Labour`s Manifesto intentions – Landlords how does it affect you?

Labour`s Manifesto intentions – Landlords how does it affect you?

Whoever had won the election, properly implementing the Renters Reform Bill was always going to be a struggle given the current financial constraints of government spending. The fundamental problem with the housing market is a lack of supply of property, coupled with an abundant supply of tenants who are desperate for an affordable home. Affordability and availability are interlinked and are the crux of the current housing crisis. Many properties are now priced out of the reach of many lower paid tenants! In fact there is a growing number of people who can`t afford to even pay the rent being asked, and yet there is an acute shortage of social housing which should be filling the gap and offering some respite and choice.

For any government to “attack” the PRS with this very depressing background has to be seen by any sane person as questionable – the same landlords who are leaving the market after the last few years of Tory measures are the ones who don`t have a mortgage and can afford to have a social conscience about the type of tenant they want to help. If Labour follow through on their election pledges, without first rectifying some of the endemic problems, they will only exacerbate an already acute problem! Both governments have been struggling for a while now with practical solutions to this thorny problem (which unbelievably has been started by the Tories). The main question is about the need to help the poor and vulnerable, which are the very people who are now suffering due to a lack of choice or worse any housing that they are able to rent. Previous government policies, however well meant and intentioned, have been the catalyst for this housing crisis and left many disillusioned landlords selling up.

Ben Beadle (CEO NRLA) was recently on GBN Live and eloquently summed up the answer to the housing problem: “Building more social homes, revisiting Right to Buy policies, and incentivizing investments in the Private Rented Sector are key steps to address the root causes of the housing crisis.”

With that as a very general backdrop, what do the labour government intend to put in place?  Their manifesto has stated that they intend to:

1. Abolish Section 21 – this is a flagship policy for Labour, and given it has cross party support it will come in sooner rather than later given the pre-election rhetoric. In the Renters` Rights Bill, Labour mentioned that as well as abolishing no-fault evictions, they will create “new clear and expanded possession grounds” to make it easier for landlords to reclaim properties when needed. However, just like the Renters (Reform) Bill, this new legislation doesn’t state how they will ban Section 21 and reform the courts; which are the key components of the intended change and will need to be rolled out smoothly so as not to panic the market.
2. Consider rental prices, as they have pledged to “challenge rent increases designed to force tenants out” as well as end “rental bidding wars by landlords and letting agents”. The former would prove difficult for two reasons; firstly, the market will find its own natural level at which tenants can pass the referencing criteria. Secondly, the number of landlords who evict tenants for no real reason is far more smaller than portrayed in the media – if the aim is to run a seamless tenancy, a void is the last thing any sensible landlord wants to deal with. Bidding wars are driven by the market and are a result of the supply shortage coupled with the excess demand, particularly in desirable locations – if more houses were built and there was choice, this problem would naturally disappear.
3. Put in place a Decent Homes Standard. This standard currently only applies to the social housing sector, but would now be applied to private housing – this could be a complex issue given the poor state of much of the current social housing and the complaints from those tenants. It does pose the question of whether the existing standard which is enforced by local authorities is worthy of being used as a model for the PRS, where most properties are already adequately maintained! The Conservative Government announced that local authorities would have been given further powers to ensure landlords are maintaining their homes to a decent standard. This included a £30,000 fine or a banning order; the key question is whether will Labour endorse or change this? It is painfully obvious that most local authorities are cash starved and running on shoestring budgets for all of the services that they are expected to deliver. Without extra funding or a re-think in the roll out, coupled with Local Authority interaction, this could become yet another regulation that gets put in place but can`t be effectively policed!
4. Relate Awaab’s Law to the PRS. Labour has committed to ensuring homes are safe, secure and hazard-free. Awaab’s Law which is currently applied to the social housing sector will ensure that landlords will have to comply to set legal expectations coupled to time frames; and to ensure any hazards in the home are dealt with, within a specific period of time. To be honest, any decent landlord should have checked a property before the tenancy starts and rectified any problems, so that the tenancy is stress and problem free. There should also be procedures in place if a problem arises, in order to cause the least disruption to the tenant and get the issue resolved as quickly as possible.
5. Allow pets in rental properties. Data from 2021 shows that 40% of UK households own a pet with only 7% of private landlords advertising a pet-friendly rental. It is something desperately needed in the private rental sector – many families include a pet. Labour’s Renters` Rights Bill covers this very emotive issue, allowing “tenants the right to request a pet”. The proposed bill states that landlords must consider and not unreasonably refuse a tenant’s request. However, “Landlords will be able to request insurance to cover potential damage from pets if needed”. This will be a necessary safeguard for landlords as pets can increase the risk element to the rental, but will require an amendment to the Tenant Fee Act which could in turn take some time to bring in.

As with the Renters Reform Bill, the new Renters` Rights Bill will become clearer over the next few months and the “devil will be in the detail”. What is very clear, and it is something that has grown in importance since the Coronavirus Act, is that landlords will no longer be able to “bumble along” but will have to look at renting as a business. They will need to be better at communication and treating their tenant as a person and not a number, combined with allowing them to treat the property as their home for the duration of the tenancy. Compiling and keeping evidence of all communication will become both necessary and hugely more important if the only route to getting possession has to go via a court hearing.

The complexity of regulation in the current set up of tenancies, let alone the changes that will come with this Bill, mean accidental and amateur landlords will need a lot more help to understand their responsibilities and compliance of the rules. They would be strongly advised to take some form of professional advice to make sure that everything is set up correctly and then administered properly thereafter. This will give them better protection against the plethora of fines that may well be more harshly enforced by local authorities, given government policy and financial shortages.

I would urge all residential landlords to ignore the negative media hype and concentrate on performing their roles in a professional manner, as the changes when they come should be in the main acceptable, so long as practices change to work with them. The key message to landlords is DON`T PANIC!! There is an underlying bonus for landlords staying in the PRS and it is twofold – house prices are likely to rise over the longer term and there are numerous tenants desperately trying to find a suitable property to call home. It will most likely be over a decade before these pressures on housing cool off and tenants eventually have the choice of the property they deserve, so landlords will be able to cover their costs and maybe make a profit for their efforts.

No one doubts that the law does need some re-balancing, but it has to be fair to both the tenants and landlords if it is to work. If it is not, this government will need to give serious consideration as to how they will help the fast increasing number of homeless people, who will have been made homeless through no fault of their own nor their landlords!