22 Jun 2022 | Residential

Key takeaways from Rental Reform white paper

A casualty of the pandemic, this long awaited “A Fairer Private Rented Sector” White Paper has just emerged. It has been, somewhat tenuously, tied to the Levelling Up agenda. And if Oscar Wilde was right when he wrote “imitation is the sincerest form of flattery…” then the Build to Rent (BTR) sector should be feeling very flattered right now. Most of the proposed changes have been lifted directly from those introduced by investors since the sector’s early days.

They include:

  • PRS housing to meet the Decent Homes Standard for the first time. Naturally, BTR continues to exceed these by some margin.

  • “No fault” evictions to be abolished - BTR investors prefer good customers stay for as long as possible.

  • Illegal for landlords to ban renting to families. I can’t imagine why a BTR investor would want to ban families, when I last looked, there were one million families renting in the PRS.

  • Tenants to have a right to request a pet. The vast majority of BTR investors (it might even be all of them now) allow pets, when they can, to enhance customer wellbeing and increase lettings.

There are then some proposals which are often done in BTR with good reason, that are proposed to be banned:

  • Tenancy end dates will be abolised and replaced with rolling tenancies. Whilst I get the logic of this to ensure tenancies don’t terminate by the effluxion of time, the transition to the new regime, when it comes, will be uncomfortable for renting customers who have been used to having an end date in their tenancy agreement. Some may see a never ending tenancy as something to be concerned about. The Government will need to heavily advertise the change when it comes to try and overcome this.

  • Rent review clauses to end and rents only allowed to increase once per annum. A tenancy for a fixed length of more than a year, being reviewable annually and on a clear and agreed basis e.g. linked to RPI and possibly with a collar and cap has benefits for customer and landlord as both know where they stand during its duration. An annual market review creates uncertainty for both sides and the process may be more unwieldy.

And finally, some proposals will benefit BTR investors and other good landlords if properly introduced.

  • Landlords will find it easier to evict (provided they can get a court hearing – and that may be a big issue) for anti-social behaviour, the sale of the property or persistent arrears.

  • Increased fines and powers to crack down on rogue landlords. This is welcome news. There is a long held concern that by not cracking down on rogue landlords directly and enforcing the many powers that exist to do so there is always pressure to introduce even more legislation to crack down on them further. BTR investors and other good landlords comply with the new rules, usually at extra cost and bureaucracy, but the rogues continue to avoid them e.g. landlord licensing. It’s worth noting that all private landlords will be forced to join a new Ombudsman (no doubt at a cost and no doubt to tackle rogue landlords – again). Are the rogue landlords going to sign up?

Overall, the proposals are to be welcomed but there is room for improvement if the Private Rented Sector is to function effectively for all the parties involved.

A Fairer Private Rented Sector

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Andrew Stanford Head of Build To Rent