Reform of the Private Rented Sector
Last week the Parliamentary Select Committee published their report on the state of the private rented sector (PRS), following an intensive 3-month inquiry.
It’s a significant report which made some surprising and radical recommendations.
It’s all the more important when you bear in mind that a number of key recommendations in the last such inquiry of this nature (5 years ago) were subsequently adopted by government.
As well as a significant increase in the size of the PRS, the report noted that for an increasing number of tenants, renting is now a long-term prospect. The report also noted concerns that according to The English Housing Survey, an estimated “800,000 private rented homes have at least one Category One hazard, such as excess cold, mould or exposed wiring, while 41% of tenants reported that they had waited an unreasonably long time for repairs that their landlord was legally required to undertake.”
The committee also found concerns about Local Authority enforcement.
The report’s conclusions and recommendations can be summarised as follows:
- Quality of accommodation and the balance of power
The committee expressed the view that many tenants require yet more protection from retaliatory evictions, unfair rent increases and harassment.
Despite the evidence revealing that most PRS housing is of an adequate standard, the report concluded that there “continues to be a significant minority of private rented accommodation that is shockingly inadequate.” In fact, the committee received evidence that 27% of private rented homes failed to meet the Decent Homes Standard in 2016.
The report also concluded that there remains a clear power imbalance between landlords and tenants, with tenants often unwilling to complain to landlords for fear of retaliation. The committee went on to recommend that the Government provides “additional protections from retaliatory eviction and rent increases. Protections should also be extended to prohibit retaliatory rent increases for a period after making a complaint.”
The committee also agreed with the Government idea of providing a specialist housing court to make redress for tenants more accessible. They further recommended that “the Ombudsman be given sufficient powers and resources to provide tenants with the support they need when challenging inadequate standards in their homes, and to require the payment of compensation to tenants when appropriate.”
Finally, the committee recommended that consideration be given to “introducing a new Local Housing Allowance (LHA) rate for studio accommodation, to reduce the incentive for landlords to break up larger properties into much smaller ones to enable them to benefit from the higher LHA rates payable for one-bedroom properties compared to the shared accommodation rate.”
- Legislative powers
As with the last report 5 years ago, the report again recommended a review of PRS legislation with consideration being given to how to achieve greater clarity for tenants, landlords and local authorities.
The committee expressed a strongly held view that the Government should “introduce a more straightforward set of quality standards for the sector, so that it is clear to everyone—not just to highly qualified professionals—whether a property meets minimum standards.”
The committee also agreed with:
– the All-Party Parliamentary Carbon Monoxide Group (APPCOG) that “legislation should be amended to make it mandatory for landlords to install carbon monoxide alarms in the rooms containing any fuel-burning appliance.”
– the Electrical Safety Standards Working Group that “mandatory five-yearly checks on electrical installations should be introduced as soon as possible in the PRS.”
The committee expressed support for the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill. However, to give it more teeth they recommended that “Provision should be made for free and easily-accessible technical and legal advice to support tenants through this process.”
The report dealt with Local Authority enforcement in some detail and concluded that councils have been inconsistent, and enforcement levels—formal or otherwise—are far too low.
The committee expressed the view that “local authorities should have the power to levy more substantial fines, which might stand a chance of breaking the business models of the worst offenders. Further, local authorities should have the power to confiscate properties from those landlords committing the most egregious offences and whose business model relies on the exploitation of vulnerable tenants. Coupled with the banning orders which came into force in April, this would act as a more powerful deterrent than the existing provisions.”
- Selective licensing schemes
Finally, the committee concluded that decisions to implement selective licensing schemes should be made locally, where there is greater understanding of local needs and politicians are directly accountable to the electorate for their decisions.
The conclusion was that “the current process of application to the Secretary of State is not fit for purpose. Decision-making is too slow, lacks transparency, and is overly bureaucratic and unduly expensive.”
For the majority of landlords, this report should be welcomed. In my experience, most landlords understand that providing their tenants with good quality accommodation and a good landlord experience is in their own interests in any event.
Anything that makes the legal and moral obligations of the relationship between landlord and tenant clearer, more easy to understand, more positive and more straightforward, has to be welcome. Eliminating or at least reducing rogue landlords from the PRS landscape also has to be good news.
However, to what extent government decides to adopt the report’s recommendations, of course, remains to be seen. And of course, to what extent any changes (legislative or otherwise) have built-in safeguards against abuse by tenants is going to be key.
You can read the full report here and I’ll keep you posted on any developments of course.
Graham Faulkner is Branch Director of EweMove Dorking
He’s bought and sold a lot of properties over the years and is also a portfolio landlord, as well as specialising in helping other landlords. Apart from his own experience and expertise, he can also recommend the right professionals, as tried and tested by him, to advise you.
Multi-award winning EweMove in Dorking is a residential property sales and lettings agency who pride themselves on being refreshingly different and standing out from the crowd. EweMove Dorking covers from Ockley to Oxshott.