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By Richard Rowntree

Managing Director for Mortgages, Paragon Bank

OTHER FEATURES

Politicians To Decide Future Shape of the Private Rental Sector

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. 

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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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    There will always be a need for some '' rogue'' landlords, without them who's going to house the rogue tenants that good landlords won't touch ? horses for courses as the saying goes

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    Andrew write out 100 times:-
    "There is no such thing as a good landlord; there is no such thing as a bad tenant."

     
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    Terrified to thing what these children will do to the sector now. It’s the toy they keep playing with until it’s not only broken as it is now but beyond repair.

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    I've got news for them.

    Landlords will decide the future shape of the PRS and whether it continues to exist or not.

    Politicians will only be the catalyst.

  • girish mehta

    Wake up call for the government and charities. They need to listen to landlords after all they are investing their hard earned earnings tens like it or not housing family. G the government and social sector have not make any investment for decades, stop demonise dividing and demonising

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    If they pass legislation that has the effect of landlords with EPC D & E properties spending their kids inheritance, then we have trouble. The majority of landlords are just like me, a couple of properties, mortgage fee, full time job, but in my case coming up to retirement….. I will sell the lot and evict, and so will thousands of others. They need to get this right.

  • John  Adams

    The problem is there is a mentality taking root that housing is not only a right, but it should be free. The concept of repairs, and where the money is going to come from seems to be beyond these people, "The rich" is their answer and the trouble is the likes of Shelter and Generation Rent are encouraging these beliefs. The upshot will be huge numbers of homelessness, they forget that there is an enormous shortage of housing and developers won't do it for free. They also ignore the large numbers of people who want to rent because of work or other commitments and can't do that if there is no prs sector.

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    Agreed John, in years gone by the 'rich' were those born with a silver spoon in their mouth, like the local farmer / land owner in my area, wealth handed down over many generations, but today wealth is earned by very ordinary people from humble beginnings who work hard and are not afraid to take a risk now and again, there are all too many who go through life sitting on the fence moaning and winging their lot

     
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    I agree with Andrew (nothing new in that) and I am reminded of one guy who was actually jealous of the property portfolio that I have built up from an initial £6000 investment in a 10% deposit ( earned back within the first year's rental income). He mocked me along the lines of " If you didn't have all those properties you wouldn't need to do all that maintenance and decoration". I replied "If I didn't do all that maintenance and decoration I wouldn't have all those properties".

    I'm not sure he understood cause and effect but now in my early seventies most of my income is just as unearned as the idle rich. The difference is I haven't inherited a penny of it.

     
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    So, acknowledging that the system is too complex with some 168 pieces of regulatory legislation, the answer to the rental crisis in the UK is yet more regulatory legislation?
    What planet are these people on? A reset back to pre-2015 would help enormously. Prior to then, there was a good choice in rental property here across all property types. We had to be competitive and if they didn't like the house they would just take the better one down the road. Now it just resembles a desert with desperate tenants and agents looking for available properties. It's unhealthy, yet they are choosing to double down to "solve the problem". Osborne and Co have a lot to answer for

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    I agree with Grumpy Dog, Arears that used to be full of affordable properties to rent prior to 2016. Now have virtually nothing available. This situation has been caused by the Government and Councils.

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    Bonfire of red tape ! Getting rid of these European laws ?

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    From a government which promised to reduce Red Tape!

     
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    If l charged £20 / HR for my wife and myselves labour l would be making a massive loss !

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    I like the headline Politicians to shape the future of PRS.
    They will take everyone’s view’s into Account except the owners of the Private Rented Sector.
    Edwin is absolutely right millions of Landlords have to do tens of millions of hours extra unpaid of work & administration since they started all this anti-LL campaign not least George Osborne attack 2015 /16 increasing taxes, costs, doubling stamp duty & local Authorities licensing Schemes where we pay them for the work we do.

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