COMMENT: Labour’s rental reforms, have they been watered down?
Labour’s “Renters Charter” was announced in a speech by Lisa Nandy before the election. It outlined what she claimed would be fundamental reform of the private rented sector, “overhauling its regulation to markedly drive-up standards and conditions and provide tenants with long-term security and better rights.”
It would, “Introduce a renters’ charter that will abolish ‘no fault’ Section 21 evictions, introduce a legally binding Decent Homes Standard for the private rented sector, ban landlords from refusing to rent to those in receipt of benefits or with children, provide for longer notice periods, introduce a national landlord register and introduce a right to have pets.”
It would also, “Seek to close loopholes that disreputable landlords might use to exploit tenants and jeopardise their security of tenure following the abolition of Section 21.”
To summarise, Nandy’s points, the Labour party aimed to:
- End Section 21 evictions
- Reduce eviction powers for landlords whose tenants are in arrears
- Introduce four month notice periods
- Examine schemes for ‘portable’ deposits making it easier and cheaper for tenants to switch properties
- Allow tenants to have pets
- Permit renters to make “reasonable alterations to a property”
- Create a national register of landlords
- Initiate a legally binding decent homes standard in the private rental sector.
Further information gleaned from House of Commons data by the National Residential Landlords Association on Labour's intended reforms includes:
- Introduce ban on no-fault evictions from day one of office.
- Insist landlords wait to claim intention to sell or move in a family member for at least the first two years of a tenancy – currently they only have to wait six months.
- Landlords must offer their property for sale to the tenant before trying to evict them on grounds of needing to sell.
- Apply a “hardship test” allowing courts to refuse a possession order if it will cause greater hardship to tenant than the landlord.
- Get rid of the ground for “persistent rent arrears”, to be used when a tenant falls into two months of arrears at least three times.
It would seem, if the post speech rent reform detail released by Number 10 and the housing minister Matthew Pennycook MP [main image] is to be believed, that some of the more extreme proposals above, such as reducing eviction powers for tenants in arrears, may have been dropped? We won’t know this for sure until the publication of Labour's new Renters’ Rights Bill.
Here experienced residential and commercial landlord Tom Entwistle comments on the proposals put forward by Labour in the King’s Speech and the subsequently released Downing Street paper - see his comments point by point below.
The Government has promised to remove the Section 21 no fault eviction process currently available to landlords and replace it with “new clear and expanded” grounds for possession, presumably enhancing the Section 8 grounds for possession. This was originally proposed in the now defunct “Renters Reform Bill” by the Tories.
Labour announced a new “Renters’ Rights Bill” in the King’s Speech which, on reading through the released detail, bears a strong resemblance to the original Tory plans on tenancy reform.
Local authorities are to be given “strengthened enforcement powers”, which is said will make it easier to “identify and fine unscrupulous landlords and drive bad actors out of the sector”.
The released background briefing notes to the King’s speech set out below give a little more detail and Tom Entwistle comments on these.
“The Government is determined to address the insecurity and injustice that far too many renters experience by fundamentally reforming the private rented sector and improving the quality of housing in it.
“We value the contribution made by responsible landlords who provide quality homes to their tenants and believe they must enjoy robust grounds for possession where there is good reason to take their property back. However, the Government is determined to level decisively the playing field between landlord and tenant by providing renters with greater security, rights and protections and cracking down on the minority of unscrupulous landlords who exploit, mistreat or discriminate against tenants with bad practices such as unfair rent increases intended to force tenants out, and pitting renters against each other in bidding wars.”
TE - I don’t think there is anything in these two paragraphs that any responsible landlord will disagree with. Good landlords want to see the rogues driven out of the sector. All too often this does not happen because councils fail to enforce the law, laws that already exist to tackle these problems - in fact, if they were to do so comprehensively, councils end up with more homeless tenants on their hands, which they are obliged to re-house.
The released detail continues…
“The Renters’ Rights Bill delivers our manifesto commitment to transform the experience of private renting, including by ending Section 21 ‘no fault’ evictions – we will take action where the previous Government has failed. The Bill will give renters much greater security and stability so they can stay in their homes for longer, build lives in their communities, and avoid the risk of homelessness,” says the background release.
TE - The no-fault eviction process has been a “safety blanket” that landlords have valued ever since the introduction of the assured shorthold tenancy. Responsible landlords don’t abuse it but use it as a quicker less hassle way to avoid trouble when needed. I think the level of abuse ascribed to it has been exaggerated, but no doubt a minority of landlords have done so.
