BLOG: Hit or miss – how will the long-awaited Renters’ Reform Bill be received?

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In the first in a series of blogs for LandlordZONE on rental reform, Sean Hooker, Head of Redress at the Property Redress Scheme, shares his thoughts on yet another delay to the Renter’s Reform Bill and whether the sector could still have a chance to steer the process.

Long and winding road

Does anyone remember the Aesop fable, “The boy who cried wolf?” Well, I am beginning to feel this is me when it comes to the Government’s announcements of reforms in the rental sector.

The banner, “Coming Soon” is now well worn and in the last few weeks we have been confronted by contradictory statements by ministers on what season we should expect the Bill to finally roll off the press.

We knew the proposed legislation was promised this parliamentary session, but as this has been extended till next autumn this led to speculation that the pressures on the parliamentary timetable could delay the introduction of the legislation further.

This was hinted at by the current minister, tasked with delivery of the Bill, Rachel Mclean, who took over the portfolio from Felicity Buchan in an internal job swap in DLUHC.

This did not stop head honcho Gove telling Laura Kuenssberg at the end of March that everything was on track for a D-Day of a couple of months.

Mayday Mayday!

Easter has come and gone, the crescent moon has been spotted over Mecca, so Eid Mubarak and now we enter the merry month of May with the lesser spotted Renter’s Reform Bill still nowhere to be seen.

With three bank holidays this month, one of course for the King’s Coronation, this would always mean very little time to dot the Is and cross the Ts, if the legislation is to start wending through the parliamentary process. So it was always tentative that the timetable would be met. 

And then hope!

A confirmation came that the Bill will be laid the week after the King’s Coronation. Of course, off the back of this, it was all hands to the pump. Teams were lined up to start looking at the publication in minute forensic detail, blogs, podcasts and webinars planned and spokespersons briefed to be available.

Hopes dashed

The week before the Coronation Goodlord published my latest blog in which I asked, where was the Renter’s Reform Bill? Then as explained above, within a couple of days the Government announces that it is due the week after, so we change the blog to reflect that.

I then wake up on the Wednesday, after rumours abounded the day before, to find the introduction has been postponed because of “procedural issues”. What this means, who knows!

Some commentators are saying that, due to concerns among back-benchers on the Government side, parts of the Bill are going back to the drawing board (it evidently did not get a good reception at the pre-screening) and meanwhile the opposition were having a field day.

Stand down the troops. But stay on high alert! Goodlord changed my blog once again. What a Hokey Cokey.

One last chance

So, we are now waiting for a new date for the Bill, and whilst I have been flummoxed on predictions every time previously, the First Reading of the Bill will take place very shortly.

It has to be because Parliament goes into recess and rises for Whitsun on 23 May, not returning until 5 June and thereafter it is the short summer session before the House rises again on 20 July.

I therefore believe the political pressure will be mounting to get the Bill out before the end of May and, given that the First Reading literally take a few minutes, start cracking on with the graft on the Bill when MPs return. Yes, we are close but still no cigar.

Subject to change

What I also know, however, from my communications with the civil servants (no spoilers), is that they are hopeful that as the “heavy lifting” has been done, cumulating with the White Paper, the subsequent round tables and other consultations, the passage of the Bill should be straight forward and not contentious, however we have heard that all before.

Even as recent as mid-April, the meetings with the stakeholders were still going on with leading industry figures still expressing concern. So, what the final director’s cut of the blockbuster will look like is still to be determined and of course that is before MPs get their hands on it.

We can also surmise that a good part of the proposals will not be fully fledged and therefore will be light on details within the Bill, with enabling powers granted to the Government to work on the changes further and introduce them later through secondary legislation.

There is even a suggestion that “helpful” amendments will be introduced during the legislative process, giving the department more time to firm up the proposals and put more flesh on the bones.

All that’s needed is the green light and for the Government to realise that, as American President Teddy Roosevelt wisely exclaimed, “Knowing what’s right, doesn’t mean much unless you do what’s right”.

View Full Article: BLOG: Hit or miss – how will the long-awaited Renters’ Reform Bill be received?

