x
By using this website, you agree to our use of cookies to enhance your experience.

OTHER FEATURES

White Paper - government should beware unintended consequences

Unintended consequences. Let’s face it, they happen across lots of different areas of our lives. We start out with the best intentions and a great plan of action, but something we hadn’t quite considered rears up. 

Most of the time these present trivial or harmless outcomes, but when it comes to peoples’ homes, there can’t be unintended consequences. 

The government’s new Fairer Private Rented Sector White Paper contains lots of sensible proposals and won’t be the death knell for the buy to let market as some media outlets have predicted. Yes, it will end Section 21, but it will beef up Section 8 grounds considerably and – hopefully – bring clarity to certain grey areas of the market. 

Advertisement

However, as they currently stand, the proposals do open the door for unintended consequences across some key areas. The student market, for example, could be damaged if the proposals are implemented as suggested in the document. 

The government has proposed a mandatory ground under Section 8 that covers student accommodation that is currently let to non-students. Under this ground, the landlord will have the right to gain possession of the property, but this only applies to educational establishments or purpose-built student accommodation providers. 

The government is arguing that there shouldn’t be a specific ground for student property because some students may not wish to move at the end of a tenancy because they have local ties or a family to support. This covers a minuscule proportion of students; the overwhelming majority of student tenants remain in the property for the academic year only. 

It’s a model that has worked successfully without issues for many years and the student market is one of the most mature sectors of the private rented sector. It’s a mutually beneficial arrangement between landlords and students, who value the flexibility it affords. 

Taking away the guarantee for landlords to gain possession of their property creates doubt and ambiguity. Many new tenancies between landlords and tenants are agreed in the January, February or March before the new academic year. Students want to guarantee a home for the upcoming academic year before they focus on the important end of year exams.  

How can landlords market their property to new tenants for the next academic year if they can’t guarantee the property will be free to let from the following September? The answer is that they can’t and this specific proposal as it currently stands is unworkable. 

Landlords considering buying new property in the student sector may stop and think again based on these current proposals. If that is the case, then the property shortages that we have seen inflict other parts of the rental sector could soon infiltrate the student market. 

We saw the dire accommodation issues certain universities had last September and this could become more commonplace if the Government proceeds with its plans as they are today. 

The good news is that these are just that – proposals. I am confident that when the Government hears the voices of the industry – including lenders, landlords, universities and representative bodies – they will reconsider. 

I truly believe the overnment recognises the importance of a sector that provides a home to one in five households in England and it is approaching the future of the sector attempting to balance the needs of landlords and tenants. 

But on this matter, it has got it wrong. And the harsh unintended consequence may be that students are unable to find a place to live whilst studying at university. 

* Richard Rowntree is managing director of mortgages at Paragon Banking Group *

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

  •  G romit

    Is this just cack-handed drafting or a concious favouring of big businesses (aka Tory donors) in the PBSA sector?

  • icon

    They need to think again about the whole periodic tenancy model in relation to all categories of tenants if they want to retain a decent sized private rental sector.

  • icon

    This guy is lobbying for his sector of the market, but being sycophantic to the government. He could easily have his business ruined as most private landlords are going to be !

  • icon

    Could someone explain to me what the problem is? I do not understand what the who ha is all about. I do not want to appear to be unsympathetic to student landlords but I don't understand what their problem is. As a large landlord and like all the landlords I know I want my tenants to stay, pay and behave. Anything that makes them stay longer is good for me.

    I used to let to students and if they wanted to stay on I would welcome it. It saved me a lot of work cleaning updater they left. As for preletting the property to new students then this could easily be resolved by stating it was subject to the existing tenants leaving. Not good or fair to the new students hoping to move in.

    I never evict for no reason so I will not miss section 21 as I never use it. Section 8 works for me, I have done over 350 evictions myself with 100% success always for rent arrears. I have never had to use Ground 14 ASB as all my ASB tenants also don't believe in paying rent. There is a myth which I never had and would like to happen, that the tenant turns up on the court day and pays off the arrears. The tenants I have to evict have no intention of paying the rent. It is not can't pay it is always won't pay! Often assisted by councils and other housing advisors where the tenants are told they do not have to pay the rent and the landlord must follow the legal process to evict them.

