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A Rental Market Update | Rental Reform

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Revolutionary change in the private rental sector

With 20 per cent of all households now privately renting, this sector of the market is more important than ever.

Up and down the country letting agent members of Propertymark, have seen demand from prospective renters rise month on month. An average of 113 new applicants registered for rental property, per member branch, in May compared to earlier in February.

So, it’s quite right it comes under scrutiny, including from the government. Recently the release of the Fairer Private Rental Sector White Paper set out a blueprint for quite revolutionary reform.

All Change – but not immediately

Often referred to as a once-in-a-generation reset for renting, for once the hype feels justified.

The White Paper recommends 12 major changes. These are specifically for England, but they echo similar initiatives in Scotland and Wales too. Before we get to them in detail, a word about timings and managing expectations.

Some proposed changes involve months of formal consultation and preparation. Others require legislation which could take well over a year, and a few proposals are ‘aspirations’ and not specific measures. So, nothing will happen overnight and, realistically, some details may change as they become law.

But if and once they do happen, the rental landscape could look very different indeed.

The Key Measures

  1. Private rental properties must meet the strict ‘Decent Homes Standard’ which already exists for council and housing association homes.
  2. The end of so-called ‘No Fault’ or ‘Section 21’ evictions. This will stop problem landlords from evicting tenants for malicious reasons. For example, if they demand repairs or if they complain about the condition of the property.
  3. Clarify grounds for ‘genuine’ evictions – for example for tenants with long-term arrears or anti-social behaviour.
  4. Rents can rise only once per year, with tenants having greater power to challenge excessive rent increases.
  5. A new Private Rental Sector Ombudsman to try to settle tenant/ landlord disputes without court action.
  6. More opportunities for tenants to pursue Rent Repayment Orders and other compensation from rogue landlords.
  7. Speeding up any court proceedings where disputes can’t be settled through mediation.
  8. An online register where tenants and landlords can check landlord credentials.
  9. More power for councils to investigate the activities of problem landlords.
  10. Making it illegal for landlords to operate blanket bans – for example, on tenants with small children or those receiving benefits.
  11. Renters will be able to ask to keep pets – a request “which the landlord must consider and cannot unreasonably refuse.”
  12. Investigating ways to make it cheaper to move by shifting the deposit from one rental property to another.

What does all this mean?

There’s universal agreement that these measures fundamentally shift power to renters and will, long term, improve housing quality.

For renters, this is good news as they’re likely to stay longer in improved properties, with common-sense changes to allow pets and planned rent rises.

But – there’s always a ‘but’ – there are downsides which cannot be ignored.

Landlord concerns

Some landlords have quit the buy-to-let sector in recent months, disillusioned after years of increasing taxes and stricter regulations. In doing so landlords have created acute shortages of homes to rent. In turn leading to soaring rents – up 10 per cent in a year in some cities. Also echoed by the 79% of Propertymark agents all reporting rent rises in May.

This has been offset in part by new landlords tempted by strong demand from renters and, until recently, low-interest rates.

However, rates are now rising fast (five increases in the past six months). Landlords also have strict new energy efficiency targets to meet soon. So, there’s a genuine question mark over how much more landlords can cope with in terms of costs and regulations coming their way from the White Paper recommendations.

Public sympathy for landlords may be limited but if they have to cover those extra costs themselves, there’s only one end result – even higher rents!

The elephant in the room

The other downside of the White Paper is that it says nothing about increasing the supply of properties across the board, from the private rental, councils and housing associations, and new homes for owner-occupiers.

“Given the ever-widening gap between supply of homes and demand, it is crucial that Government’s across all nations prioritise reforms that incentivise new and existing investment in the sector.” Nathan Emerson, CEO, Propertymark

That’s a whole different debate but it has a bearing today because a shortage of supply has contributed to the latest sharp rises in rents and asking prices for homes on sale.

So, let’s welcome the White Paper as a way of modernising the private rental sector eventually – but not making life any easier for tenants or landlords in the short term.

If you’re a tenant now or even a homeowner selling and considering renting until you find your next home to buy, then we’ve got you covered with everything you need to know about renting.

We will provide updates on how things progress here and via our newsletter – join us by subscribing and get Phil’s advice delivered directly to your inbox.

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Last Updated: July 7th, 2022