new government will Labour coming and tear up these new bills and make them tighter and harsher towards landlord because we know that Labour government are not a fan of landlords and all the Tories for that matter. But I think that's a consideration. But back to the main focus section 21 I think it's a lesson good in good and bad in there. I think the section 21 with the issues around the court has been a problem. And yes, it's been abused by a minority. Most landlords who use it sensibly. What's been suggested within the reform bill, and on the back of the recent suggestion of putting it back on the table, is that, in theory, landlords in a very fair and equitable way can give notice to tenant based on breaches, bad behaviour, non payment, which I think is the right thing to do, you have a good tenant, then thelandlord should behave responsibly, you have a bad tenant, then, you know, a bad tenant should be treated accordingly. Obviously give her a chance to rectify the ills. But if they're a repeat offender, they should be asked to leave and that process should be relatively. That's my view. If you speak to people from shelter, and people from the council, they may say something different because they have these people come in and knock at their door saying we're homeless, and they're saying we've got this horrible landlord, but what they don'tsay is that and pay the rent for the last three months and they've been abusive to other renters or to neighbours and things like that. So without me going on a bit of a rant. I think it's x 21. It is what it is. Amanda has a little bit more detail in terms of what's been proposed. Ithink for us as landlords what we'd like is certainty and whilst there was a sigh of relief that it was off the table in terms of the bank

 

 

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But I think deep down, we knew that he was going to be back on the table. When labour comes into power if the election goes away the polls are suggesting. So looking at a little bit more of the detail, the renters reform bill has proposed a number of different grounds for possession, some mandatory, some discretionary, which I think some most of them are fair, that will

 

 

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help with the abolition of the section 21. So just to give a little sprinkling of an example, in terms of the mandatory grounds, if a landlordwants to move back into their property, or wants to move a family member back into the property, they can, and that's two months notice, if they want to sell, they can, that's two months notice, if they are at the end of their mortgage, again, two months notice, an interesting part is they have put a special clause in there for students, because the student investors were worried in terms of or how to actually terminate at the end of the student year, I would usually use a section 21. Notice. So the end of the student accommodation can be atwo weeks notice. It says to end that sort of term and and to bring in new students, a whole bunch of other ones that aren't stuff around agriculture and places of worship, and so on, which is not too relevant to us. So that's some of the mandatory grounds as landlords, I think we're more interested in the discretionary grounds, which is ending the tenancy, because the tenant is not doing what they committed to do when they started the tenancy. So for example, if a tenant hasn't paid their rent, previously, we would have you have toowe two months worth of rent and then you can issue a 14 day, Section Eight notice, the proposal now is that if there is any renter is, that can be one month of rent arrears, you can issue the section eight, and that has a four week notice period. So it's gone from two weeks to four weeks, but you can, in theory issue that notice earlier, that's okay. If they are tenant is persistently in arrears, that's four weeks notice, breaching the tenancy agreement Two Weeks Notice anti social behaviour, subject to ticking a few boxes is immediate. And I think that gives us a little bit of certainty in terms of if we do have a real problem tenant at the property. So if the these are still proposed, so they could change. But if we remove section 21, we do bring in lots of other grounds thatallow us to evict should we need to because the tenant is not doing what they're committed at the end of the tenancy, we still do have a number of grounds. One more thing before I hand you back to Paul, which I thought was quite interesting was this one here, if theprovider of the accommodation ie the landlord requires possession from a non supported accommodation resident to relate that property to a supported accommodation resident is four weeks notice. And I think that's the Council or the government having a little bit of their cake and eating it. Because they're saying if you can actually help us and provide accommodation to vulnerable people, and those that require supported accommodation, you can actually ask your existing tenant to leave at four weeks notice and relate it to somebody through the government. That's definitely having their cake and eating it. I think I like to be a bit of a cynic. And play devil's advocate sometimes. And I think that's great on paper. One of the big issues that we've had with section 21. As every landlord now that's had to gothe distance is one you serve. Notice, nothing happens. It goes to court says come back in six months, when we've got some space foryou. You go back in six months, tenant hasn't paid in six months or paid sporadically maybe pays a little bit of money, a month before the court case, goes to the court pleads poverty pay somebody on the day gets another three month extension, eventually it gets to the point where they have to leave goes to council says don't leave wait until the bailiffs arrive. So you got to pay 1000 pounds, you got to pay 1000 pounds to get a bailiff in to talk about. So that's been the process so far. What's going to change? So we have all these noticeperiods, two weeks here, four weeks here, eight weeks there. But the criteria is the tenant