Short-term room rentals and damage deposits?

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Hello, I run a company that specialises in Airbnb holiday lets and short-term room rentals. Last year a lady contacted me and asked if she could rent a room on a monthly basis I took a damage deposit as she was only meant to be there short term.

View Full Article: Short-term room rentals and damage deposits?

NEW: Number of landlords planning to sell up hits RECORD high, new poll finds

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The number of landlords planning to sell their rented properties has reached its highest level ever, according to new research.

BVA-BDRC, commissioned by the NRLA, found that during the first three months of this year a third of 700 private landlords in England and Wales that it polled said they planned to cut the number of properties they rent out, up from 20% a year ago.

By contrast, only 10% of landlords currently say they plan to increase the number of properties they rent out.

This looming ‘disinvestment’ comes despite demand being at a record high.

According to the research two thirds of landlords said demand for properties from prospective tenants was increasing, with the East of England recording the highest levels of demand.

Supply crisis

The NRLA warns that the supply crisis is set to deepen further without action by ministers and is calling for the Government to undertake a full review of the impact of tax rises on the sector and develop new, pro-growth policies.

This must include giving landlords the correct and fairest tools to evict when they have ‘good reason’ to end a tenancy such as anti-social behaviour or rent arrears, the NRLA says, pointing out that it takes on average approximately six months to evict tenants at the moment.

“Renters are bearing the brunt of the supply crisis. Without change, matters will only worsen over the coming year,” says NRLA chief Ben Beadle (pictured). 

“The Government needs to reverse its damaging tax hikes on the sector, which have discouraged the provision of the homes tenants desperately need.

“Moreover, responsible landlords need to have confidence that they can take back possession of their properties swiftly and effectively when they have good reason to when Section 21 ends.”                  

View Full Article: NEW: Number of landlords planning to sell up hits RECORD high, new poll finds

Could the solution to the housing crisis be our empty homes?

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The UK is going through a housing crisis, with landlords leaving the private rented sector in droves and many people unable to find a home.

But could the solution to alleviate the housing crisis be in offering England’s 250,000 empty houses and flats for rent?

View Full Article: Could the solution to the housing crisis be our empty homes?

BoE raises base rate – the property industry reacts

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The Bank of England’s decision to increase base interest rates from 4.25% to 4.5% today has led to the property industry reacting.

This is the twelfth consecutive interest rate rise – and the highest the rate has been in nearly 15 years.

View Full Article: BoE raises base rate – the property industry reacts

Seeking some initial advice

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Dear Property118

I am looking for some initial advice as I want to help my mother with her property held in a limited company. Since my father went into care she now manages the company which holds two rental flats.

View Full Article: Seeking some initial advice

Interest rate rise set to hit mortgage payments and rental market

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The Bank of England has hiked interest rates by 0.25 percentage points, pushing the base rate to 4.5% and raising fears that this could exacerbate rental prices and increase repossessions.

Interest rates were already at a 15-year high before the twelfth consecutive rise since December 2021, which will see millions of property owners facing higher mortgage repayments. Those with an average 2.58% fixed rate (available in 2021) set to expire this year will see their mortgage payments increase by £13,000 a year if they have a £250,000 loan, according to investment firm AJ Bell.

Negative equity

Group chairman of Cornerstone Tax, David Hannah, believes it was a mistake to raise rates again, as it could tip the economy into recession. “We’ve just witnessed the introduction of the 100% mortgage for renters, which means they’ve got no equity,” he explains. “Now we’re raising interest rates, putting pressure on affordability, which increases the risk of a property price decline – also meaning that those 100% mortgages are going to be in negative equity.”

Homeowners coming off fixed rate deals and moving straight into a 5.5% mortgage are going to be unable to afford them which will lead to many more repossessions and forced sales, he adds.

Housing ladder

The interest rate rise is also set to affect first-time buyers who may now be unable to get onto the housing ladder due to unaffordable mortgage rates, says Hannah, who believes the rise will also have a knock-on effect on the rental market. “It has already been suffering from a lack of supply, and now, with a growing number of would-be buyers in need of a place to live, this is going to be exacerbated further. The result of this is that rental prices and competition will likely increase at a time when people are already struggling.”