I can understand the feeling of insecurity tenants may feel, especially families, with Section 21 hanging over them, but again responsible landlords don’t evict if the tenant pays its rent on time and looks after the property – it’s not in their interests to do so.
Sometimes landlords need to sell, but I think that is unlikely to be any different under the new system, even though there have been rumours of restrictions – no law should prevent a landlord’s ability to sell its property with vacant possession as a restriction would be a violation of property rights, a cornerstone of English Common Law.
But perhaps the time has come to wave goodbye to section 21 and accept that residential tenants should have greater security of tenure, with a judge or third-party arbitrator deciding a tenant’s fate, whether or not an eviction is appropriate. After all, under the Landlord & Tenant Act 1954 commercial landlords have lived with a high level of tenant security since 1954.
The difference perhaps, is that it’s relatively easy to deal with rent arrears using private bailiffs, or even evict a commercial tenant, if the rent is not paid or there are some other serious breaches of the contract – the lease conditions.
I think responsible landlords will accept that on the rare occasions when they need to remove a tenant, they need to provide good evidence before a judge or arbitrator, who will decide, but therein lies a big issue.
The courts are overloaded and notoriously inefficient. To have to wait up to 12 months to remove tenants, usually paying no rent and possibly abusing the property, is in no way acceptable: the Government is going to have to come up with a better system if this new law is to be fair to both landlord and tenant.
If they decide to go ahead with the new regulations before the court system is sorted out, this would be unfair to landlords and would simply drive more landlords out of the sector.
TE - Allowing rent increases only once a year and bringing them to a market level in my view is entirely fair. Liking rents to the cost-of-living index is another option that I’ve seen suggested, but I would argue this could increase them beyond market levels. In my experience responsible landlords don’t penalise their tenants by driving up rents to high levels, or take advantage of housing shortages, they value good tenants and want to keep them, often by keeping rents below market.
TE – Under consumer law tenants have had an advisory, perhaps not a statutory, right to request a pet for a long time, but landlords should also have the right to refuse an unsuitable pet. A large dog in a flat for example. I can see many issues with this, for example leaseholds with no-pet clauses, neighbour issues etc. And pet insurance: how do landlords ensure that tenants maintain their cover?
TE - I agree with this. Landlords should not be involved in the private rented sector (PRS) unless they are prepared to rent out housing of a decent standard. This will also involve making sure the building meets an appropriate EPC rating.
TE - This relates to the point above. If the house is adequately insulated and heated, with good ventilation in all the right places (kitchen and bathroom) then there should be no condensation and mould issues. Sometimes tenants need to be educated as to why condensation problems occur and how to prevent them. But in extreme cases, where tenants don’t or can’t afford to heat a property properly, a full forced air ventilation system fitted by the landlord may be the only answer to prevent condensation and mould.
TE – Making councils fully aware of how houses are being used and who is using them is something that has often been lacking. However, data protection issues may be raised, and managing such a database will not be an easy task. Of course it will entail some costs: who pays for this, is it another fee to be paid by landlords - hopefully not too much cost will be passed on to landlords, though we should live in hopes on this. It can only be a good thing if used correctly to track down the rogues.
TE – This all sounds good in theory, and I hope it works like that in practice. Unfortunately, my experience with bad tenants – rent arrears, anti-social behaviour, damage - has been that they won’t communicate freely, let alone enter some form of dispute resolution. The only answer in this situation I’ve found is court action, which they cannot ignore.
TE – I have no problem with this and nor should any responsible landlord. Every tenant should be put through a selection process which is the same and therefore it is perfectly acceptable to discriminate on specific grounds, for example on affordability or if the property is not suitable for the proposed occupant/s. Otherwise, landlords should accept the first viable tenant/s that comes along.
TE – Yes, agreed. For councils to take rogue landlords to court and obtain convictions is, I am aware, a long, time-consuming process. So, giving councils a greater ability to by-pass the courts and impose fines on rogue landlords (with the right of appeal of course) seems like a good idea to me.
That’s the extent of the King’s speech background information released by number 10 which is minus some of the proposals made in the original Tenant’s Charter speech given by Lisa Nandy. It does seem that the Bill has been watered down from some of the more outrageous Labour suggestions, but we need to wait until the new Bill is published to find out for sure.
The Labour housing minister Matthew Pennycook [main image] has acknowledged that landlords need the courts to operate quickly and efficiently when there is a good reason to repossess a property. This would include serious rent arrears, causing damage to the property and anti-social behaviour. We should hold Labour to that promise.
Whatever the outcome, Labour must surely appreciate that these reforms must be seen as fair and workable for landlords as well as tenants, and not make the rented housing sector, already in a serious supply crisis, a lot worse than it already is.
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