 

 

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or they leave? Are they going to leave? And if they don't leave? What then happens? Do you get the government's talking about creating aspecial court for property issues it stuff like this? Is that going to happen before the election? I think not. So what's going to be theoutcome? So so I'm a little bit cynical about changes especially lead up to the election? Because it's all changing, moving the chairs around and given the impression it's all new, but it's actually you know, same crap, different packaging. Yeah. So I have to be a little bitcynical. And the other thing that was suggested, and I can't remember what that was, you

 

 

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Within the reform bill, but it was talked about continually, I'm definitely, and Iran is a big fan of this is 12 month tenancies as a minimum, six months notice for leave as a minimum, and you have to accept pets, and you have to accept people on benefits. And that's the other side of things. And one of the financing section during what was fairly recent, one of the things which I was listening to fairly recently was,if it's difficult to get rid of tenants, when the need arises, for whatever reason, then landlord will go, really belt and braces on thereferencing. Yeah, so they'll take you inside measurements, your partner's measurements that your bank account what you spend yourmoney on, do you gamble him spin an alcohol, it always be like applying for a mortgage, because there's more tenants available, thenhouses or rooms. So the landlord still has the upper hand because they don't want to be left with a tenant that can't pay won't pay, can't get rid of it. Until the court system is fixed, which is no mean feat because they're underfunded, then nothing's going to change. So onpaper, it sounds reasonable in practice.

And we'll tell whatever happens, we live in an environment where property is now very fluid.


It's dynamic, things are changing all the time. So we have to be on our toes and be flexible. In terms of adaptive, I've always saidproperty is a long term investment, and you get these little ripples along the way.

 

 

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But 10 years from now, our property doubles in value increases by 50 70%. Or rent increases, and it works itself out. And one hopes that it works itself out in the landlord's favour. And you know, we can sell have your pension, or pay off our debt and live on our pension ifwe're a little bit older, or move on to bigger and better deals. And that's really the prize at the end of the day. All this now is detail, but the bigger prize is for what the property is going to do for you and your family going forward because most people buy a property with the intention of holding it for a long period of time. And there's two sources of benefits to landlord rent and capital growth. So yeah, soanything else, and we're just talking about the kind of the upside of that, I guess, depending on what you read, and the city, the statistics that you find, the UK needs to develop circa half a million homes every year to provide enough accommodation for those migrating to the UK, the population in the UK, etc, etc, etc. And it doesn't matter what paper shuffling the government are doing. If we don't build enough homes, we don't have enough accommodation. And if we don't have enough accommodation, and we are in the property business, we'regoing to generally be okay, we've been approached only last week by a couple of companies. One company that is housing migrants tothe UK, seeking asylum, a company that's working with the homeless people, we get inundated with companies contacting us forsupported accommodation. So I think the tougher that the government gets in terms of taking the traditional renter, landlords will then look at other options, which takes us nicely on to our next topic, whether it be supported accommodation, the vulnerable sector, or the shortterm sector, because those areas allow us to not be under so much pressure when it comes to the traditional renter. So the traditional rent is always going to suffer, even if the government put more pressure on the landlords to deliver for them because Lana's will then justlook at alternative options such as short stay. That's been one of our avenues. And some of our landlords have benefited from that we've managed to intertwine that with our long stairs to drive additional income. That's been very helpful. Now they talked about new legislation,which I think in previous podcasts, we said that was going to come in be coming down the pipe because that's really the way the system works. It allows you to do a bit of a free for all people complaints, it's affecting, it's affecting that they did a little bit of research, a little consultation, and they're bringing some legislation to support their findings and this is where we are with shorts today. So the Constitution at the moment suggests that there will be a register so if you're in the SA market, you will have to register with the council. Your house will be designated a holiday letter and will have to comply with regulations around that. And LS some issues with that. There's someissues with that because you have to think about if you have a mortgage, do you want to register your property as a holiday let if you told your lender

 

 