View Full Article: Interest rate rise set to hit mortgage payments and rental market

Plea to support landlords with rental reforms as record numbers plan exodus

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The Renters Reform Bill will increase pressure on landlords and may force even more to quit the market, warns the Royal Institution of Chartered Surveyors (RICS).

Its alarm comes as the number of landlords planning to sell rented properties has already reached its highest rate on record, according to new data from the NRLA. It found that in Q1, 33% of private landlords in England and Wales planned to downsize, up from 20% the same time last year. Meanwhile, only 10% of landlords plan to increase the number of properties they rent out as 67% said demand for properties from prospective tenants was increasing.

Higher rents

The RICS predicts that with demand continuing to outstrip supply, rental prices will be driven higher over the next few months. Samuel Rees, senior public affairs officer, explains that it’s increasingly concerned about the pressures facing the rental market. “Demand for rental homes remains high, but stock remains low, and landlords are increasingly exiting the market – which is translating into higher rents.”

Adds Rees: “The government’s proposed changes…will increase pressure on landlords and may force even more to exit the market. The government needs to ensure that proposed reforms to the rental market are delivered in such a way that it increases support for landlords and tenants and maintains and grows supply.”

Instructions dropped

Its poll reveals that tenant demand increased in the three months to April according to a net balance of +41%, while landlord instructions dropped, with a net balance of –24% of respondents reporting a decline.

Buy-to-let landlords offloading property are behind rocketing receipts of Capital Gains Tax, according to new figures from HMRC which show it collected £18.1 billion in CGT in 2022/23, £7 billion more than two years previously. The growth is set to continue as the CGT annual tax-free exemption has been cut from £12,300 a year to £6,000 and will fall to £3,000 from April next year, according to NFU Mutual.

View Full Article: Plea to support landlords with rental reforms as record numbers plan exodus

Record number of landlords are selling up – NRLA

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Despite record tenant demand for a rented home, the number of landlords quitting has rocketed to a new high, research shows.

Polling by the National Residential Landlords’ Association found that the number of landlords who are planning to sell their properties has hit its highest rate on record.

View Full Article: Record number of landlords are selling up – NRLA

Gove shelves plans to scrap leaseholds after Number 10 row

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Housing Secretary Michael Gove has dropped plans to abolish leaseholds in England and Wales after Downing Street officials argued there was not enough time to enact such major reforms.

Despite describing it as “an outdated feudal system” and pledging to get rid of leaseholds earlier this year, he will stop short of doing so, according to The Guardian. Gove had wanted to replace leaseholds for flats with a commonhold system, which would allow owners to make joint decisions about what should happen in shared areas of the building.

Crippling bills

In the aftermath of Grenfell, many homeowners have faced crippling bills and cannot sell their properties after buying leasehold flats that the freeholders refuse to make safe. New figures from the DLUHC show that in 2021-22, there were an estimated 4.98 million leasehold dwellings in England, with 38% of homes in the PRS owned on a leasehold basis.

Speaking on Sky News in January, Gove explained: “The fundamental thing is that leasehold is just an unfair form of property ownership. In crude terms if you buy a flat, that should be yours.”

Ground rents

However, he is still set to announce a range of measures to protect leaseholders next month, including a cap on ground rents, more powers for tenants to choose their own property management companies and a ban on building owners forcing leaseholders to pay any legal costs incurred as part of a dispute.

A spokesperson for the Department for Levelling Up, Housing and Communities told the paper: “We are determined to better protect and empower leaseholders to challenge unreasonable costs. In line with our manifesto commitment, we will bring forward further leasehold reforms later in this parliament.”

Property lawyer at JMW, David Smith, says Gove’s decision was predictable. “With the ongoing (and not exactly well met) challenges of PRS reform, standards in social housing, and the Building Safety Act, it was unrealistic to take on a fourth major reform programme.”

View Full Article: Gove shelves plans to scrap leaseholds after Number 10 row