    As for students not leaving at the end of the term there is nothing a landlord can currently do before the new intake if a student tenant refuses to leave. Even if the section 21 two months notice was given two months before the day the tenant has to leave I do not know how long it takes to get to court to get a possession order with a section 21 but I suspect it will take months and then if the tenant still refuses to leave in my area it takes 2 months for the bailiffs to attend. This is assuming the tenant does not try and fight the eviction. A Streetwise tenant will run rings round the average district judge and could delay the eviction for many months more. So in practice I don't see what the problem is. The abolition of fixed term tenancies will not change very much. Student tenants can currently stay on if they want with impunity for at least 4 months and possibly a lot longer.
    Jim Haliburton
    The HMO Daddy

  • icon

    Jim
    Activist lawyers, activist tenants ! I can see you being in the firing line, fairly quickly.

  • icon

    The government obviously think this is going to be a vote winner among students and their parents. Yes, it seems great not to be tied into a rental agreement for a whole calendar year, especially with the pandemic fresh in their minds, however the impact on the student market will be far reaching and the students will be the biggest losers if these proposals are approved. If we are to win this, we should not talk about the impact on landlords but the students themselves. The RNLA needs to lobby students so that they understand that these changes will have a negative impact in the long run.
    LESS CHOICE
    Private student accommodation form an important, affordable part of the student letting sector. Many students prefer to live in private housing where they can live independently, learning real life skills, fewer rules - others prefer PBSA’s.
    By making PBSA’s exempt, the government is in effect discriminating against smaller landlords. Private landlords will either sell up, rent to young professionals or families . Students will have less of a choice both in the number and variety of accommodation.
    CONVENIENCE
    Any business needs to be able to plan and market in advance. Students also need to plan and secure their accommodation well in advance so that they can secure a property which can accommodate their friendship group and their desired location. If landlords cannot arrange viewings and arrange tenancies because they can’t guarantee vacant possession, then students will be left in limbo. Also if one of their friends decide to leave at some point in the year, the landlord can put anyone in the vacant room and they might find themselves having no control of who they share a house with.
    MORE EXPENSIVE
    Even before the cost of living crisis, the high cost of purpose built student accommodation was only a choice for the privileged few.
    The price difference between private student accommodation and purpose built is huge - sometimes double the cost.
    With fewer properties on the market, the cost of student accommodation will go through the roof.
    Private student lets will become more expensive, because the landlords that choose to remain in the market will have to factor in the risk of not letting all rooms for a full calendar month.
    The large PBSA’s will be rubbing their hands together. They will almost have a monopoly. Less supply and less choice will mean that they can increase their prices even more. Remember they are owned by hedge funds and large private investors only interested in one thing - SHOR TERM PROFIT.
    Who will lose out? - the students.
    These proposals are supposed to offer protection and flexibility for the tenant, in this case the students.
    But the PBSA’s are exempt - so more students will end up in a PBSA on fixed term contracts, paying through their Nose.
    In the end fewer students will go to university because they can’t afford it, and/or they will live at home while studying closer to home losing out on the whole university experience. And then everyone will lose out even the PBSA’s.

  • icon

    Jim, I’ll tell you what the problem is and obviously not a problem for you as you are a HMO operator by choice run by cash flow under the Cloak of Company and all the advantages of that. Companies don’t need the personal input money of their own, just borrow up on the Company acids / property and keep expanding forever, which is what has happened ending up with hundreds of properties or should I say the unacceptable face of Capitalism. I believe this is your business model and have been advising LL’s on courses and offering viewings on how to divide up property to maximise profit from HMO’s and I don’t knock you for that.
    However I am not a Company LL and not a HMO LL by choice but this was forced upon me, private Landlord private property financed by me personally. I have never let rooms or wanted to either that don’t stop the Regulators forcing me into HMO licensing compliance. Section 21 is the foundation of all private letting as far back as 1988 prior to which virtually no lettings were available, do you not ask yourself who that was ?Obviously no Section 21 no letting why would I buy or build a property for someone that’s nothing to do with me.
    so where was your HMO’s they didn’t exist until invented in 2006, you can’t see the difference but now like most other new comers want to rule the roost. Private Freehold Property Privately owned, not to be taken over for Public and use in perpetuity without consent.

    icon

    Couldn't agree more, Michael.

     
icon

Please login to comment

MovePal MovePal MovePal