It is just over six years since Theresa May’s government first announced the Renters Reform Bill as a “step change” in protections for renters, ending Section 21 evictions and giving landlords and tenants more rights. It was hailed as “the biggest change to the private rental sector for a generation”.
Announcing the plans, the then-prime minister said: “Everyone in the private sector has the right to feel secure in their home, settled in their community and able to plan for the future with confidence.
“But millions of responsible tenants could still be uprooted by their landlord with little notice, and often little justification.
“This is wrong – and today we’re acting by preventing these unfair evictions. Landlords will still be able to end tenancies when they have legitimate reasons to do so, but they will no longer be able to unexpectedly evict families with only eight weeks’ notice.”
Despite May’s pledge, consecutive Conservative governments failed to deliver the proposed changes to the private rented sector, leaving Labour, elected to office last year, to take the reins.
The Labour government has since being elected to power last year abolished the proposed Renters Reform Bill and introduced the Renters Right Bill instead.
Various concerns regarding the newer Bill have been raised resulting in several suggested amendments. But that has not stopped the government pressing ahead with its plans – determined to introduce changes to the PRS ASAP. So much so that the deputy prime minister and housing secretary, Angela Rayner, was earlier this week accused of “bullying tactics” in order to push through Labour’s Renters’ Rights Bill.
But while many property industry professionals accept the need for reform, very few are happy with the existing proposed changes in their entirety.
Nathan Emerson, CEO of Propertymark, said: “While we accept the need for reform, we have grave concerns with specific areas of the proposed legislation and the impact this will have across the sector.
“Property professionals from up and down the country continue to be left wondering how this legislation will help meet the much-needed demand for homes for people to rent, as overall buy-to-let investment has fallen to levels not seen since 2007. In the first quarter of this year, investors purchased just 10% of homes sold across Great Britain.
“The proposals continue to cause widespread concern as to the viability of landlords continuing to operate within the private rented sector. Reports show that 88% of landlords have no confidence in the current private rental sector due primarily to the Bill itself and more than a third plan to leave the sector altogether this year.
“We continue to make the case for evidence-based policies that support a flexible and fair private rented sector for all and urge the UK government to recognise the unintended consequences of the Bill, rather than trying to rush this legislation into action.”
The chief executive of safeagent, Isobel Thomson, is another high-profile property professional to voice concerns about the Renters Rights Bill.
In an open letter letter to housing minister Matthew Pennycook, Thompson earlier this year highlighted two clauses in the bill in its existing form that would in her opinion adversely impact less well-off prospective tenants attempting to access the private rented sector.
Here is the letter to Pennycook from the head of the accreditation service:
Dear Minister
RENTERS’ RIGHTS BILL – GOVERNMENT NEW CLAUSES 13 AND 14
We write following publication of the Government’s New Clauses 13 and 14 to the Renters’ Rights Bill.
We are seriously concerned that these Clauses will severely restrict access to the private rented sector for less well-off prospective tenants, some of whom will be vulnerable or at risk of homelessness. These include those who may have a no credit history or a poor one. The
Clauses will also negatively impact on those who cannot provide a UK guarantor, including overseas students and other foreign nationals.
New Clause 13 will prohibit the payment of multiple months of rent upfront. Whilst we understand that this measure is driven by the desire to reduce the cost pressures faced by prospective tenants, there will always be those who are likely to struggle to pass affordability checks, in order to prove their ability to cover their rents. In these cases, payment of several months rent upfront is a legitimate solution to these difficulties.
New Clause 14 will undermine landlords’ ability to limit risk, by preventing them from requesting the first month’s rent prior to entering into the tenancy agreement. Once again, this takes away a legitimate option for tenants with no (or a poor) credit history, who nonetheless
need to access the private rented sector.
An important piece of context to this is the proposed end of fixed term tenancy agreements. When this comes into force, there are likely to be fewer people prepared to act as rent guarantors, as guarantees will have to last for an indefinite period. Payment of multiple months
of rent upfront should, therefore, remain as a legitimate option for the potentially increasing numbers of prospective tenants who cannot find a guarantor.
Payment of multiple months of rent upfront can also be a legitimate option for low income tenants, including those claiming benefits. This includes people who are being helped by Local Authority schemes which incentivise landlords to make properties available to homeless people or those at risk of homelessness. For example, an Assured Shorthold Tenancies scheme in Bristol offers landlords up to six month’s rent in advance. It is important that Local Authority incentive schemes should continue to have the option of paying rent in advance.
Other groups that will be negatively impacted by the Clauses include those on variable incomes and the self-employed. These groups can face challenges when trying to pass referencing and affordability checks. Paying a larger proportion of rent at the start of a tenancy gives these prospective tenants an alternative way of evidencing their ability to sustain a tenancy, thus giving landlords confidence in renting.
An inevitable consequence of the Clauses, if implemented, will be a heightening of the barrier facing those least likely to be able prove their ability to sustain a tenancy. To avoid this, we would urge the government to withdraw the amendments. It will be important to ensure that payment of multiple months of rent upfront remains an option for prospective tenants. The clauses as they stand risk making it harder for those who most need the private rented sector to find somewhere to live.
I look forward to hearing from you regarding the above.
Yours sincerely
Isobel Thomson
Chief Executive
Read the orginal article: https://propertyindustryeye.com/how-exactly-will-the-renters-rights-bill-improve-the-supply-demand-imbalance-in-the-prs/
