Blog: Rental reform is coming - now is not the time to bury your head in the sand
Paul Shamplina founder of Landlord Action on the Government's planned changes and the impact of the Covid-19 pandemic.
As expected, the Queen’s Speech in May once again reconfirmed the Government’s commitment to reform in the private rental sector, promising to ‘enhance the rights of those who rent’.
Of course, central to reform is the plan to scrap Section 21 ‘no-fault’ evictions – first announced more than two years ago. The response to this consultation will be published later this year alongside a white paper outlining proposals for future legislation.
Notable aspects that tie into this include, the strengthening of grounds for repossession under Section 8, a commitment to mandatory landlord redress and proposals for a new ‘lifetime’ tenancy deposit model.
In addition, the Government is looking at options for driving up standards in the PRS through effective enforcement, for example, exploring the merits of a national landlord register.
Impact of Covid on reform
Even though significant change has been coming for some time now, we cannot ignore the fact that in between we have had a global pandemic, which has accelerated rent arrears and put many people, both landlords and tenants, under financial hardship.
I appreciate there will be considerable stakeholder engagement to help shape such reforms. But, I do have concerns that making radical change too early, following a very difficult 18 months, could hinder rather than help the market by diminishing supply, making it even more challenging for honest hard-working tenants to find affordable properties.
Obviously, the pandemic and the current eviction ban is playing a huge part in rising rent arrears. In a recent poll carried out by Client Money Protect (CMP), nearly a third of letting agents (32 per cent) said that more than 50 per cent of their portfolio of tenants have fallen into rent arrears. This is before the furlough scheme ends in September.
We know that most landlords are working hard to be accommodating to tenants’ circumstances wherever they can (77% say they will be flexible with rent).
We have seen in some instances that mediation has helped to successfully reach a way forward, whether that has resulted in the tenants looking for another property, being offered a rent reduction or implementing a repayment agreement.
However, as previously stated, there is a limit to how long landlords can shoulder the financial responsibility, regardless of tenants’ personal circumstances.
It is already likely that there will be a surge of evictions over the next 12 months, particularly as a result of a strong sales market which may encourage some landlords to cut their losses now.
With this in mind, and to prevent a further stampede of evictions, I believe there needs to be a significant amount of time, post-pandemic, for the market to readjust.
Landlords and tenants need time to get back to normal and see if they can or want to remain in their current tenancy contracts.
Courts need time to clear the backlog of repossession cases which are currently stacked up, and significant consideration and alterations must be put into making Section 8 work in practice, not just in theory.
On a positive note, the Government has provided a clear roadmap to restarting possessions and returning notice periods to pre-Covid levels from 1 October.
The Government announced bailiffs will start operating again from 1 June, at which point notice periods will be reduced to four months instead of six, and exemptions for shorter notice periods will remain.
What next for redress?
I believe that mandatory landlord redress, although may be met with some resistance from smaller landlords, is ultimately the best way of raising standards in the industry. If landlords look at it positively, it provides a platform from which to elevate themselves and avoid being tarnished with the same brush as those who do not operate professionally.
If we have landlord redress, I personally cannot see the need for a national landlord register as well. We know the Government’s existing rogue database has not had the desired impact, with just 39 landlords and agents being handed a banning order.
I guess my only concern about redress, is what kind of complaints will be included within this and how easily it may be for tenants to submit spurious complaints.
For example, whilst there are thousands of tenants who have been adversely affected by the pandemic, unfortunately, there are also some who have used the system to their advantage and avoided paying rent simply because they know there is nothing their landlord can do about it.
Without Section 21 and a redress system which carefully considers evidence from both parties, landlords could be just as exposed to these kinds of serial rogue tenants as tenants are to rogue landlords.
As always, the devil will be in the detail…to be unveiled in the autumn.
However, it is clear that landlords cannot bury their heads in the sand and must keep themselves up to date with the impending changes if they wish to remain in the sector. Non-compliance will not be an option.
If you need help with the repossession of your property, contact NRLA recognised supplier, Landlord Action today.
