In recent times, the UK property market has been nothing short of turbulent. Rising mortgage rates and the cost-of-living crisis have cast a shadow over the housing sector, leaving many uncertain about their next move. However, amidst this uncertainty, the election of the new Labour government provides some hope for home buyers.
With new policies and promises from their manifesto, many will be contemplating what this new government will bring to the housing market, inspiring homeowners and prospective buyers to contemplate – is now the right time to join the hunt?
King’s Speech: Labour policies back housebuilding and leasehold reform
Housebuilding, leasehold and rental reform are set to be key roles of the new Labour Government’s legislative agenda but agency regulation was missing from last weeks King’s Speech.
The State Opening of Parliament saw the King’s Speech set out Prime Minister Keir Starmer’s legislative priorities. This included a Planning and Infrastructure Bill as well as legislation to fill the gaps on leasehold reform and scrapping Section 21 notices.
The Planning and Infrastructure Bill aims to help Labour fulfil its aim of building 1.5m homes over the next five years by reforming compulsory purchase compensation rules and modernising planning committees, while boosting their capacity.
Brian Berry, chief executive of the Federation of Master Builders said "it is positive that the new Government has already made tackling the UK’s housing crisis a key priority. One startling omission is the lack of plans to upgrade the existing housing stock. We had been expecting to see a bold plan to retrofit five million homes to make them greener and more energy efficient but clearly the purse strings have not been opened enough to allow for this. While we should be looking to build more homes we mustn’t take our eye of the existing housing stock, which is the oldest and leakiest in Europe.”
Tim Bannister, Rightmove’s property expert, added “the new Government can now get going with its pledge to improve planning processes so that building homes can take place more quickly. We need more, good quality homes across the UK in the right places, so that everyone can find their next home, whether they are looking to rent, buy for the first time, upsize or downsize."
Meanwhile, a Draft Leasehold and Commonhold Reform Bill pledged to end the “feudal leasehold system” by continuing previous changes including regulating ground rents and banning the sale of leasehold flats.
Katie Kendrick founder of the National Leasehold Campaign, described the move as 'momentous'. She said: “over the years we have heard many Queens / King’s speeches promising reforms but today’s commitment from the new Government feels different. It feels like meaningful change is eventually going to be delivered. It is clear there is a lot of work still to do on the many issues of leasehold but it's refreshing to know that the new government is determined to pick up the outstanding issues, tackle them head on and deliver once and for all.”
However, Sheila Kumar, chief executive of the Council for Licensed Conveyancers, suggested "the Government has missed an opportunity to make further improvements to the homebuying and selling process by failing to introduce measures to regulate property agents. Regulation of estate agents and managing agents could be immensely helpful for improving the operation of the property market, making better use of housing stock, supporting growth and providing increased confidence to consumers.”
Summary of proposed UK Renters’ Rights Bill
Landlords have another battle on their hands with news that the Renters’ Rights Bill will pick up where the Renters (Reform) Bill failed to deliver. Despite a 2019 manifesto pledge, the RRB was binned by the Conservatives after Rishi Sunak called a General Election.
Now Labour is promising to ‘take action where the previous government has failed’ on the protection for renters.
The proposed Renters’ Rights Bill aims to enhance tenant protections and improve living conditions in England’s private rental sector. Here’s a detailed summary based on the government’s statement and interpretations from other sources:
Purpose
Objective: To provide greater rights and protections to renters, addressing issues of insecurity and substandard living conditions.
Key Provisions
Abolishing Section 21 ‘No Fault’ Evictions:
- Ends No-Fault Evictions: Prohibits evictions without a stated reason, increasing tenant security and stability.
- Expanded Grounds for Possession: Clarifies and expands the grounds on which landlords can reclaim their properties, making the eviction process more transparent and fairer.
- Strengthening Tenant Rights
Challenging Rent Increases:
- Empowers tenants to dispute unfair rent hikes
Banning Rental Bidding Wars:
- Prevents landlords and letting agents from engaging in practices that inflate rental prices through competitive bidding.
Pet Requests:
- Allows tenants to request permission for pets, with landlords permitted to request insurance to cover potential damages.
Improving Housing Standards
Decent Homes Standard:
- Applies this standard to ensure that rental homes are safe and free from hazards. The standard is due for a rewrite, although the date is not specified.
Awaab’s Law:
- Mandates timely repairs of serious hazards to maintain safe living conditions.
Digital Database and Dispute Resolution
Landlord and Tenant Database:
- Establishes a digital platform for accessing key rental information, improving transparency.
Ombudsman Service:
- Introduces a new service for resolving disputes fairly and efficiently, aiming to reduce the burden on courts.
- Anti-Discrimination Measures
Protection Against Discrimination:
- Makes it illegal for landlords to discriminate based on tenants’ receipt of benefits or presence of children.
- Enhanced Enforcement
Local Council Powers:
- Strengthens investigatory and enforcement powers of local councils to identify and penalize unscrupulous landlords.
Impact - Scope: Affects 11 million private tenants, including significant numbers of families with children and older adults.
Addressing Evictions and Rental Prices:
- Aims to reduce the frequency of no-fault evictions and curb rising rental prices.
- Income and Housing Quality: Strives to decrease the proportion of income spent on rent and improve the overall quality of rental homes.
