Government publishes its plans to reform the rental market and outlaw Section 21

Property Reporter
16th June 2022
Gov 675

The Department for Levelling Up, Housing and Communities is set to finally publish its long-awaited White Paper today, changing the rules to make it easier to own a pet in a rented property and banning "no-fault" evictions.

As part of the government's new deal for private renters, a new property portal is expected to be announced, allowing landlords to access information about their obligations and where tenants can get information that will help them hold their landlord to account. Part of this will also see the introduction of a new ombudsman for private landlords, resolving issues early and taking the weight off struggling courts.

Changes will also be made to renter's rights, which will be strengthened by aligning the sector with the legally binding Decent Homes Standard, eliminating serious health and safety hazards.

The Government committed to ending Section 21 notices back in April 2019, so it's long been known that these would be subject to reform. However, confirmation of the ban on Section 21 is likely to be the most notable of today's announcements.

According to the government, over a fifth of private renters who moved in 2019 and 2020 didn't end their tenancies by choice, including 8% who were asked to leave by their landlord. The government claims that the new rules will offer greater security for renters, however, the exact changes to the eviction process are yet to be confirmed.

Michael Gove, Levelling Up and Housing Secretary, said: "For too long many private renters have been at the mercy of unscrupulous landlords who fail to repair homes and let families live in damp, unsafe and cold properties, with the threat of unfair "no-fault" evictions orders hanging over them. 'Our New Deal for renters will help to end this injustice by improving the rights and conditions for millions of renters as we level up across the country and deliver on the people’s priorities."

As you would expect, the industry has been quick to react. Here's what they're saying:

Nathan Emerson, Propertymark CEO, comments: “After waiting three years to see exactly what this reform will look like, we’ve now got a set of proposals titled ‘The Fairer Private Rented Sector White Paper’. But there are some elements that don’t appear to be so. How is it fair that a tenant can simply end a tenancy at a time of their choosing, but an agent or landlord has to present a valid reason that is defined in law?

“We’ve already set out broadly what we think reform should look like in our The Future of Renting paper.

“Now we have the detail of what’s being proposed, we will be closely scrutinising it and working with Ministers to help them understand how on a practical level it will impact our letting agents members and their landlords.

“Our sector provides around 4.4 million households in England with a place to live. Property is a good long-term investment but the number of property owners choosing to withdraw from this area is growing*. That’s the result of a decade of tax and regulatory burden that simply does not incentivise investment, especially for single property landlords who make up 43% of the market.

“The private rental market is already under huge strain with renters outstripping available properties and we need to be able to attract new investment.

“If Ministers really do want to create a ‘fairer private rented sector’, they must work with us to ensure these reforms are carefully balanced and any interventions to achieve short-term objectives do not constrain the market in the longer term.”

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “Whilst headline commitments to strengthening possession grounds, speedier court processes and mediation are helpful, the detail to follow must retain the confidence of responsible landlords, as well as improving tenants’ rights.

“We will be analysing the Government’s plans carefully to ensure they meet this test. A failure to do so will exacerbate the housing crisis at a time when renters are struggling to find the homes they need.

“The eventual legislation needs to recognise that government actions have led to a shortage of supply in the sector at a time of record demand. It is causing landlords to leave the sector and driving up rents when people can least afford it.”

Richard Donnell, Executive Director of Research & Insight at Zoopla comments: "With the backdrop of the cost of living crisis putting pressure on renters, these reforms are welcome and timely, particularly as they're largely focused on boosting the quality of housing in the rented sector. The private rented sector plays an important role in the housing market, providing much-needed homes for a wide spectrum of households. These reforms mark another milestone in the journey to create a suitable equilibrium between renters and private landlords who provide the majority of homes for rent."

"However, it's important to note that the private rented sector is under growing strain due to lower levels of new investment by private landlords, largely a result of tax changes and more regulation. There are a growing number of amateur, private landlords exiting the market, offsetting the increased investment from corporate landlords and institutional investors into the build-to-rent market. There is a delicate balance to ensure reforms don't compound these supply-side challenges which continue to keep upward pressure on rents, which have risen 11% in the last year. Ensuring decent homes is paramount but so is the investment into this important sector of the housing market."

"The Zoopla Lettings Advisory Board has advocated a range of initiatives to improve the transparency over the process of owning and renting homes. In particular, the need for a property register for rented homes to help with compliance on standards of accommodation and the move to define when homes meet the Decent Homes Standard for private rented homes. This will also boost transparency for renters and landlords who both have to deal with often complex regulatory requirements. There is a lot of detail to work through in how this is rolled out and Zoopla will continue to work with our advisory board and estate agency partners to seek operational efficiencies in the lettings market through our software platforms."

Ian Fletcher, Director of Policy at the British Property Federation, said: “Efforts to create a better and world-leading rental sector for tenants and investors is something we very much welcome. Good landlords know that reform can be win-win, protecting and enhancing renters’ rights but also encouraging residents to feel at home, increasing the time they stay and ultimately benefitting tenants and investors.

“There are occasions when issues arise on both sides of a tenancy, and while it is a last resort the renters’ reform will result in more disagreements between investors and tenants being seen in court. It is vital that the government delivers on its digitalisation of the courts’ agenda ahead of these reforms to ensure a swift resolution to these cases. Investors will feel let down if that is not the case.

“It is now important the sector works with government to ensure that the reforms deliver for renters and investors. That was the promise given by the Government in 2019, and we look forward to playing our part in ensuring the reforms deliver a stable home and customer excellence for renters – two of the key pillars on which the Build-to-Rent sector has been built over the last decade.”

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