Rental Reform White Paper
The big news in lettings at the moment is the release of the Government White Paper entitled “A fairer private rented sector” – White Paper
The white paper is part of the current governments levelling up policy and has been produced off the back of a consultation caried out in 2019 “A new deal for renting” – Response to Consultation
The white paper seeks to bring about reforms to the private rental sector and adjust the balance between the rights of landlords and tenants, with the aim of creating a fairer, safer and more regulated private rental sector, arguably giving tenants more rights than they currently enjoy.
The headline which is being picked up on is the abolition of Section 21 “no fault” evictions. However, the white paper encompasses far more that this. Having read through the response to the consultation and the white paper itself, the key points which will be of interest are those below –
- Section 21 to be removed
- Grounds for Section 8 to be improved
- No blanket ban for renting with pets
- Arbitrary rent review clauses will cease
- Blanket bans on renting benefit recipients (or families with children)
- New private renters’ ombudsman created to settle disputes between tenants and landlords quickly
- Improvement to the current court processes for housing cases (such as evictions)
We are already being asked about the impact of this white paper and the changes to lettings legislation that are likely to result, it was felt it was appropriate to give our view on the effect that these might have on the wider rental market, but especially that in the area where we operate (Bury St Edmunds and surrounding areas).
There is an understandable fear that by removing the Section 21 notice, and a landlord’s ability to guarantee that they regain possession of their property, that landlords will become reluctant to enter the lettings market. They may look to other investments instead. There could also be an impact on current landlords who look to exit the sector as a result. This may in turn then lead to a shortage of rental property, and inadvertently negatively impact tenants by reducing supply and pushing up rents, harming the very group that the government intends to help. Ironically, section 21 was introduced in the Housing Act 1988 to re-encourage landlords to let property to address a lack of rental properties at the time.
We feel that now is not the time for a knee jerk reaction, and certainly would not suggest that anyone consider changing their buy to let plans because of the white paper. Firstly, the resulting legislation as a result of this white paper is still likely to be 2-3 years away, and throughout the process of putting legislation together, there will undoubtedly be changes, so we don’t at this point know exactly how the final regulation changes will look.
Secondly, and perhaps more importantly is that the abolition of Section 21, provided Section 8 is strengthened as planned, will only affect bad or “rogue” landlords. We cannot think of a time we have been asked to serve a Section 21 notice for no good reason. It is always done as a result of a genuine situation, such as a landlord wishing to move back into a property, sell the property, move a family member into the property, or as a result of a tenant’s actions, such as not paying rent or behaving antisocially. Section 8 will provide provisions for a notice to be served under any of these circumstances, meaning that the changes will not affect the vast majority of landlords in England and Wales who are decent and honest.
The other main changes are not quite so controversial, but still will take some time to adjust to. Preventing landlords from excluding tenants from having pets without good reason shouldn’t be too much of a burden, since there will be an option for landlords to make it mandatory the tenant has pet insurance to cover damage to the property caused by pets. Landlords will still be able to prevent pets with a valid reason, such as a restrictive clause in a head lease or a property not being suitable for a certain type of pet.
How the improvements to the courts and the introduction of a renter’s ombudsman will play out will be interesting to see. Currently the wait for a possession hearing is extraordinarily long, and many experts are saying that the current system is not fit for purpose. So a meaningful change for the better will be a very welcome change indeed.
Overall, as set out in this article, we don’t feel that the white paper is necessarily a cause for alarm amongst landlords, especially those who are already quite prepared to abide by the rules. There will be a slight swing in the balance between landlord and tenant rights, in favour of the tenant, but this will not make things so uneven that buy to let investment becomes untenable. What is clear, is that it is going to be more important than ever to make sure that relevant legislation is complied with, and that tenants are chosen and vetted carefully.
One way of doing so is by selecting and using a reputable managing agent to look after your residential properties!
As always, if you would like specific advice on any aspect of residential lettings, please give Andrew or Chris a call on 01284 702 626