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that it's a vital asset. Now, I know none of our listeners would ever do anything like that. But you know, just in case I thought I'vementioned it. So those implications with that potentially small hotels b&b and guest houses are excluded from that, because they have their own planning class. They see one planning class. But the other thing is that they want to create a separate planning class for shortlist. So if you want to either convert or do a short lead


development of some sorts, I'm not too sure what the criteria then there's a planning class specifically for that. Now, the problem is shortlist has affected in the more touristy type areas, or areas where they have a lot of business traffic coming. So the big cities, some ofthe areas on the coast, the brightens and things like that, where there's there's there's two challenges, the challenge is that local people can't rent property at local prices. Because if you will, on the basis that you want to rent a normal battleship for 600 pounds a month, if it's sold as holiday let's or short today, in order to be able to get that same property as a rental, you might have to pay as high as 12 or 1500pounds. And that's obviously unaffordable. And that affects the local economy, for people living there locally. The second thing is that it itaffects just the whole tone of the area. I think most areas welcome tourists. But you know, the country that the way it is and Brits been?They are right. They don't want too many, the morning just right to keep things ticking over, but not too much that they have to be inconvenient. And you know, that's the culture that we live in. So I think they've come together. So let's see how we can police this, let'ssee how we can maintain some sort of order. So councils who are genuinely broke, I have now been given the authority to oversee this, I assume that they're gonna get a little bit of a budget. If they don't have a budget, then good luck to them being able to please them. But as we've said before, the legislation is upon us for short stay. Are we worried? No, we're not worried because we ensure that the properties that we work with are compliant anyway.

Because we anticipated this. We're very familiar with local legislation as it relates to HMO and

SA, had to go down in that direction in terms of fire doors and exits and stuff like that. The planning side could be quite interesting. As I said, there's going to be implication in terms of fundraising. If you have a specific planning class that's going to be quite interested in theway that evolves going forward. And I think, for anybody out there listening, who do an essay that one a little bit of advice on that in terms of what they should do, then anybody should have a chat with us contact us and have a chat. And we can probably work out a strategy for them once obviously, legislated, comes out, it's in consultation, I think through till about April, but that's normally a fait accompli. And it means that there's going to be something on the books and they try to force this stuff through before the election aspotential vote winners for people in those constituency where holiday lights are affected. And the other thing as well is that people buy

 

 

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houses in parts of the country where they probably tourists, have the missing second homes, run them as holiday let's for part of the year,elect them as basically standalone businesses,

 

 

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go for business rates instead of local council tax, get small business relief, so they don't pay any business rates. So basically, they'remaking money out of the area, but nothing has been reinvested in terms of cards, tax or business rates. So the locals in those areas a bitmiffed about that. So that's probably another reason why they've loved it. But I think the main reason why he that it crowds out localpeople being able to rent and a reasonable price, because people from outside the area have been buying up the properties and doingthem as Airbnbs. So I think Watch this space, whether you have anything to add on that amount of Well, I think in our past experience legislation has generally worked in our favour once we got over the shock of it when it came to HMOs. So yes, you're having to spend tospec your property. Yes, you're having to licence than the so you're having to go on record with with local authorities.


But what it does do it does shake out the shysters and I think for serviced accommodation, it will probably reduce the competition, because I think perhaps the renter renters or the rent to essayez people that are renting properties and the landlords actually have no ideawhat they're doing with them. And all of a sudden the landlord now has to register it says hold on a minute. I didn't even know that you were renting this out by the room properties that don't have fire doors, etc. So when we saw article four in Crewe, yes, it stopped. Newdivision.

 

 

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Remember what it did do was reduce competition and increase the rents. So I just wonder what upsides will come because all of ourhouses, they are up to spec. And whilst you wonder, what is the government's real strategy here? I don't think within our business, andthose professional operators have a huge

 

 

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issue with it. But I think those that are doing stuff, perhaps a little bit behind the scenes, may decide it's not profitable anymore for them.But we shall see. Yeah, no, I agree. So with that, I think we should touch on some of the changes for permitted development, which have been mentioned, we're a little bit slim on information there. Again, that's something I was going through consultation. And basically, the government saying, it can't be enough houses, let's make it easier for people to make their houses bigger, to accommodate more people, but to make it easy to build under plots of land, to convert existing properties that are maybe going by the wayside retail, as an example, old offices, they're no longer efficient. Let's see, we can convert those permitted development has been around for a few years now. Andone would say, successful, some councils might defer to that opinion, it all depends on quality. But anyway, the government had pushed through and continue to push domestic development, I think on the basis that planning legislation is based, so antiquated, in knees, for someone to drive something through it. So I think more recently, I think, in the last podcast, we mentioned that you can now convert a house into two flats without planning permission, obviously, that's going to be viable, that might be impossible, or maybe not survivable. But in the in the Midlands, in the south probably is quite variable. So that was going coming up the pipe, I don't know whether that'sactually on statute now. And then they're increasing the numbers in terms of what you're allowed to do in terms of extensions, without require planning. And that's single instal, we wrap around, they're trying to just make it as easy as possible to do extensions, as neededall about extension, that starts to go into HMO territory. Yeah, we love an extra room or two, we love an extra room or two. So they're allowing things as I understand it, or suggesting to allow things if you want to go up into the loft, if you don't have enough head height, you're able to raise your roof by about 30 centimetres, or instead, to give you that extra roof space to make it a livable area. So you can get more rooms up in the left there allowing you to go out further. And if you want to do a wrap around another application, so you could be into two or three different applications.

