Will 2022 present energy efficiency and rent control challenges?

As we enter 2022 the private rented sector can look back on a year which marked the start of its recovery following the difficulties caused by the Covid-19 pandemic.

Demand for rental accommodation has increased across the UK, the Government has made funding available for councils in England to help renters in arrears, and the courts are hearing possession cases at a (relatively) normal rate.

Alongside this, the sector has avoided a number of potential pinch points.

Despite widespread press speculation, the Chancellor resisted the temptation to increase Capital Gains Tax.

Moreover, proposals to reform the way landlords can take back possession of their properties will now not be published until next year.

But what about energy efficiency? Whilst we await confirmation of the UK Government’s plans for the sector, we know that landlords will be able to access some limited financial assistance to install heat pumps in properties.

But having seen some signs of stability, 2022 promises to be a year of change and challenge.

With inflation continuing to increase, landlords need to be prepared for an expected rise in interest rates at some point, and therefore the likelihood that their mortgage payments will go up.

Whilst we are still left with the legacy of rent debt caused by the impact of Covid on tenants’ livelihoods, councils need to ensure that the funding made available to help them reaches them as swiftly as possible to help sustain tenancies.

Having presided over the climate conference in Glasgow, the UK Government remains committed to ensuring the country becomes a net zero emitter of carbon by 2050. As part of this agenda, if it has not already been announced by the time this article is published, we expect the Government shortly to publish details of what it expects of the private rented sector when it comes to energy efficiency improvements.

This will mark an important moment for the sector, which has been craving certainty for many months now. It is vital that, when the Government publishes its plans, it provides that long term trajectory. We cannot be in a situation of the sector being set targets, only to find the Government revisiting them a few years down the line.

Alongside this, Ministers need to resist the temptation to think that every landlord is a property tycoon with deep pockets able to afford any and all energy efficiency improvements. Through a combination of loans, grants and tax measures landlords need support to make the investments the rental housing stock will require to meet the Government’s objectives.  

Landlords will also be looking to the Government’s planned White Paper on reform of the sector. This will have at its heart details of how Ministers plan to end the use of Section 21 repossessions.

The new system needs to give landlords the confidence to continue to provide the homes to rent the country needs. That means the new grounds for repossessing properties should be clear and comprehensive. It must not leave landlords frustrated by a slow and cumbersome process where they have a legitimate reason to repossess a property.

This should be matched by efforts to ensure disputes can be dealt with, wherever possible, without the time and expense incurred by the initiation of court proceedings.

Separately, landlords and tenants will continue to face pressures as a result of a benefits system which is failing to provide either with the confidence they need. Most acutely, with the Local Housing Allowance having been frozen in cash terms based on rents in April 2020, it is likely that more tenants will be affected and will struggle to afford their rents. The NRLA will continue to campaign, in partnership with others, to end this freeze which has inflicted substantial damage on tenants in receipt of benefits.

Meanwhile, in Wales, the Labour Government has used an agreement with Plaid Cymru to explore ways in which rent controls can be introduced in the private rented sector. Over the course of the next year, the NRLA will campaign heavily to highlight the folly of a policy which has proven to be disastrous not just for landlords but for tenants as well. Any form of rent control, as history shows, will inevitably lead to a smaller sector and less choice for tenants.

With recent evidence suggesting there is an excess of demand over supply, the priority for all governments in the UK must be to consider policies that will encourage investment in the sector. Otherwise, tenants and prospective tenants face a year of restricted choice and the prospect of higher rents.

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

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