Minister considering harsher eviction rules for landlords and agents
Housing Minister Matthew Pennycook is reportedly looking into French-style “hardship tests” before tenants can be evicted.
As well as banning no-fault eviction notices, Housing Minister Matthew Pennycook (pictured) is also considering adding a French-style ‘hardship test’ for tenants to the Renter’s Reform Bill.
It would mean if an eviction was likely to cause a tenant greater hardship, the courts would refuse a possession order.
Pennycock proposed the same amendment to the Conservative’s Renter’s Reform Bill. According to an article in the Telegraph, he is now open to the idea of including it in Labour’s version of the bill.
Prevent an eviction
When he proposed the amendment, Pennycock gave an idea of the kind of hardships that might prevent an eviction. These included: if a tenant had terminal cancer, would lose their job or if the eviction would result in them becoming homeless.
A similar system was introduced in France in 2008. Under its Right to Housing Act a tenant can appeal an eviction if they have no rehousing options.
The other proposed Labour amendments to the Renter’s Reform Bill were:
- Forcing landlords to offer their property for sale to the tenant before evicting them on the grounds of needing to sell.
- Making landlords wait for the first two years of a tenancy before being able to claim they are selling or moving in a family member rather than six months.
- Removing “persistent rent arrears” as grounds to evict tenants, i.e. those who fall into two months’ arrears at least three times.
The Conservative’s Bill ran out of time to become law before the election and was abandoned. Labour’s version is expected to begin its journey through the commons in the autumn.
Here is a history lesson for the experts who keep voicing opinions. Before 1988 and the introduction of the Assured Shorthold Tenancy, all tenancies were Protected or Statutory Tenancies with Landlords having little rights of possession. In many Statutory Tenancies rents were fixed for the entire duration or required a long period of notice to increase the rent. If parents rented and then died , a sibling could carry that tenancy on until they relinquished it. Always needed a Court Order that could take 12-18 months to obtain. Tenants could claim hardship etc to remain in the property. Arrears were common place with little or no redress and often the courts ignored these when a Landlord was seeking possession.
Landlords had liquid wealth not like the Landlords today who are paper wealthy and are reliant on Capital growth to purchase further properties. Before the ” Buy to Let ” market, banks only lent a maximum of 60% of the purchase price at best over 10 years . It was done purely as a commercial transaction. How many Landlords could purchase a property using that criteria ? I doubt not many
What Labour is proposing is going back to the pre 1988 days. What government don’t want is the small investor who has only has a mountain of buy to let mortgages who see it as their right to raise rents every time mortgage rates increase or inflation increases. Pre 1988 rent rises were almost unheard of and rents were set at a level the average working man could easily afford. Its not good politics to have people unable to pay the rental levels.
In essence the modern Buy to Let Landlord offers the rental market as much security as an investor on the stock market, When house prices rises, they look to sell despite telling everyone its their pension plan. Labour and Conservative governments wants a stable rental market supplied by Pension Plans who can afford to maintain properties at a high level, not look for rental increases every time inflation rises or mortgage rises and who as we have already seen can ” Build to Rent”. All governments will continue to make it less attractive for the small Landlords as there is no long term benefits either to the Tenants or to the rental market in general. Corporate Pensions see property as a long term investment and as such aren’t looking for a must have return on their investments.
Ironically the return levels for Landlords Pre 1988 were far higher than the 5% being branded around.
Quite Frankly the proposals are just old hat being rebranded for politically gain.
As Letting Agents best start cutting back as incomes will decrease with the private Landlord leaving in numbers, rents not rising so fees remaining the same (although pre 1988, standard managements fees were between 12.5% and 15%) and tenants remaining properties much longer so less reletting of properties and less sales being done of rented accommodation. , Agents wont need all the portals to advertise the very small amount of properties that are available and its unlikely that the Corporate Pension Plans will be seeking the help of their local Letting Agent. So all those who think the future is rosy, when it reverts back to pre 1988, how many Lettings Agents do you think there were?
On a positive note, the Portals will suffer as Agents realise the costs of advertising a handful of properties is not good business and it is likely the Agents will have a list of waiting applicants anyway, Void period will be short for Landlords as they use to be and the Landlords who are financially secure will benefit as they did before.
So let’s look at this rationally….
Having to offer a sale property to the tenant first- who ISN’T doing that in the first place? If you can sell at market rate to your tenant AND get rental income until the day of completion why wouldn’t you. However, the reality is, most tenants won’t be in a position to buy the property they rent.
If the Conservatives had done as pledged and got the removal; of S21 & the RRB through pre-election, we wouldn’t be in this mess at all as Labour would have had to focus on ‘bigger wins’- especially in their first 90-100 days. Conservatives are just as much, if not considerably more to blame for the situation we face. Will ministers listen, downscale and appreciate the value & role Landlords play? Only time will tell.
Making Landlords wait 2 years before being able to sell/reoccupy- we knew S21s were going, we knew indefinite tenancies were coming- it is logical this is accompanied with protections such as this. 2 years, however, is a long time if interest rates spiral or tenants stop paying rent, etc. 2 years is fine if there are exceptions for proven financial distress and, as others comment above, allowing banks to re[possess if needed.
Removing persistent rent arrears is a shame- a handful of tenants know the 2 month arrears rules and play the game. The reality is, they are few and far between- this was a good step to address that behaviour. A disappointing move but far from disastrous.
Hmmm I bet the council of mortgage lenders will have a lots to say about this…..
Will the banks still want to lend to landlords if they can’t repossess?
If the banks can’t get their money back they will stop lending .
I’m encouraging ALL landlords to sell; We have 15 rentals gone this year already. The Labour party are worse than even their sceptics thought thought. Look at what they are doing as some above said, God help us!
So what would be the point in paying rent if you know you are not being evicted. I lost another rental property yesterday because the tenant moved out and the landlord instantly said I am selling it and he came and collected the keys. His comment was “this government and the last one seem to forget it is my money I just hope they have billions available to provide social houses because they are scaring landlords out of the market.”. He is correct buckle up its going to be a disastrous five years on the performance so far.
Who in their right mind would become a landlord if this draconian nonsense is made law?
Prediction: More landlords to sell up. Less supply. Mass immigration and our population crises to continue. Demand up. Rents to rise.
The Starmer government are accelerating the slide into the sand. God help us.