Rental Reform - are government proposals the right proposals?

Wherever you stand, whether you’re a landlord or tenant, the supply and demand issues impacting the private rented sector are at crisis point. With a shortage of housing across all tenures during a wider cost of living crisis, the Government is under increasing pressure to take radical action.

But what? The Queen’s Speech gave us a long-awaited update on what’s headed the sector’s way over the coming year.

Most notable was confirmation that the Renters Reform Bill is back on the agenda. With far-reaching proposals which will significantly change the relationship between landlords and tenants, the Bill, as many readers already know, will include the abolition of Section 21 in England – so-called “no-fault evictions”. 

The NRLA firmly believes that it is in the interests of all to have a private rented sector which is fair, inclusive and which works effectively for both landlords and tenants. Although they don’t have to evidence a fault, many landlords use a Section 21 notice in cases of rent arrears or antisocial behaviour, as they have more confidence, they will be able to regain possession with certainty and in a reasonable timeframe than through the fault-based Section 8 process. 

We were glad to see the Government accept our argument that a reformed Section 8 with stronger possession grounds must replace Section 21, but it’s also important that they acknowledge the ongoing backlog of cases in the UK’s court system. Significant court reform needs to occur if the courts are going to be able to cope with the increase in cases the loss of Section 21 will lead to. Alongside this, we have called for a conciliation service which would help to avoid going to court in the first place.

While the Queen’s Speech mentioned an ombudsman, it’s unclear whether this body would help alleviate the pressure on the courts – or instead help address tenant/landlord disputes which would otherwise go through local authorities.

The speech also said little about the supply and demand issue which continues to plague the market. Our research with landlords shows historically high tenant demand across the country, while at the same time a significant proportion of landlords are reducing their portfolios – or leaving the market altogether. 

Recent Capital Economics research commissioned by the NRLA reveals the extent of the gap between supply and demand, and demonstrates clearly how tax changes – particularly the scrapping of the stamp duty land tax levy on additional homes – could help boost the homes available to rent whilst also increasing Treasury revenues. 

We need a stimulus to support responsible landlords to provide the homes tenants want. Without this, it will ultimately be tenants themselves who suffer as a result of less choice, higher rents and the resulting difficulties they will encounter when looking to become homeowners.

Just as the cost of living has increased, so has the cost of providing good quality rented homes. Unfortunately, the impact on landlords’ bottom line has been exacerbated by the Government’s policy of making short-term holiday lets more tax efficient than providing long-term family homes. Faced with these challenges, some landlords feel forced to sell up. 

Taxing the supply of new homes makes no sense when we need almost 230,000 new privately rented homes a year. And the shortage of rented housing will only be exacerbated if the Government doesn’t get the balance right in its proposals for reform, with a model that works for both tenants and landlords.

* Meera Chindooroy is Deputy Policy Director of the National Residential Landlords Association *

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