 

 

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Yeah, so I've tried to tie it up and make it very easy and say, Okay, fine. If you want to do a wrap around on tobacco side, nope. Anyrequired to finish drawings and get on with it. So that's what's been suggested, which has got to be good news. So what does that mean? Itmeans that


if you have existing property, you look at it and say, is available for us to extend up or out? Like we did this afternoon? Yeah, absolutely.Absolutely. If you are looking to purchase a property, you now look at it with the thought that if I wanted to take a longer timeframe, and extend and get more rooms, then I don't have to worry about planning. Now, as I understand it, there is still the six person limitation forHMO. So if you want it to extend up and out, or and or out, but you want you to accommodate more than six people, then that still requires planning. The one that's interesting for us, for people who are invested in crew is how does it how does this affect us in crew because of the article for directive. So if a property's in an article for area, will we still be allowed? If this legislation gets pushed throughthis book as pushed through, will we still be allowed to extend up and all out without requiring planning is under permitted development?So that'd be interesting. I know, in some instances, isn't allowed in conservation areas and article four areas. But the impression that I have and I stand to be corrected on this is the government knows that some local authorities use article four, just to put a spanner in the works. So I suspect they're allowing some of this new permitted development to bypass article four I certainly hope so. I certainly hopeso. Sanity is we need we need more rooms. We need more accommodation, especially in the affordable arena. Clothes a disasterbecause it absolutely deserves

 

 

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So I think it's probably the worst thing that they did for achieving the accommodation goals and housing goals. And I actually think weshould write to the head of the counselling crew, and say this essay where we're on the ground, and we get more inquiries for combination include that we just aren't Phil, and this is both HMO and normal houses the lab. And if someone if something goes up to let we get added in terms of housing, we had one little, I think one bedroom or two bedroom apartment, which was to the side of an existing HML we had atonne of inquiries. So those letting agents that specialise in single nets will be inundated, but they don't have the property. Yeah.

 

 

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And it doesn't matter what the government tries to do. If they say yes, you can extend your house. Yes, you can. Well, we're going toclamp down on this with landlords the rarity is unless there are more properties built, we're still going to have this problem. And we really are just shuffling paper, aren't we to try and make

 

 

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it look like there's action being taken. But the action is quite minimal. I was thinking about how we as HMO investors and how our listenerswho who also own hate HMOs benefit more with all this change than those with the single family laps. Because if you imagine that you have a tenant in a HMO, who's being antisocial, he's paying everybody off. He's or she causing trouble and the police record and so on. And you say right, that's it, I think they said here immediate eviction, generally they will leave, because a person and HMO can go in, live back withtheir parents, they can go into sleep at a mate's house, they can go and find another landlord to disrupt. But if you have two adults, twochildren, they go to the local school, they've lived in the


house for a long time, and then they have become problematic. That's been very difficult. So as HMO owners, I think we just have a little bit more transient tenants that will leave anyway at some point. And even when it comes to the permitted development, if you have a

 

 

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tuition, terrorists and soul contract, and you have a large yard area, and you rent that to a family, and you think right, I can put anextension on the back, because I want this permissive development. What's that really going to do to a two bed terrace for a family? Not alot. But for a landlord with a four bed HMO, if you know that you can go from four beds to six bed without going through huge amounts ofplanning. You've got two additional income sources from those two rooms whereby a family let perhaps you might get an extra 50 pounds a month for utility room. So I think HR landlords benefit a lot more from these things. And then your traditional buy to let renters rewrite, I don't think that was the Government's intention. That's just a byproduct. I think the thinking is, I think it's true. If you're a family of four, and you now got a trader, to a larger property, if a larger property is not on the market, maybe might be cheaper, if you're an owner of that property, to do an extension, and create a room for your growing family.

