A report from the Public Accounts Committee on the regulation of the private rented sector (PRS) was issued with little notice or fanfare in the middle of April, but it could have a wide-reaching impact on landlords and tenants within the sector.
The report - Regulation of Private Renting - concludes that regulation of the sector is too incoherent, inconsistent and patchwork. Authorities also don’t have the time, money or resource to adequately police the existing regulations, enabling the ‘rogue’ element of the landlord community to continue to tarnish the reputation of the broader sector.
From a tenants’ perspective, they find it too difficult to understand what their rights are amidst the myriad of rules and often don’t know who to turn to when they experience difficulties.
It criticised the department responsible for regulating the sector, the Department for Levelling Up, Housing and Communities (DLUHC), for introducing well-meaning new regulations without considering their wider impact. It concludes that recent regulatory changes have made the system even more overly complex and difficult to navigate for tenants, landlords and local authorities.
In short, it concludes that the regulation of the sector needs to change and it’s something I wholeheartedly agree with.
Regulation fatigue is certainly something landlords exiting the sector cite as a key reason for selling up in the regular research we conduct with the community.
A report by the NRLA last year found that the number of statutory provisions applying to the sector in England has risen by 40% over the last decade to 168 pieces of legislation. Some of these even date back to the 18th century - the Landlord and Tenant Act 1730 and the Distress for Rent Act 1737.
The Public Accounts Committee has asked the DLUHC to consider how it can improve the regulatory environment of the sector for the benefit of both tenants and landlords, which may explain why the mooted Renters Reform White Paper still hasn’t been published.
I sympathise with the challenge facing regulators. They need to protect the most vulnerable tenants in the sector whilst balancing the needs of the overwhelming majority of landlords that offer good quality homes and enjoy strong relationships with their tenants.
We hosted a dinner in the Houses of Parliament to discuss the future of the PRS with MPs and Lords from across parties and there is a widespread belief that creating the right regulatory environment to encourage investment into the sector, whilst protecting the interests of tenants, is a major challenge.
However, we seem to be in a position where more legislation will be layered upon existing regulations, adding to the confusion.
The Queen’s Speech next Tuesday - that's May 10 - should include a commitment from the Government to introduce major reforms of regulation of the sector. The Renters Reform Bill has been mooted for around two years and it’s widely believed this will signal the end of Section 21 and strengthen Section 8.
The Levelling Up white paper launched earlier this year also referenced the Government consulting on how to improve decent homes standards in the PRS, plus elements of creating a path to ownership for tenants.
Then we have the Energy Performance Certificate issue, which will have significant implications for the PRS – as well as the broader housing market – if introduced. We are still awaiting final details from the Government on what that is going to look like.
The Public Accounts Committee asked the DLUHC to come back with specific responses to the questions it posed. It stated that the Department needs better data to understand issues within the sector and to evaluate the impact of legislative changes on landlords, tenants, the housing market as a whole and the effectiveness of regulation.
I’m hoping this could be a watershed moment for the sector and that we see well thought-out policy that considers the broad impact of legislative changes on different elements of the housing market going forward.
The PRS faces major supply challenges and it needs a regulatory regime fit for purpose.
* Richard Rowntree is Managing Director for Mortgages, Paragon Bank *
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