Renters Reform Bill – Update

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The call for evidence on the renters reform bill has now been published. The report was informed by the opinions of the wide range of industry representatives.

The report shares recommendations from cross party levelling up, housing and communities committees. These are now suggestions that will be taken forward within the white paper.

Addressing affordability issues.

There is a huge amount of concerns now in the industry about people not being able to afford their rent. There has been a 25% drop in supply volumes in the past 3 years and figures indicate this may be an increasing issue in the sector.

Due to the huge amount of increase legalisation that has caused landlords costs to rise as more rules come into play. Including upgrades to properties. The renters reform bill and proposed new energy performance certificate requirements may see landlords profits squeezed even further. Ultimately forcing them to sell up and those remaining to increase their rental figures.

It is important that people recognise the affordability issues in the private rented sector. The committee recommends a review of the current tax resume for landlords in the buy to let sector. The goal to be making investing in this sector more financially attractive to more landlords.

Some of the suggestions are:

  1. Further clarifying the role of the property redress scheme to understand the value of Government places and smaller portfolios.
  2. Realigning housing benefit with the 30th percentile in each broad rental market area to ensure it covers the tenants housing costs.
  3. Implementing the tourism accommodation registration scheme in England as soon as possible.

Giving landlords more security has also been discussed.

The report recognised the introduction of periodic tenancies should strike a balance between security of tenure for tenants and a agree of security for landlords. The recommendations are at a requirement for tenants to wait at least four months before they can give two months notice. This will give the landlord a legal six months rent from the outskirt of the tenancy.

Fixed term tenancies for students.

The report proposes that fixed term tenancies should stay in place across the whole of the housing sector for students.

Landlords will therefore be required to sign the existing codes of conduct. The report advises that there is an alternative of creating one single national code. Financial penalties may also be introduced for landlords that try to use this exception to rent to non-students.

Court processes and section 21.

The report highlights the necessity working with landlords on adapting the court process before abolishing the section 21. This is to ensure that landlords have the confidence in the system.

It suggests creating a specialist housing court to unblock the process. This would then have better prioritisation and fast tracking claims of rent arrears and anti-social behaviour.

There are proposals for more changes to the section 8.

The reports recommends strengthening further section 8 grounds for sales or occupation. It proposes;

  1. Increasing the notice period that landlords have to give when gaining possession of the sale or occupied property to 4 months.
  2. Extending the amount of time that must pass in the tenancy before grounds can be applied, from 6 months to 1 year.
  3. Increasing the notice period from 2 months to 4 months.
  4. Not allowing landlords to remarketing or relet the property within 6 months of the grounds being exercised.
  5. Encouraging landlords to sell the property to the sitting tenants.

The report also advises that ground 14, which addresses anti-social behaviour, should become mandatory. This includes more guidance to define anti-social behaviour and under certain circumstances possession to be granted.

A realistic decent homes standard.

This currently only applies to social housing sector to ensure homes are of a decent standard. There is a call to introduce a legally binding decent homes standards to the PRS.

The report states that the Government plans to “provide a suitable time table for implantation” giving landlords time to make relevant upgrades. They will also consider a gap on associated costs to meet state of repair and reasonable modern facilities and services. Together with a reasonable degree of thermal comfort.

This will all increase landlords costs.

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The scope on the ombudsman.

An ombudsman currently exists for letting agents to mediate complaints that tenants may have. However, no ombudsman exists to mediate directly between landlords and tenants in the PRS.

The housing ombudsman for social housing associates recently suggested that the new ombudsman should cover both social and private rented sectors, with the same level of potential compensation to tenants.

The report proposes replacing current letting agents schemes with a “single ombudsman covering all letting agents and landlords” to avoid confusion and to streamline the dispute process.

Decent home standards will be extending to apply to both sectors, monitoring and addressing complaints throughout the industry through a single ombudsman that can also deal with enforcements.

The property portal.

The bill proposes for a new property portal aims for all property documents to be hosted on the online space, to create more visibility for industry state holders.

How the portal will work at this moment in time nobody understands. It is believed that a unique property reference numbers are likely to be deployed to match relevant documents such as deposit and electrical certificates and to monitor compliance.

The report states that other items should be included in the portal such as gas and electrical safety certificates and reports and other reports generated by trades people such as any performance data, details of the ombudsman and deposit protection scheme membership.