 

 

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I think that's why it probably helps. So it's actually not helping the housing crisis in terms of number of homes bill, but it's given people other options to expand their existing plot to accommodate their new members of the family, ie homeowners in Glen is not going to an extension, not the ROI is not there isn't a reason to do an extension is because he wants to turn that singular intellectual. Yeah, that's the only reason he would do it, which makes a lot of sense in terms of the comparison. So you can go up into the left or out and you can turn a two bed two up two down into a six bed HMO, and probably increases his cash flow threefold. You do the numbers, you check the ROI.And I would say seven or eight out of 10 times it's one further, we were definitely going to be looking at all our properties over the coming year such as this legislation, we'll probably wait until to see what the labour does see when they change any of it, but we're probablygonna look at all our properties. And just see where it's feasible to, to go up and or out, especially in those areas where we have a lownumber of rooms in the HMO like form. And we have land at the back and we can't expand any more because of Article four. So currencynow please, one, we've got some ideas and stance and still about my fall into that category, thinking about bangle street or something likethat. So So there's definitely a few options there. So I think all in all, to your point, Amanda, the changes that come through when you walk them through, there might be some rough edges to it. But I think all in all long term

 

 

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With a bit of thinking and strategic planning, we can tell them to our advantage, which has to be a good thing. Housing is so importantalthough people scream and shout, landlords provide one in five homes for people living in this country seem to be one in four. And I think the government has said this appears broadcast, I think the government has realised that it really screwed up royally over the last few years. With the changes they're made to tax. With the changes they're made on E PCs and a whole load of stuff are threatening tolandlords, then


landlords decide to sell up. And when you sell out, chances are you don't get that stock back to for renters, it's bought by a first time buyer great tick. But every house is posted by first time buyer is one less house to rent. And that pushes up rent for the existing and thenrealised what they've done. So maybe some of this, the last few bits and pieces of commands been setting up being on the side of the landlord, or beneficial to the landlord. Now, not beneficial to tenants, but definitely benefited landlords. So of course that might change when Mr. Kerr starlet comes into power. I'm talking as if it's a slam dunk, I think more necessity to buy elections unit day and the Toriesgot absolutely crucified. Paul, Rishi could believe it when he thought he was having his worst nightmare. And that might be just a sample of what's to come.

 

 

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I think one thing you can't stop is you can't stop the train of human behaviour. And if people want to travel around the country and stop in an Airbnb, I think Airbnb is a dirty word. They didn't use it in the consultation, they said, online platforms or something like that. But if that's what people want to do that they will do that and no matter what, how you tried to squeeze or enforce, if that's the behaviour, just like if there are migrants coming to the UK, and they're being accommodated in certain types of accommodation, which is pushing out local renters. That's just the human behaviour, what's happening at the moment. Take crew for example. I think there is now one hotel lifting crew

 

 

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for people moving around the country because the the lady who works for us usually the general manager the property directly acrossfrom the station and grew during COVID. That went to the programme to get everybody off the streets for COVID which is a greatprogramme the hope the hotel took that on now it has become a migrant hotel. I think the name has been coined. I won't mention the hotel names, but there's another two or three down Nantwich road which are also the same. So I think we're just left with the Ibis stoke isthe same certain parts of Stoke are the local authority either just leased the whole hotel, and the hotel directly opposite Stoke on Trent train station now is predominantly taken over by the council. So there isn't the traditional accommodation IDI the hotels and bays because the government have made them such a great offer to take particular people that the government can't house. So people are thought that into the Airbnb types. So whilst they're saying we're going to tamp down on all this, you can't stop that train of just what's happening in the country at the moment. Maybe the government can make a bit of money out of it. But I think they have to move with what's happening. And that's what we see. Okay, so I think that we've probably covered a fair bit with a bit of politics thrown in, and to show whether we're fixing immigration policy. But so I think, as usual, we try and keep our listeners informed. I think going forward will communicate with those who rent from us, or users to rent their property on any changes that affect their property in particular, but given the changes in planning, I think there are opportunities there for sure. The impending consultation on service accommodation. I think it's just formalising things that we knew was going to happen anyway. So I don't there's too much to worry about there. The Register. Not sure about that. And I think that could be a little bit of a trap, if we're not careful. But we may not have a choice but to register any service accommodation units.

And section 21 is a guide is it not going sounds like it is going it's just a matter of why we are

with the courts and being able to fully evict someone without having to bring in bailiffs and going to court and things like that. So watchthis space. Right. We hope you enjoyed it. As


always please share the podcast with anyone else that you know that would benefit from listening to it. Please get in touch we'd love tohear from our listeners to share with us what you'd like to hear on future episodes. Thank you for listening.

 

 

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We hope you enjoyed today's episode

 

 

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