While action to tackle poor quality rented homes and drive out rogue landlords has been widely welcomed, the long awaited renters’ reform bill has received mixed reviews from within the industry.
Described as the new ‘blueprint’ for renters’ reform, it’s being touted by the government as a “generational shift” that will redress the balance between landlords and 4.4 million private rented tenants.
The government wants a fairer private rented sector with “quality, affordability, and fairness at its heart”, and this bill forms a key part of its levelling up agenda, seeking to ease the cost of living pressures that renters currently face.
Michael Gove, Secretary of State for Levelling Up, Housing and Communities, is scathing about the 12% of households - more than half a million properties - that pose “an imminent risk to tenants’ health and safety.”
He estimates that around 1.6 million people are living in dangerously low-quality homes, and in total more than 2.8 million citizens are paying to live in homes that are not fit for the 21st century:
“For too long many private renters have been at the mercy of unscrupulous landlords who fail to repair homes and let families live in damp, unsafe and cold properties, with the threat of unfair ‘no fault’ evictions orders hanging over them.”
While these are the worst offenders, Mr Gove recognises that the majority of private rented homes are of good quality and offer safe, comfortable accommodation for families.
So what do the White Paper proposals mean for letting agents?
Here are the main points:
• Section 21 will be banned and ‘no fault’ evictions will be outlawed. S21 notices will be replaced with a ‘modern tenancy system.’
• All tenants will be moved onto a single system of periodic tenancies, meaning they can leave poor quality housing without remaining liable for the rent or move more easily when their circumstances change. With no end date on tenancies, renters will be able to choose to end the tenancy at any time. Landlords will always need to provide their tenants with a valid reason for ending a tenancy, as defined in law.
• The grounds for possession under Section 8 will be strengthened to ensure that “responsible” landlords will be able to gain possession of their properties efficiently from anti-social tenants and can sell their properties when they need to.
• It will be easier for tenants to have pets. If they request a pet in the property, the landlord must consider and can’t unreasonably refuse.
• The Decent Homes Standard will be extended to the private sector, to force up the quality of accommodation offered by rogue landlords - making their properties free from serious health and safety hazards and in a good state of repair.
• Arbitrary rent review clauses will end. Increases to rents will only be allowed once per year. Notice periods for rent increases will be doubled, with stronger powers for tenants to challenge rent hikes. Tenants will be able to be repaid rent for non-decent homes.
• Blanket bans on renting to families with children, or to those in receipt of benefit, will be illegal.
• A new Private Renters’ Ombudsman will be created, so that disputes between private renters and landlords can be settled quickly, at low cost and without going to court. This should ensure that landlords can gain possession of their properties efficiently from anti-social tenants and can sell their properties when they need to.
• A new property portal will be introduced to help landlords understand and comply with their responsibilities, as well as give councils and tenants the information they need to tackle rogue operators.
• Local Councils will have stronger powers to tackle the worst offenders, backed by enforcement pilots and increasing fines for serious offences.
• As part of reducing the financial barriers to moving, the issue of passporting a deposit between one tenancy and the next will be monitored and reviewed. Further action, including legislation, will be taken if needed.
Industry representatives have been quick to point out the potential issues that could arise for letting agents and landlords if the proposals are not subjected to further scrutiny.
With demand for rented homes already outstripping supply, there are concerns that giving more power to tenants through legislation could act as a deterrent to potential landlords and place further strain on those currently letting out their properties.
Figures from Propertymark, the professional body for property agents, reveal that over half of rental properties sold in March this year alone did not return to the private rented market.
Propertymark CEO Nathan Emerson, said that some elements of the proposals appeared unfair:
“How is it fair that a tenant can simply end a tenancy at a time of their choosing, but an agent or landlord has to present a valid reason that is defined in law?
“Now we have the detail of what’s being proposed, we will be closely scrutinising it and working with Ministers to help them understand how on a practical level it will impact our letting agents, members and their landlords.”
Ben Beadle, Chief Executive of the National Residential Landlords Association, said they would also be analysing the government’s plans carefully: “The eventual legislation needs to recognise that government actions have led to a shortage of supply in the sector at a time of record demand.”
One of the main practical concerns for landlords and letting agents is the ending of Section 21 powers and what will replace this.
Will Eastman, Head of Legal at Barbon Group, which includes the Rent4sure brand, said that while it was recognised that good landlords did not evict good tenants without reason, S21 had been used by landlords to try and alleviate the results of a broken system.
Landlords needed to have an efficient way to take back possession where there was a legitimate reason to do so, he said, requiring court systems and processes to be fit for purpose. However, the abolition of Section 21 “would not be the catastrophic blow to landlords that some suggest as long as the system is appropriately reformed.”
Mr Eastman said that in his view the white paper did not go far enough and that the industry needed to wait to see what changes in practice:
“Whilst I welcome more transparent regulation of the sector and a better balance of rights between landlords and tenants, this is unlikely to achieve that.”
Legislation is expected to be brought forward within the next 9 months, during this parliamentary session. Industry representatives such as Propertymark and the NRLA are seeking further consultation with Ministers and aim to ensure the final legislation is carefully balanced and does not unduly constrain the market.
As these reforms are put into law, reliable referencing will become more critical than ever as letting agents and landlords seek to do all they can to protect tenancies and assets. Agents need to be able to outsource this part of their risk management within a transparent, long term partnership and with a supplier they can trust to provide quality checks and in-depth tenant screening.
Rent4sure’s specialist teams can help safeguard and support your business. To find out more about how we can add security and confidence to your business, or to request a one-to one system demo, call today on 0330 088 3774 or click here.