While the Renters (Reform) Bill should be welcomed for introducing greater tenant protection, it leaves a number of crucial unanswered questions that could threaten future investment in the industry from landlords and letting agents.
The Bill, introduced to Parliament in May and still awaiting its Second Commons Reading, has been described as the most radical reform of the private rented sector (PRS) in a generation.
Neil Cobbold, Managing Director of PayProp UK, said: ”While we welcome legislation that improves standards within the PRS, landlords and letting agents need more details to assess its impact and determine whether it is likely to be workable.
“At this stage, it remains to be seen. More than three months have passed since the Bill’s first reading, and we would have expected more details from the government by now.”
Among other things, the Bill proposes to:
- Abolish Section 21 (so-called ‘no fault’) evictions;
- Make it easier for tenants to keep pets in rented accommodation;
- Improve standards in the PRS;
- Introduce a new Ombudsman to handle tenant complaints;
- Convert assured and assured shorthold tenancies into periodic tenancies, giving tenants the right to give two months’ notice;
- Create a new Property Portal and Landlords’ Register.
Cobbold said: “This legislation has taken a long time to get to this point. It was first mooted in 2019 when the then-Prime Minister, Theresa May, promised to end ‘no-fault’ evictions.
“Since then, we have gone through numerous Housing Ministers and Secretaries of State and a white paper, but we still need clarity on how some of these proposed measures are actually going to work.
“The lack of detail is putting additional pressure on rental housing supply while landlords struggle with costs and some with higher mortgage rates. Landlords may need reassurance to continue to see the PRS as a viable investment. The vast majority of them already provide decent homes for millions of people. Many landlords could already be considering their position in the sector as they are now being taxed on revenue instead of profit at a time when costs are rising.
“In addition, many are worried that the proposed abolition of Section 21 will take place before the courts are ready to absorb the inevitable increase in Section 8 evictions. The industry also needs reassurance that the proposed court reforms to speed up Section 8 evictions will be sufficient to provide a reliable and timely court service.
“There is a chronic shortage of housing in the UK, but in order to create a thriving PRS, we need to encourage the remaining landlords to stay in the sector. This needs to be coupled with a boost in housebuilding for sale as well as rent, and a legislative framework that supports this.
“Broadly, the industry welcomes the new Ombudsman and proposed Property Portal. But here again, we will need to see how both of these services will work. Crucially, will there be enough resources to enforce the new levels of regulation?
“And how will periodic tenancies affect student lets? While it is encouraging to see the government working on this issue, there is already a lack of student accommodation in some towns and cities, and some students commute hours to get to lectures. The form of student tenancy will be key to avoiding further shortages, as landlords may decide to offer student properties to the professional market as HMOs without reassurances on these reforms.
“These are just a few examples. As it stands, the Bill does give a direction of travel but the question of how we get there remains largely unanswered in some cases.
“It has been estimated that the Renters (Reform) Bill could take as long as 18 months to pass through Parliament, but landlords and letting agents need time to absorb the details and adapt their businesses. The less time they have, the bigger the impact on tenants.”
