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Housing White Paper highlights need to improve safeguards in private rented sector

Housing White Paper highlights need to improve safeguards in private rented sector

Admitting that the UK housing market is ‘broken’, the Government’s new Housing White Paper sets out a series of initiatives to support and diversify the housing market in order to create the type of homes that people can afford and in places they want to live.

In the plans it unveiled yesterday, while focus was placed squarely on house builders, developers and planning, the Prime Minister stated that the Government will need to take more steps to help people now, through improving safeguards and affordability in the private rented sector.

Writing in the Foreword to the White Paper, Prime Minister Theresa May said:

“Whether buying or renting, the fact is that housing is increasingly unaffordable – particularly for ordinary working class people who are struggling to get by. Today the average house costs almost eight times average earnings – an all-time record. As a result, it is difficult to get on the housing ladder, and the proportion of people living in the private rented sector has doubled since 2000.”

Safeguarding the private rented sector

In order to achieve improved safeguards in the private rented sector the Government is planning to encourage more institutional investors into housing, to build more homes for private rent, and to encourage family-friendly tenancies.

The aim of this is to drive up the overall housing supply, and to increase the choice and standards for people living in privately rented homes.

In addition to the fact that these Build to Rent developments tend to be built out more quickly, the White Paper says that they adopt modern methods of construction and help regenerate local economies by attracting a skilled labour force.

The White Paper also states that purpose-built market rental property also has the potential to help provide more stable rented accommodation for families.

“As access to ownership has become more challenging, increasing numbers of families with children are making their home in the private rented sector. The proportion of households in the private rented sector with dependent children has increased from 29% in 2003-04 to 37% in 2014- 2015. We are therefore keen to see more family friendly tenancies in new build private rented sector schemes.”

Other measures that will support more Build to Rent developments, include proposals to change the National Planning Policy Framework so authorities know they should plan proactively for Build to Rent where there is a need, and to make it easier for Build to Rent developers to offer affordable private rental homes instead of other types of affordable housing.

A fairer deal for renters

A fairer deal for renters and leaseholders is also part of the Government’s ‘helping people now’ initiative.

According to the White Paper, over four million households now rent their home from a private landlord – nearly twice as many as ten years ago– and there are around four million leasehold homes in England.

While standards in the private rented sector are improving – just 28% of homes are now deemed to be non-decent, compared to 37% in 2010, concerns still revolve around affordability and security.

The Government believes that in the longer term, building more homes will help with affordability and with regards to the lettings fees that tenants often face, it says it will bring forward legislation to ban these fees, helping to improve competition in the market and give renters ‘greater clarity and control over what they pay.’

As for safety and standards in the private rented sector the Government says it will implement measures introduced in the Housing and Planning Act 2016, which will introduce banning orders to remove the worst landlords or agents from operating, and enable local councils to issue fines as well as prosecute.

Plans are also being discussed to mandate electrical safety checks for rented properties and client money protection for letting agents. Extending mandatory licensing of Houses in Multiple Occupation (HMOs) it says will also ensure greater protection for thousands of vulnerable tenants.

Referring to the insecurities brought about by six and 12-month rental contracts, the White Paper highlights that the Government is working with the National Housing Federation and the British Property Federation to encourage longer-term tenancies in private rental homes delivered by housing associations and institutional investors. It is also proposing that family-friendly tenancies of three years or more are available on new build rental homes, to those tenants who want them.

The Government will also be speaking to the Local Government Association about local authorities’ appetite to do the same, where they are delivering market private rented housing through local housing companies. However, the paper omits any mention of a specific plan to extend tenancy agreements by private landlords, many of whom who are constricted by their buy to let mortgage contracts from offering tenancies any longer than 12 months at a time.

Commenting on the Housing White Paper, John Eastgate, sales and marketing director, OneSavings Bank said:

“Given the scale of the problems in our housing market, an awful lot of hope has been placed in the Housing White Paper, so acknowledgement of the issues is positive.

“The intentions set out in the White Paper are laudable, and it does feel that whilst many commitments have been made over the years to fix our housing issues, the weight of conviction this time is greater than ever. Speeding up the planning and building process is a much needed improvement to boost supply, while ensuring the availability of longer tenancies will provide stability to both landlords and families who rely on rental homes.

“Investment in all types of property is the only way we will meet the needs of the UK’s growing population, so the government’s commitment to support more institutional investment for build to rent is another important policy milestone. Recognition of the importance of the private rented sector is welcomed and will hopefully see a change in focus for the buy-to-let market, from one of intervention to one of encouragement, and an end to the stigma and negativity directed at landlords who will now, as ever, play such a vital role.

We need to see consistent support for the sustainable growth of the sector, coupled with measures to ensure it delivers high quality housing that meets the needs of tenants. We also need to see the call for lenders to back developers to be supported by appropriate capital initiatives that make lending for development more widely available.”

While it is encouraging to see the Government taking action to increase the country’s housing stock, this is not the first time we have seen bold promises to address the imbalance between supply and demand. 

It is also good to see the Government acknowledge the role that the private rented sector has in providing millions of Britons with accommodation. More needs to be done to help private renters certainly but I doubt that banning letting fees or extending the length of tenancies alone will help private landlords turn a profit and provide the best possible service at rents people can afford.

Ultimately, landlords’ costs have a huge impact on their tenants’ rents, and policymakers must therefore ensure that property investment remains an attractive proposition to all landlords, and not just institutional investors. The regulatory environment has become more challenging for private landlords over the past year, and supporting them should be on policymakers' radar.


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