The report highlights the need to digitise all the information. Financial penalties for false or misleading information would also be introduced.

Tenants rights.

The report suggests that the Government should abandon its plan to legislate that landlords cant unreasonably withhold consent. However, they want to define the word unreasonably. The report calls for the Government to explain how it will stop landlords from banning tenants on benefits.

The Government are trying to streamline as many issues as possible without realising what the consequences could be. The Government are very keen to push this bill through as quickly as possible but again the detail is so small and confusing it hasn’t yet got a defined direction in which it is going. We will give further updates.

Updated 11.03.2023

The Government are bringing out more and more details of the situation regarding the Renters Reform Bill but these still have a massive lack of contents.

The new updates are as follows;

Addressing affordability issues.

There have been concerns for some considerable time regarding the housing supply in the industry. There has been over a 25% drop in supply volumes in the past 3 years. Things seem to indicate this is becoming an increasing issue in the sector. Landlords are finding the cost of repairing bricks and mortar to be one of the issues in deciding to sell.

There has also been a huge increase in legalisation that has caused landlords costs to rise as more rules come into play with the upgrade of properties. The Renters Reform Bills together with the proposed energy performance requirements show that landlords profits may be squeezed further with a view to then potentially selling their properties. This will mean prices will start to increase for rentals in order to cover the costs of the landlords increases in mortgages as well.

The Government needs to understand that the affordability issues in the private rented sector need to be reviewed. The current tax resume for landlords in the buy to let sector is not helping them. Landlords who are being legally required to comply with more legalisation are finding it very difficult to make it worthwhile. The goal would be to making the investing sector more financially viable to small landlords to increase the availability.

There needs to be information regarding the following;

  1. Further clarification regarding the role of the property redress scheme to understand the value of the Government places in smaller portfolios.
  2. Revaluating housing benefit with the rental market. This needs to ensure this covers the tenants housing cost.
  3. Implementing the tourism accommodation registration scheme in England as soon as possible.

Landlords are looking for much more security when their property. Periodic tenancies don’t give a degree of certainty for landlords but give huge amounts of security to tenants.

This has now been amended and the new recommendation is for tenants to wait at least 4 months before they can give 2 months notice. This will give the landlords legal certainty of 6 months rent from the outside of the tenancy.

Fixed term tenancies for students?

The latest report suggests that fixed term tenancies should stay in place across the whole of the student housing market.

Landlords would therefore be required to sign one of the existing codes of conduct. The Government reports says that creating a single national code would be the best way to do this. Financial penalties could be introduce for any landlords that try to use the exception to rent to non-students.

There will be more updating of the court processes of the section 21. The section 21 notices are still going to be abolished but landlords need to have confidence in the new system.

It suggests creating a new housing court to unblock the process and to consider better prioritisation and fast tracking on claims of rent arrears and anti-social behaviour.

It looks as though there will be more changes with the section 8 process. This recommends strengthening further section 8 grounds for sales of occupation.

They could do this as follows;

  1. Increasing the notice period that the landlord has to give when gaining possession to sell an occupied property to 4 months.
  2. Extending the amount of time that must past in a tenancy before grounds can be applied from 6 months to 1 year.
  3. Increasing the notice period from 2 months to 4 months.
  4. Not allowing landlords to remarket or relet the property within 6 months of the grounds being exercised.
  5. Encouraging landlords to sell to the sitting tenants.

They will also be strengthening ground 14 on anti-social behaviour.

A realistic decent homes standard.

This currently only relates to social housing in the words “decent” standard. There is a call for this to be legally binding for residential as well.

The Government are looking at plans to provide a suitable time table for implantation giving landlords time to make the relevant upgrades. They will consider a cap on associated costs meeting certain criteria in the property.

The scope of the ombudsman.

The Ombudsman currently existing for letting agents to mediate complaints that tenants may have. However, no ombudsman exists to mediate direct between landlords and tenants. There is now a call for a housing ombudsman to be included within this and for decent standard homes.

The property portal.

There will be a new property portal that aims for all property documents to be hosted on an online space to create more visibility for industry stake holders. Unfortunately, there is again a lack of information how this will be determined. It may be the property will have a unique reference number that will match documents.

The portal should hold documents such as gas safety, electrical certificates and other reports.

There are so many proposals but again the actual detail is exceedingly bare. We will keep you updated and there will be more during the year when the pace gathers to have a Renters Reform Bill put in place.

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