Propertymark says the Renters’ Rights Bill must provide a greater degree of balance between tenants, landlords and agents to ensure a healthy private rented sector (PRS).
While the organisation welcomes the government’s commitment to avoid rent controls, it emphasises the need for clarity on how the legislation will address the significant demand for rental properties and boost supply.
The bill – which had its first Committee stage on 22nd October – must also outline how local councils will be adequately resourced to enforce both existing and new regulations effectively.
Also, Propertymark wants the bill to consider the specific needs of student landlords and extend the student ground to more sharers.
There also needs to be measures to register all short-term lets.
How this legislation will support landlords
Timothy Douglas, the head of policy and campaigns, said “key concerns remain about how this legislation will support landlords and agents to meet the huge demand for rented property. To give more confidence to landlords, the UK government must outline in detail how they intend to adequately reform the court system and resource local authorities to deal with the changes.
Rules to regulate short term lets, a review of taxes and costs impacting private landlords and maintaining Local Housing Allowance rates can also support both landlords and tenants and ensure there is enough property for people to rent. The introduction of a Private Rented Sector Database provides the opportunity to reduce duplication and support local authorities but only if there is a commitment to phase out licensing schemes and to give more choice to renters fixed term tenancies must be retained as an option and the student ground must be extended to one or more sharers.”
Impact assessment for many of the proposed changes
During the Second Reading debate, many MPs echoed Propertymark’s concerns about the lack of an impact assessment for many of the proposed changes in the Bill.
The removal of fixed-term tenancies, for example, could lead to complications and additional costs for both tenants and landlords. In that debate, Housing Secretary Angela Rayner expressed her intention to create ‘decent, safe and affordable homes’ through the legislation.
But Shadow Housing Secretary Kemi Badenoch warned that the bill could pit landlords and tenants against each other.
The Renters’ Rights Bill includes provisions to stop Section 21 ‘no-fault’ evictions, end ‘bidding wars’ between landlords and agents, allow tenants to keep pets and introduce a Decent Homes Standard.
Doug Shephard is the director of Home.co.uk, which issues a respected monthly sales and lettings market monitor. In an editorial accompanying the data in the latest edition he warns that the Renters Rights Bill could be the measure that kills off the private rental sector.
He details the measures in the Bill, describing the proposed ban on Section 21 evictions as “particularly contentious” because even though most landlords have never used the power, many view it as a crucial safety net. Another big issue for landlords is the notion that the legislation states they can’t act on rent arrears before three months are up. During this period a landlord could easily slide into financial difficulty. They then find that they can’t evict the tenant for non-payment before they themselves become bankrupt.
The Renters’ Rights Bill will not improve the lives of tenants; more likely, it will worsen their plight. It is in fact an attack on landlords’ fundamental property rights and therefore an attack on the entire UK property market.”
The latest Home market snapshot says that landlords downsizing their portfolios, particularly in London, have contributed to a record number of sales listings. However, this is leaving renters facing a chronic lack of supply.
While the number of properties available to let has increased by 25% since October last year, the total remains 21% lower than in October 2019.
The snapshot warns that landlords clearly need more incentives (and assurances) to stay in the market and increase the supply of essential quality housing, and says that until this is achieved, renters will continue to suffer high rents and lack of choice.
Housing Minister Matthew Pennycook is warning that landlords will not be able to get around the Renters’ Rights Bill, and any landlord or letting agent caught discriminating against a tenant could be fined £7,000.
In an interview with The i newspaper, Mr Pennycook claims “landlords pitch renters against each other” in rental bidding wars and the Bill will end the practice once and for all.
He also says that landlord fears over the court backlog are ‘overstated’, and tenants complaining about a rent rise won’t be ‘hit by potential arrears’.
Mr Pennycook also admitted “there is no concrete date for when Section 21 will be abolished” but hopes it will happen by next year.
Stop rental bidding wars
Mr Pennycook says the Renters’ Rights Bill “is not a reheated version of Renters’ Reform Bill” and goes further than the Conservative government’s bill. The decent homes standard will apply to the private rented sector for the first time and the Labour government will ban Section 21 no-fault evictions immediately rather than waiting for the courts to be ready."
Mr Pennycook also claims the Renters’ Rights Bill will stop rental bidding wars.
He said to The i newspaper “we’ve looked at examples of where action has been taken in Australia and New Zealand to combat rental bidding wars. We’ve learnt from those models and there are provisions in the Bill to clamp down on rental bidding wars. Landlords are often in particularly hot rental markets pitching renters against each other playing them off to see who can bid up the highest amount of rent. We think that’s wrong and the practice has got to end the landlord should clearly state the amount of rent that they expect for the property and if that rent is offered by a tenant it should be accepted.”
No concrete date for abolition of Section 21
Mr Pennycook admitted "there is no date on when Section 21 will be abolished but hopes it will happen as soon as possible. We don’t have a concrete date yet partly because we want to ensure that when we announce a date we’re very clear that we can stick to it.
It’s our intention to abolish Section 21 no-fault evictions to overhaul the whole tenancy regime as soon as possible after Royal Assent. My target is by summer next year but we have to see how quickly the Bill progresses.”
Mr Pennycook believes the concerns about the courts are “overstated”. "We are not going to do what the previous government did which is tie reform to the private rented sector to a sort of subjective assessment of when the courts are ready. We do need to see court improvements and we recognise the concerns about significant pressure on Tribunals. However, if I’m honest, I think some of these concerns are a bit overstated. We’re not going to see a direct read-across from every Section 21 eviction to a Section 8 possession order. We’ll work with colleagues at the Ministry of Justice to ensure the courts are ready, but we won’t be making tenancy reform contingent on that.”
Landlords could face £7,000 fines
Mr Pennycook claims "the Bill will ban rental discrimination and landlords and letting agents could face up to £7,000 fines if they discriminate against renters with children or tenants on benefits.
in theory, those practices are already illegal but we do know that they occur. What we are trying to do in this Bill is to strengthen those provisions and clamp down on the abuse. For example, I’ve seen adverts that say people with benefits can not apply. There’s also the problem of intentional discrimination that can take place in person where it’s not advertised and a tenant views a property.
We want to be able to fine landlords and letting agents that engage with these sorts of practices. Our clear message through the legislation is that these practices are unacceptable.”
Possession grounds won’t be abused
Mr Pennycook says he will be making sure that new possession grounds for landlords won’t be abused.
He said “we are not going to allow those new possession grounds to be abused. In the Bill, we have tried to overhaul how those grounds could be abused and close those loopholes. For example, in the previous legislation when a landlord took back their property on one of these grounds to sell or to move back in they could re-let that property after three months now it will be 12 months.
What we want to see by the changes we’ve made is that they are being used for genuine reasons rather than as a means to evict people by the back door.”
Increase rent once a year
In the Renters’ Rights Bill, landlords will only be able to increase rent once a year and only to the market rate.
Mr Pennycook explains "a tenant will be able to challenge a rent increase. If a tenant feels the rent increase is unreasonable they can take it to the Tribunal and the Tribunal will be able to adjudicate on whether the rent increase is reasonable or that for that particular market area.
The Tribunal will not be able to award a rent that is higher than the landlords asking for and we’ve put in measures to ensure that when an unreasonable rent rise has been requested and the tenant has gone to Tribunal tenants can’t be hit by the potential arrears that might result if a Tribunal makes an award.”