White Paper reforms: NRLA counters uncertainty
Introduction
This non-member survey looked at private landlords of residential properties with rent paying tenants in England and Wales. Conducted by market research and marketing consultancy DVJ Insights in August of 2022, the survey had over 800 respondents (898). Of these, 861 landlords were located in England and 37 in Wales.
- Although called a non-member survey (because the landlords came from an external panel rather than our membership database), over 100 respondents were NRLA members.
This blog looks at how landlords may react to recent and anticipated policy and legislation changes in the PRS. These future changes include, in England, the possible changes to the PRS from a future Renters’ Reform Bill and possible changes to Minimum Energy Efficiency Standards. Wales-focused landlords were asked about the Renting Homes (Wales) Act and how its introduction may affect them.
Landlord sentiment
The fieldwork for this survey was in the period immediately after the publication of the White Paper, A Fairer Private Rented Sector.
Were legislation to closely follow the White Paper, then a Renters' Reform Bill would represent the most significant change in the private rented sector since the introduction of the 1988 Housing Act.
There is a clear sentiment among those surveyed that the White Paper reflected the government’s unsupportive tone towards landlords. When asked about the trend in housing policy and legislation over the past few years, landlords thought the scales had been tipped against them. Many landlords used words such as “unfair,” “difficult” and “frustration” when discussing government attitudes towards the PRS.
While recognising the need to provide good tenants with long-term security, the government should also recognise landlord's concerns when faced with a genuine problem tenant. It's about protecting landlord's rights as well as tenant's rights.
Landlord awareness
Landlords were asked whether they were aware a new Renters' Reform Bill was in the process of being prepared by Government (DLUHC) as was being reported at the time of the White Paper's publication.
The chart below shows levels of awareness among landlords. Responses have been split by whether the landlord questioned was a member of the NRLA or not.
Chart 1 - Awareness of a future Renters’ Reform Bill among landlords.
Overall, among all landlords surveyed, just over one-third of landlords - 38% - reported being aware of a Renters’ Reform Bill being in the policy pipeline.
However, landlords who are members of the NRLA are more likely to have been aware of the policy developments compared to those who were not members: Almost three-quarters of NRLA members were aware of a bill possibly coming forward.
Impact of proposals on landlords
Those landlords who were aware of a possible Bill and its contents, were asked about the specific elements the Bill may contain (based on the White Paper). Then, they were asked to summarise whether they were confident of carrying on as a landlord following the change.
Given the White Paper had only just been published and its contents were still being digested, it is perhaps little surprise landlords were split on its contents.
Roughly equal proportions of landlords were either confident, uncertain, or not-at-all confident they could carry on with being a landlord were legislation to proceed in the manner indicated in the White Paper.
NRLA members were more likely to sense a future Renters’ Reform Bill would have a big impact on their landlord business than non-members. At the same time, NRLA members appear to be more positive about the outcomes of future legislation than their non-member peers.
Those landlords less confident about moving forward with the implementation of the White Paper (both NRLA members and non-members) were asked why. Responses included:
“Uncertainty”
“Another piece of legislation with good intentions to protect tenants from bad landlords, but will actually make good small landlords leave the market”
“Not enough detail”
Responses like these demonstrate landlords' frustration with the possible contents of the bill. Landlord comments reinforce the need for the Government to provide further clarity and opportunity to debate before the White Paper becomes part of the legislative programme.
Reasons for concerns
Landlords were asked whether any bill emerging from the White Paper would have an impact their portfolio. Landlords who stated the bill would have an impact were asked to explain how it would affect them.
Key concerns included:
- The impact of removing of fixed term tenancies: This uncertainty was more pronounced for landlords occupying the student market.
- The inability to remove difficult, anti-social tenants: Landlords referred to the consequences of the removal of Section 21 without any substantial strengthening of Section 8 grounds.
- Inefficient court systems: The difficulties in the court system increases concerns about the loss of Section 21. There exists a clear demand for measures which support landlords seeking to evict tenants where there is a legitimate reason.
Many landlords stated they were considering selling - the sale of rented property would further exacerbate a shortage of properties to rent in the PRS. Landlord comments included:
“It will make forecasting and planning very difficult”
“If the White Paper becomes law, then we intend to start selling our properties and withdrawing from the rental market. We are good landlords …if we have a bad tenant this new legislation is going to make it far more difficult.”
“The removal of fixed term tenancies adds uncertainty. The removal of Section 21 makes evictions even harder than they are already due to inefficient court systems and backlogs”
“Harder to evict problem tenants and difficult non rent paying tenants”
Summary
This research was undertaken just as the White Paper was launched; landlord awareness of the proposals was limited. The PRS as a whole was still digesting the implications for the sector.
The research did show that those landlords who are members of the NRLA are considerably more engaged in policy and legislation changes when compared to non-members. They were the landlords most likely to have noted the existence and contents of the White Paper. They are also more comfortable with the network of support on which they can draw should the policy scales tip further away from them.
Landlord concerns with the White Paper focused on:
- The loss of Section 21, particularly in the absence of significant reform to Section 8 grounds.
- The abolition of fixed term tenancies.
Many landlords have reported in this research that the White Paper, if implemented, may lead to the sale of at least part of their portfolio. At a time of increasing demand, this would worsen the supply of homes in the PRS.