- Territorial Extent
Primary Application:
- Applies to England, with certain provisions also extending to Wales.
Key Facts
Homelessness Threats:
- In 2023, no-fault evictions threatened 25,910 households with homelessness.
- Rental Price Increase: Rental prices increased by 9% annually as of March 2024.
Non-Decent Homes:
- 21% of private rented homes are non-decent, with 12% containing severe hazards like damp or mould.
Conclusion
The Renters’ Rights Bill closely mirrors the proposed Renters’ Reform Bill, aiming to abolish Section 21 evictions, enforce stronger tenant rights, improve housing standards, and ensure fair treatment of tenants. The bill represents a comprehensive effort to balance tenant protections with landlord rights, ultimately seeking to create a more equitable and stable rental market
Ending S21 is fine says leading agent - but safeguards needed
The government’s renewed pledge to end Section 21 eviction powers for agents and landlords is fine, a leading industry figure has said - but there must be wider safeguards for owners and investors.
The comments come following the announcement of a new Renters Rights Bill: few details are available yet but it will scrap S21 and reform the grounds for possession.
The former president of ARLA Propertymark, Greg Tsuman - now director of lettings at the Martyn Gerrard agency - says “the new Labour government has a real opportunity to actually deliver on Renters Reform, which under the Conservatives became trapped in a vicious cycle of becoming too complicated for its own good, so it is good to see that this has been included in the King’s Speech and is high on the legislative agenda from the outset. My main hope for this Bill is that that we see a version of it emerge under the new government that has been simplified and balanced, so that it actually works for all stakeholders.
In particular, the key measure that needs to strike a fair balance between working for both landlords and tenants is of course the abolishing of Section 21, or ‘no fault’ evictions. In practice, landlords should not have an issue with this change in the rules, and I am likewise in support of getting rid of no-fault evictions as long as there are robust provisions in place that mean landlords are able to efficiently deal with problematic tenants who are abusing the system.
For the vast majority of the private rented sector, this is rarely a problem, but it is nonetheless a risk that landlords take on, and so they need to be protected or we could see a number of landlords exit the market. However, just stopping landlords from leaving the market cannot be the end goal. It is vital that the new government aims to encourage more private investment into the rental market to increase the number of homes available to rent in line with growing demand, which should include expanding the supply of affordable housing. Another measure that has previously been tipped for Renters Reform is abolishing fixed-term tenancies, which if introduced would create more problems than it would solve. Broadly speaking, both landlords and tenants want to enter long-term contracts which see tenants paying a fair price to be settled into a good quality home, as well as having peace of mind that their rent will not unreasonably increase and that the landlord has committed to not selling up during this period.
We know that wider reform for the private rental sector is high on the new government’s agenda, and I suspect we will see further changes to the tax regime introduced later this year, possibly at the new Chancellor’s first budget statement in the Autumn. If this is indeed the case, I hope to see the government re-introduce mortgage interest rate relief for landlords, in recognition that the policy to remove this has only been detrimental to the market. It has failed as a policy and served as a core reason for rents increasing by around 40% since the changes were rolled out, making it more difficult for renters to find suitable homes, let alone save up to buy. We’ll have to wait and see, but if the old idiom that change begets change is true, the new government has plentiful opportunity to change things for the better.”
The call for safeguards for landlords is echoed by safeagent, the not-for-profit accreditation scheme for lettings and management agents.
Chief executive Isobel Thomson says "while welcoming the government's commitment to strengthening local councils’ enforcement powers, we highlight the need to ensure enforcement activity is properly resourced if these measures are to achieve the desired outcome. We would urge Government while seeking to level the playing field between landlords and tenants, not to alienate landlords and to recognise the vital role of landlords and agents in underpinning a safe and secure private rental sector for the majority of tenants. We look forward to more detail on the contents of the Bill and will be happy to work with government.”
Meanwhile Propertymark has reiterated its long-standing views that scrapping Section 21 without an adequate and workable alternative would trigger lengthy and costly delays for everyone involved, and that the volume of regulatory and financial pressures on landlords in recent years would further hinder investment in the private rental sector.
This in turn could cause many more landlords to sell up and prevent future landlords from entering the market altogether. Potential consequences of landlords leaving the private rental sector include initiating a further shortage of homes for tenants, which will ultimately could push rents up even more.
Nathan Emerson, chief executive at Propertymark, says “the [Conservatives’] Renters’ Reform Bill caused great uncertainty for many landlords when it was introduced by the last government, so we hope that the new UK Government’s revised version of this legislation clarifies what new mechanism will be implemented if they succeed in abolishing Section 21.
Whilst Propertymark supports renters having firm rights to challenge unfair practice, any new legislation must strike a fairness for all involved. Ultimately, there is a concerning lack of housing stock within the marketplace, and there needs to be clear pathways and support for investment to help boost supply and provide choice for prospective tenants when it comes to choosing a new home. Many tenants have also faced high energy bills in recent years, and while it is positive to see that the new UK Government has made clean energy one of its central pledges, Propertymark has long called for landlords and agents to be provided with loans and grants to make energy efficiency improvements in their homes, thereby allowing the housing sector to play a leading role in achieving net zero.”