The looming Renters Reform Bill, which is currently being kicked around Parliament after a couple of years of procrastination, is likely to have the single most significant impact on the rental market that I’ll have seen in my lifetime. And yet we are still coming across landlords and agents that are blissfully unaware of its existence.
As is often the case with these things, the sentiment behind the legislation is great, but the reality is not so much. Unfortunately, it seems likely that the impact of the changes will be felt most by tenants, the exact people the legislation is set up to protect.
So what’s in it? As usual, there’s a bit of fluff; a new property portal for landlords and tenants that sounds suitable but vague, the right to keep pets (how that’s going to work in leasehold buildings where this is prohibited in leasehold agreements is anyone’s guess), outlawing bans on renting to people on benefits or with children (which is actually already the case) and introducing a new property ombudsman for landlord and tenants disputes (it has been a legal requirement for all Property Agents since October 2008).
There are restrictions on landlords raising rents by allowing this to happen only once every 12 months, as well as outlawing rent review clauses in tenancy agreements. This seems pretty reasonable to me; we have never increased rents more than once a year and the intention to curb landlords exploiting local markets seems justified. (Although there will of course be landlords unhappy that their mortgage lenders have no such restrictions in increasing their payments every time interest rates rise).
“The Decent Homes Standard” that currently applies to social housing is being expanded to the private rental sector. We’ve all seen some of the tragic stories in the news recently about the state of some of the social housing stock and management, and I think the regulations that are already in place for the private sector will make this a headline rather than any real positive change for the better.
The biggie though is the end of fixed periodic tenancies and the abolition of “no-fault” Section 21 evictions. In basic terms, tenancies are currently set with an initial fixed period (traditionally 6 months or a year) and after that point, a landlord would need to give the tenant 2 months’ notice (without a specified reason) if they wanted them to vacate the property / end the tenancy. In return, tenants currently have to give 1 month’s notice to leave. In over 20 years of working in the lettings market, I don’t think I’ve ever had to evict a tenant. I appreciate that this is hardly a yardstick for the world at large, but landlords in general don’t want to kick good tenants out for no good reason. There are various bits of data thrown around in regard to landlords evicting tenants if they complain about repairs or if they refuse a large rent hike. I don’t doubt that this happens (which is pretty horrible) but I would question whether it happens as regularly as some organisations would have us believe. And if landlords aren’t suitably protected to regain their property from antisocial or non-paying tenants, then they will simply exit and the rental market will shrink.
The detail will determine whether the abolition of Section 21 will be a success for renters or a disaster for all. Personally, I’m all in favour of giving people more security in their homes and trying to eliminate a subsection of landlords that operate on the edge of the law. But at the same time, measures need to be in place to ensure that landlord’s rights are also considered and that protection still exists for anti-social behaviour (which affects not just the landlord but the whole community).
One huge side effect of the potential abolition of Section 21 (I say “potential” but it’s definitely going to happen), is the likely effect on student accommodation. Currently, most students sign a fixed 12-month contract for a full academic year and take occupation during the summer. They want the security of a fixed agreement and so do landlords; it’s pretty hard to fill a large student house in a student area halfway through the year with professionals or a family and you would risk losing the planning consent to rent to a large group of shares/students if you did so, via the Article 4 regulations that exist in many University towns including Leeds. Students in return like the security of tenure and the way the market works which allows them to secure the following year’s accommodation well in advance. Students look for new properties pre-Christmas time and the cycle continues. By prohibiting fixed tenancies, student tenants would only need to give notice a month before they chose to leave. So the security of student tenancies for both Landlords and tenants will be taken away which has quite significant repercussions.
Under the current drafting, any one tenant in a group will be able to serve notice for the entire house; our current re-assignment rates for student properties (where at least one tenant changes places in a house during the year – sometimes leaving university, sometimes moving home for personal reasons) runs at about 20% of our tenancies. So there’s a real issue for groups of friends when one of them wants to exit.
You will also have no doubt seen plenty of headlines over the summer of student housing shortages in a number of University cities in the UK. Durham had people in sleeping bags camping out the day before housing lists were released, the University of Manchester housed students in Huddersfield and Hull became a residential option for students in York (as a son of Hull I can say that York it is not!). We’re already seeing genuine supply issues with bedroom numbers for students. There is a real danger that the abolition of fixed tenancies will mean landlords switch to other tenant groups (such as short lets) or simply exit the market.
Scotland, always the testing ground for housing law, has been dealing with this issue for a couple of years now. We spoke recently to a large student agent in Edinburgh who said the student market up there was hugely undersupplied and students were often sofa surfing or commuting in from other cities.
Generally, markets sort themselves out, and for the student market – whatever happens- I’m sure this will be the case. However when supply is challenged and found short then the people who suffer are ultimately the customers; in this case that will be tenants. We have been lobbying (nationally and locally) for students to be exempt from the abolition of fixed tenancies. Students don’t want it, and student landlords don’t want it. Interestingly (and not surprisingly) purpose-built student accommodation (the huge tower blocks you’ll have seen springing up with alarming regularity) will be made exempt and fixed tenancies will remain. The push to herd students into these buildings for their tenure at University seems to be political and, I think, hugely detrimental to the experience of students and the life skills they develop.
The devil will be in the detail and we’ll be closely monitoring what happens. But none of this really solves the real crisis which is that we simply don’t have enough houses in the UK.
For anyone wanting to find out more, the NRLA have some great info on their website;
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