Using new survey results revealing what regulation tenants want, we examine how the planned Renters’ Reform Bill will meet these needs and how it will impact the buy to let community.
There’s been much discussion around stricter regulation of the private rental sector (PRS), especially over the last few years. Last year, the Government finally released further details of its Renters’ Reform Bill, including the controversial plans to abolish Section 21 “no-fault” evictions and extend the Decent Homes Standard to PRS properties.
Unfortunately, the buy to let landlord community is still waiting for confirmed deadlines for these changes, resulting in considerable uncertainty and frustration. It’s fair to say that many feel this is an unfair persecution of landlords. At the same time, some tenants and supporting bodies believe these are necessary measures to protect those who live in rental properties across the UK.
But what do PRS tenants actually want from this legislation? A new survey of tenants and landlords reveals that 73% of tenants want more regulation, which, if we’re honest, is pretty vague. Demonstrating the extent of the disharmony between the two sides, 63% of landlords surveyed believe there’s already too much regulation, and 65% feel unfairly penalised by the Government over the last 10 years.
Increasing Standards of Buy to Let Property
74% of tenants believe that more needs to be done to raise the standard of PRS properties. Fortunately, extending the Decent Homes Standard (which currently only covers social housing) to the PRS would give landlords a slightly clearer guide to what is considered acceptable. While this isn’t a perfect solution, it would certainly help settle disputes over property conditions and help root out the minority of neglectful landlords that leave properties in significant disrepair. You can read more about what the Decent Homes Standard guidelines include here.
In addition, the planned introduction of a ‘property portal’ and Ombudsman service should support the industry’s professionalisation and help meet tenant needs for better quality properties by holding ‘rogue’ landlords accountable. It will also provide a platform where a neutral party can resolve tenant and landlord grievances fairly. In turn, we hope this will combat and redress the unfairly poor reputation landlords seem to have in the UK.
Rent Controls for PRS Tenancies
77% of tenants would like rental price controls, which perhaps isn’t that surprising. However, many landlords have had no choice but to increase rents to mitigate rising buy to let mortgage interest rates (a factor entirely out of your control) over the last 12 months. Furthermore, the significant imbalance between the supply and demand of rental properties fuels rent increases because, as with anything, low supply and high demand push up prices.
Currently, the Renters’ Reform Bill only includes plans for restrictions on rent reviews, stipulating that tenancy agreements can no longer have rent review clauses. Furthermore, landlords must give at least two months’ notice of a rental increase rather than one.
It appears the Government recognises that blanket restrictions on rents, like we’ve seen in Scotland, would have a profoundly detrimental impact on the sector by encouraging more landlords to sell up, only adding to the supply and demand issue. While the new rent review regulations will make it more difficult for landlords to adjust rates quickly, this does appear to be a fair middle ground that serves both tenant and landlord needs.
Section 21 “No Fault” Evictions
The planned abolishment of Section 21 “no-fault” evictions is undoubtedly the most hotly contested part of the Renters’ Reform legislation. While 62% of tenants support the move, 40% of landlords are concerned it would leave them with tenants they need to evict but can’t.
It’s clear from speaking to many of you over the last year that this particular piece of legislation is a genuine concern regarding the future of your buy to let investment journey. We wrote extensively about the enormous implications abolishing Section 21 “no-fault” evictions would have back in October, and we continue to support groups advising the Government on the best approach.
The fact of the matter is tenants do need protection from vindictive evictions, but it’s essential landlords can control their portfolios, including when they need to repossess. We hope that suitable adjustments to the Section 8 eviction and legal processes will provide a fair solution for landlords and tenants alike.
While this may all seem pretty gloomy, a more extensive survey of tenants found that 81% are satisfied with their property and 85% with their landlord. The Think Tank Social Market Foundation report found that “the greatest source of dissatisfaction among tenants is with being a renter, though only a minority of renters (34%) said they are dissatisfied with this status.” This finding suggests that most tenants are unhappy that they don’t own their own home rather than their physical living circumstances and that, on the whole, PRS landlords provide comfortable housing for those who need it.
Despite difficulties around Section 21, the Renters’ Reform Bill doesn’t look like the death of the UK private rental sector. But we’re sure some firm clarification on details would go a long way to calm the nerves of a frustrated landlord community.
Stay up to date with BTL legislation, mortgage rates and property investment news with our FREE weekly newsletter. Sign up today!
25th January 2023