Naughty
Government’s Planning Reforms
Up first on the naughty list is the government’s planning reforms, which came as part of the Levelling Up and Regeneration Bill. The Bill caused controversy when it was passed through parliament last year as Michael Gove announced that it had been amended to scrap mandatory housing targets.
By caving into Conservative backbench pressure from NIMBY’s, the government has allowed local authorities to refuse developers’ applications if they believe it will change the character of an area. They also introduced character tests for planning that could open the door for anti-housebuilding bias and prevent the construction of more homes, thus meaning that affordability is likely to remain an issue for another generation of first-time buyers.
Although this change was announced in December 2022, the Bill became law on October 26, 2023, putting it firmly on this year’s naughty list.
Nice
EPC Scrapped (Part One)
Kicking off our nice list for this year is the scrapping of the new EPC (Energy Performance Certificate) requirements. Earlier this year, it was announced that new tenancies would be required to have a minimum EPC rating of C in order to legally rent out their property. This is much higher than current regulations which have the minimum rating as E. The upgraded minimum rating would then have been applied to all existing tenancies from 2028, costing landlords thousands.
However, the government went on to announce in late September that this would not become a legal requirement after all, and they would instead offer money to landlords in a bid to encourage them to upgrade their EPC. This brought relief to many, with Group Managing Director of Leaders Romans Group Michael Cook welcoming the U-turn, saying that “Essentially, asking homeowners and landlords to dig deeper into their pockets at this difficult time is unwanted pressure.
Landlords in particular have been continually hit with higher taxation and legislation, coupled with inflationary pressure and higher interest rates, leading many to conclude that it is time to sell. This supply restriction has seen rents go up at a greater rate than in living memory. Reducing capital outlay by reversing policies like this is in everyone’s interest in the short to medium term.”
Naughty
EPC Scrapped (Part Two)
However, it's not all nice when it comes to the scrapping of EPC changes, with it having proved divisive enough to also land on the naughty list. This is because several landlords had already set about meeting the new standards by the time the government announced its U-turn, meaning they spent thousands or even sold their property as a result of requirements that will no longer be implemented.
As Jonathan Daines, the Founder and CEO of lettingaproperty.com, put it: “With the planned EPC changes looming, many landlords in our community proactively improved the energy efficiency of their properties. They incurred significant costs and practical hassles, to make energy efficiency upgrades in line with proposed EPC minimums. Some of our landlords even took the drastic step of selling their property because it was financially or practically impossible to make necessary improvements. These landlords have walked away from the Private Rented Sector and a ripple effect has been felt, with tenants competing within a shrinking pool of homes to rent. Those lucky enough to secure a rental are typically paying more for the privilege, thanks to reduced stock levels – an unwelcome burden on top of rising living costs.”
Nice
Renters Reform Bill
The Renters Reform Bill was introduced to parliament in May of this year and is designed to ‘bring in a better deal for renters.’ One of the main talking points from the bill is the removal of Section 21 ‘no fault’ evictions, which provides renters with more security and stability. Meanwhile, the bill also aims to ensure that landlords uphold a Decent Homes Standard after it was revealed that almost a quarter of private rented homes do not meet basic decency standards.
As a result, the renters reform bill will help to reduce the impact of criminal landlords on the reputation of those who do a good job, instead aiming to celebrate those who care about treating their tenants fairly and with decency. The bill is not perfect and arguably divisive at times, with the removal of Assured Shorthold Tenancies and the fact that landlords can still end tenancy agreements to move in close family or to sell the property reassuring some and causing concern to others. However, its overall aim to improve the lives of tenants and to celebrate good landlords means it deserves a place on this year’s nice list.
Naughty
Mortgage rates
This one is obvious, but in some ways that perhaps makes it the most deserving of a place on the naughty list. Mortgage rates have been skyrocketing over the last year and a half, having a huge impact on landlords and homeowners alike. After reaching its peak for 2023 at 7.79% in October, rates have been falling, but are still much higher than they were for many years.
As a result, Octane Capital has revealed that the number of buy-to-let mortgage arrears has doubled in 2023, with 11,450 cases recorded in the last quarter. This is 100.3% higher than this time last year, highlighting the impact of higher mortgage rates on the property market. However, at least there is some hope that rates will decrease further in 2024.
Nice (and a little bit naughty)
Saying goodbye to bad landlords
Finally, we look at a potential silver lining to come from 2023’s great difficulties, as the higher costs and greater demands on landlords from the government could lead those who are unable or unwilling to maintain their properties correctly to exit the market.
This could lead to better and safer conditions for tenants, which in turn would help to alleviate the bad reputation surrounding landlords caused by those who do not follow regulations and do not look after their properties and those living in them. However, there is still an argument as to why this could be on the naughty list, as landlords who cannot afford to maintain their property could force out tenants in order to sell it, and if there are less landlords and thus less rental properties available, it could be more difficult for said tenants to find somewhere else to live.
