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Proposed reforms for the private rented sector: An update on the Levelling Up, Housing and Communities Committee’s Report

The government’s White Paper, “A Fairer Private Rented Sector” was published in June 2022. It aims to provide a fairer balance between the interests of landlords and tenants, but does it achieve it? 

A response from the Levelling Up, Housing, and Communities Committee (which comprises MPs and landlord & tenant groups) was published on 9 February 2023).   All sides recognise that change is needed but, unsurprisingly, most landlord groups feel the proposed reforms go too far, whereas tenant groups do not believe they go far enough.  Striking a fair balance is going to be hard.

Some of the key changes:

  • The abolition of Section 21 no fault evictions
  • The abolition of fixed term tenancies
  • The creation of a register of landlords
  • Blanket bans against benefit claimants and pets

Abolition of Section 21 no fault evictions

This proposed reform is viewed negatively by landlords.   Landlords generally want to look after good tenants, keep them for as long as possible and avoid costly remarketing and void periods.  Section 21 is regularly used to recover a property where a tenant is at fault and in breach of their lease, for example, where a tenant has run up arrears and there is little prospect of recovery.   It provides the cheapest and simplest way to evict a defaulting tenant.   Landlords are concerned the changes will mean being saddled with poorer tenants for longer. 

Wider Section 8 grounds are being introduced to fill some of the gaps.  These include new mandatory grounds for sale; occupation by a landlord or a member of their family; and cases where there have been at least two months of rent arrears three times in the previous three years.  This latter ground is good news for landlords as it tightens up the existing Section 8 mandatory rent arrears ground.  Tenants will no longer be able to avoid eviction by paying some or all the arrears prior to a court hearing as is the case now.

Tenant groups feel the inclusion of new mandatory grounds for sale or occupation remove most of the intended tenant security and provide bad landlords with a backdoor “no fault” eviction route.  Modifications have been requested in the Report to increase to the length of tenancy that has to elapse before the grounds can be used and the notice period that must be given by the landlord. 

Court hearings will be required to evict in all cases under the reforms.  This will be expensive and slow.  There are already significant delays in the court system and there is little from the government to indicate how a court system already bursting at the seams will be able to cope with an increased caseload.  Streamlining of the court process will be key if the reforms are to work. The Committee is currently working on proposals with the Ministry of Justice, although a specialist housing court with fast tracking for rent arrears and anti-social behaviour is the Committee’s preferred route.  Whether there is funding to support that is another story!

Abolition of fixed term tenancies

The abolition of fixed term tenancies in preference to rolling periodic tenancies will mean tenants are able to leave a property at any time (generally on 4 weeks to a month’s advance notice).  If a tenant’s personal circumstances change, they will no longer be tied to a property or have to pay rent until the end of a longer fixed term.   They are also more likely to Report “bad” landlords without fear of retaliation if they know they can leave more easily.   

Whilst providing more flexibility for tenants, the Report recognises that landlords face significant uncertainty of income.  The proposals also fail to consider that buy-to-let lenders often require minimum 6 months letting periods as part of their lending terms.  Private rental stock is already low and if the changes make borrowing more difficult this could dent availability further.  As the Committee quite rightly highlights “all the protections in the world will mean nothing for tenants if homes are not there in the first place”.  To strike a balance, recommendations have been made that tenants should not be able to give notice for at least 4 months to ensure landlords have certainty of at least six months’ rent but also that a review of recent tax changes be made to make the sector more attractive for investment and increase the pool of housing available. 

This proposal is also causing a headache on both sides of the student letting market. Most university towns struggle with inadequate levels of private rental accommodation and if students can bring a tenancy to an end as soon as they finish their studies, we could see more landlords either move away from student lets entirely or start charging premium rents to students.  The Committee recommends that student fixed-term lettings should continue, subject to landlords signing up to an existing government approved code of conduct. This is in line with purpose-built student accommodation which is already exempt from the proposed reforms.

New register of landlords

England will introduce mandatory landlord registration to provide a way for tenants to check if a landlord is complying with the law and increase confidence that a property will be safe and fit for habitation in advance of a tenant signing a tenancy agreement.  

Registration will enable good landlords to build a public profile to attract prospective tenants.  In turn, it is hoped that rogue landlords will be incentivised to comply with the law to improve their public profile.  It will also aid local authorities in ensuring housing standards are maintained by more easily identifying rogue or criminal landlords.

A lot of the detail still needs to be considered to ensure the register works how the proposals intend and it will not be known for a while what will be included in the register.   It is anticipated that similar benefits those already being seen in Scotland and Wales who have had landlord registration for some time will be experienced in England. 

Blanket bans against benefit claimants and pets to be made illegal

Whilst the reforms aim to strike a balance, in a free-market economy, shouldn’t landlords have the right to let to whomever they like?  It seems the government has other ideas.

The government want people on low incomes to live in decent homes and propose making it unlawful for landlords to have blanket bans against letting to benefit recipients.  The Report identifies that there is little in the proposals to secure more availability to tenants on benefits.  Practically this reform will have little effect, unless mechanisms are put in place to monitor landlords who continue to refuse to let to benefit claimants.  Provided landlords don’t instigate blanket bans and consider potential tenants on their individual merits, they can continue to let to the tenant who poses the lowest risk.  Faced with a choice of potential tenants – someone on benefits, a student or a working person – landlords will continue choosing tenants who are most likely to be able to pay the rent.  If the government really wants this to work and give benefit claimants a fair chance of securing a property, they need to increase housing benefits to a more realistic level in line with market rents. 

Next on the list are pets! Pet owners should not be “unfairly deprived of the company and companionship of an animal by their landlords”.  Under the proposed reforms landlords will be required to let their property to someone with a pet on request unless there is a reasonable excuse not to.  Currently there is no detail on what would be considered unreasonable.   The current proposal also provides that pet insurance can be charged to the tenant needing amendment to the Tenant Fees Act 2019. 

Landlords are understandably worried about damage caused by pets, and many have negative experiences.  Other tenants in multi-occupied properties such as HMOs also may object if, for example, they suffer from allergies, experience nuisance from constant barking or simply don’t like pets.   For these reasons, the Report rejects the ban on pets but recommends if the proposal does proceed, that there is detailed guidance as to the circumstances where it will be acceptable to “force” landlords to accept pets.

You can read the Report in full here.

Since this post was originally published, the formal Bill has been introduced to Parliament. The Bill can be read here. The Bill is still very much in its early stages and subject to change, along with much of the finer details to be introduced later by way of statutory instruments. Updates will be provided.

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