PRS regulation update

The Select Committee scrutinising the so-called ‘Renters’ Reform Bill’ White Paper has reported. David Callaghan summarises the key comments from MPs and industry stakeholders.

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Major changes to the Private Rented Sector are much-needed and the relationship between landlords and tenants needs an overhaul. So says Westminster and many other interested parties in the industry. Even if there isn’t a consensus, there is certainly agreement amongst most people with a vested interest in the PRS that some reform is necessary.

For tenants, they want to see more protection against eviction, rent rises and poor living conditions. Landlords on the other hand want to be able to take action against renters who refuse to pay their rent or don’t look after the property.

They want to see more protection against eviction, rent rises and poor living conditions.

The Government recognised these tensions within PRS and published its programme for change in the Renters’ Reform White Paper last June, which it has promised will be enshrined in a bill before becoming law this year. There were some sweeping changes in the White Paper including the abolition of Section 21 ‘no fault evictions’, and an end to fixed term tenancies. Now, MPs on the House of Commons’ Levelling Up, Housing and Communities Committee have responded with their verdict on the Government’s plan.

Section 21 to go

The committee supports the scrapping of Section 21 and also fixed term tenancies, although it says they should be retained for student lets. It says that if landlords are forced to use Section 8 of the Housing Act 1988 instead of Section 21, then the pressure on the already creaking courts could become too great. This extra pressure could be made worse by landlords themselves being prosecuted by local authorities for failing to meet new Decent Homes Standards that the Government is keen on and has made a key part of its proposed PRS changes.

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Michael Gove, driving PRS reform at DLUHC.

So, the committee backs the idea of new ‘housing courts’ dedicated to dealing with Section 8 cases, as well as DHS prosecutions and other housing-related issues. “The best way to improve the housing court system is to establish a specialist housing court, but the Government has rejected this idea, for reasons we find unsatisfactory,” the committee says.

New housing courts or at least reforms of the court system are supported by Chris Norris, policy director at NRLA, who says: “The committee is right to call for court reform to underpin the ending of Section 21, changes in plans for student tenancies and ensuring cases of anti-social behaviour are prioritised by the courts.”

Redress schemes

Timothy Douglas, head of policy and campaigns, at Propertymark, agrees and says he backs housing courts, but also the fast-tracking of possession claims for ASB and rent arrears. But Douglas does not believe that a single ombudsman for the lettings sector is the way forward, as the MPs propose. The Government wants to introduce an additional ombudsman for landlords, as well as the two existing schemes for letting agents, the Property Redress Scheme and the Property Ombudsman.

Douglas says: “It is concerning that the committee has recommended that the UK Government introduce a single ombudsman for the whole of the private rented sector without considering its impact. “Such a significant change needs thorough consideration of the implications on the system as a whole.

“Alongside letting agents, sales and managing agents are also currently legally required to belong to one of the existing redress schemes, therefore removing these schemes and replacing them with one for letting agents and landlords will have knock on effects for the housing sector which the committee has failed to realise.” He says, “a single-entry point for all housing related complaints” should be introduced, and for landlords to be added to the existing schemes.

Taxation and affordability issues

Both Douglas and Norris believe the committee has recognised the fundamental nature of some of the problems faced by the PRS. For example, the committee says that the impact of tax changes on the buy-to-let market need to be looked at by the Government. “We recommend that the Government review the impact of recent tax changes in the buy-to-let market with a view to making changes that make it more financially attractive to smaller landlords,” it says.

Also, the MPs want the White Paper to reflect the “affordability crisis” in PRS with rents that are already high, rising even further. They make a concrete suggestion to help with affordability; “We call on the Government to recommit to delivering the affordable homes the country needs, particularly the 90,000 social rent homes we have previously concluded are needed every year.”

PRS documentation imageNorris says: “As the committee rightly notes, the biggest challenge faced by many renters is that there are not enough homes to rent. All the protections in the world will mean nothing for tenants if the homes are not there in the first place.

“That’s why the Government should accept the committee and the NRLA’s call for a full review of the impact of recent tax changes in the sector.”

Douglas echoed the demand from the committee and NRLA for action on tax measures, repeating the call for a review. And he says, “It is encouraging that the committee shares our concerns that the private rented sector is shrinking. As the committee rightly notes, the biggest challenge faced by many renters is that there are not enough homes to rent. “

All the protections in the world will mean nothing for tenants if the homes are not there in the first place.” He says there is a need for more social house building “to improve investor confidence, tackle affordability and increase supply”.

Douglas also wants to see a more joined-up approach across government to ensure the issues within PRS are tackled effectively. He calls for “a wider approach that incorporates the six government departments that interact with the private rented sector to create a long-term strategy for the future of renting. “For us to find a long-term solution, we must look holistically at the scale of the challenge and be realistic about the level of reforms needed.”

Benefits claimants and pets

There were some other recommendations from the MPs’ committee that have not prompted a reaction from industry experts, such as its comments on action against landlords who refuse benefit claimants. The Government wants to make it illegal for a landlord to prevent benefit claimants from taking a tenancy, but the committee says this unrealistic.

“Landlords who do not want to let to benefit recipients will simply choose not to do so,” it says. A much better solution, the committee says, would be to increase local housing allowances so housing benefit covers the rent more effectively.

Similarly, the committee believes it would be very difficult to make landlords accept tenants with pets against their wishes. The Government must “explain in what circumstances it would be acceptable to force landlords to accept pets, especially where those landlords have had previous negative experiences of tenants with pets,” the committee says. The MPs are not convinced that a workable solution to this issue can be found, especially as the Government has to come up with a definition of what ‘unreasonably withholding consent’ actually means in practice.

Tenants need to know their rights for any of the Government’s changes to PRS to work, the committee concludes, and more needs to be done to ensure renters understand what their rights are. This should start, the MPs say, by updating the ‘How To Rent Guide’ and making it a requirement for every tenant to be provided with a copy.

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