By Richard Dawson, rental sector expert at RentGuarantor
At face value, the ‘Renters’ Reform Bill’ outlined in the recent government whitepaper, A Fairer Private Rented Sector, looks as though it will bring about a great deal of positive change for the 4.4 million households living in privately rented accommodation across the UK.
Indeed, throughout the paper there is mention of ‘everyone’s right to a decent home’ and the intent to ‘reduce financial insecurities’ for renters, which the proposed reforms aim to achieve.
Unfortunately though, this bill has somewhat missed the point, and runs a severe risk of bringing further challenges to an already diminished sector.
We can all agree that everyone should have the right to a decent home, and in the wake of the current cost-of-living crisis, financial insecurity for renters is something that needs to be addressed. However, the current reforms included in the proposal from the Department for Levelling Up, Housing and Communities will not fully achieve this. On the contrary, the recommendations made in this proposal could lead to more landlords pulling out of the private rental sector (PRS), which currently has nearly half as many properties as it did three years ago. This in turn will further drive demand, lead to bidding wars on rent, and ultimately drive up the cost of rental properties – meaning less affordable housing is available to those who need it.
Something needs to change, and while the ‘Renters’ Reform Bill’ is a step in the right direction, it fails to address some of the fundamental areas in which reform is rapidly becoming a necessity. We need the lettings industry to become fully regulated in order to drive a higher professional standard across the sector. If this is achieved, more security will be provided to both landlords and tenants, driving growth in the PRS and ultimately provided better and more affordable housing across the UK.
Where the bill is missing the mark
A number of the rental reform proposals outlined in the bill look great on paper, presenting exciting changes to the sector that would give additional rights to the tenant and removing certain powers from the landlord that might be deemed as unfair. However, while the PRS is undoubtably in need of attention, care needs to be taken in the changes being made – as these can have far reaching implications and the potential to cause more issues than benefits for tenants. An example of this can be seen in the aftermath of The Tenant Fee Act, which came into effect in 2019 and was met with a record 55% of landlords raising their rental prices and a large number of landlords exiting the market.
At present, we are already seeing a worryingly low number of rental properties available, with a recent report from Propertymark showing that the average letting’s agency branch had just five properties available to rent in February this year, with an average of 142 applicants on agent’s books. With the proposals outlined in the government set to imposed further restrictions on landlords, such as the abolition of ‘section 21’ no-fault evictions, the private rental sector will likely shrink even further.
Regulate the sector, instead of reforming it
Of course, the ‘Renter’s Reform Bill’ isn’t a complete misfire. The goal of creating a fairer private rental sector is admirable, and the underlying sentiment of overhaul is very much required – but as the rental market grows and the average length of tenancies extends, the current model itself, built to service short-term lets, is no longer fit for purpose.
And though landlords are often vilified in the public eye, the truth is most issues between tenants and landlords arise due to inexperience and a lack of awareness regarding regulation and standards. Currently anyone that owns a property can rent out that property, regardless of whether they have experience or knowledge of the PRS, so it is no wonder that the sector has become rife with problems and led to a frayed relationship between tenant and landlord.
To address these issues, we need to fix the market from the ground up, starting with legislation to regulate the whole rental sector in England. The Regulation of Property Agents Working Group (RoPA) have long called for Government regulation to ensure everyone working within the industry is licensed, adheres to a strict code of practice, and holds a minimum of a level three qualification. Not only would this ensure higher standards are met, tackling several goals in the ‘Renter’s Reform Bill’, but it would also mean a higher level of knowledge and education is needed to let a property – helping to rebuild trust between landlords and tenants.
The future of the PRS
There are uncertain times facing society at large, and the PRS is no different. With the current cost-of-living crisis, and the lack of properties available, people are choosing to stay in their current rental property for longer. This, of course, means less churn of stock, and should landlords chose to remove their properties from the market following the ‘Renter’s Reform Bill’ we will see further demand and higher rent.
If the new government were to replace the introduction of potentially off-putting reforms with wider regulation to support the lettings industry, guided by the industry experts behind RoPA, they can ensure the introduction of policies to protect and benefit the tenant, as well as make the sector more attractive to potential landlords. This will reinvigorate the lettings industry, bringing more properties to the market and reduce demand, leading to fairer prices and the positive change that tenants and landlords both need.
