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UPDATE: The Renters (Reform) Bill - the fall out
It is yet to gather speed in parliament, so before it does here are some of the major industry challenges to the Renters (Reform) Bill in its current form
The Renters (Reform) Bill feels like a great big rumbling train that has been coming down the tracks for years now, threatening, if some were to be believed, to derail the landlording business altogether.
The Renters (Reform) Bill feels like a great big rumbling train that has been coming down the tracks for years now, threatening, if some were to be believed, to derail the landlording business altogether.
Well, when it finally rolled into the station as Housing Secretary Michael Gove introduced it to Parliament in May, OTH Magazine eagerly tuned into PMQs expecting it and the rejigging of the rental sector to be the contentious hot topic of the day. The result, almost no mention at all, a murmur at best.
An anti-climax its introduction to parliament might have been, but the bill, which was first proposed by Theresa May’s government (April 2019), still has a long way to go before it starts legally reshaping the way we do business.
As we went to press it was awaiting its second reading in the House of Commons, with three more stages in that house prior to heading off the House of Lords for a pummelling and reshaping before it finally enters its final stages and then Royal Assent.
ALL QUIET ON THE PARLIAMENTARY FRONT
In fact, progress on the bill since it was released has been unusually slow. According to PropertyIndustryEye; “It is considered unusual for a Bill to take this long to move from a first to second reading.” The way things are going questions about whether the government are really committed to introducing the bill, certainly before the next general election, have been raised.
Chief executive of the National Residential Landlords Association, Ben Beadle, noted that the government has now announced all business for Parliament up to the summer recess with no mention of the second reading of the Bill. He also noted that with the shorter September session, the run in to the Autumn budget and the King’s Speech, it even looks iffy for a pre-Christmas second reading.
There may have been a barely a raised eyebrow in the House as the Bill finally departed the station to make its journey through the Parliamentary process, but in the industry media it has sent shockwaves and has been debated in great depth. Here we have a look at the fall out and how industry commentators and experts have reacted and how they believe the Bill needs to evolve before it is fit for purpose whenever (or if ever) the day comes it is introduced.
CAN THE GOVERNMENT REALLY DELIVER COURT REFORM?
Gove recently underlined a promise to landlords that even though the reform bill will abolish Section 21, so called ‘no-fault evictions’, the government will ensure an expedited process for recovering your property when there is a good reason such as late payment of rent or anti-social behaviour.
If they can’t stick to that promise, it risks massively undermining the rental sector even further.
So, believes the NRLA’s Beadle who was quoted as saying: “Responsible landlords need to be confident that when Section 21 ends, where they have a legitimate reason, they will be able to repossess their properties as quickly as possible… Without this assurance, the Bill will only exacerbate the rental housing supply crisis many tenants now face.
“Ministers must develop a plan to improve the speed and efficiency with which the courts process possession claims. Although the Government has accepted NRLA calls to digitise cases, staff numbers need to increase in the court system as well to meet the needs of these reforms.”
Elizabeth Earle, Knowledge Lawyer at Farrer & Co questions if the need for abolishing section 21 is really there in the first place and is highly sceptical about whether courts could cope with the added workload it will require.
“While it is unjust for good tenants to be asked to leave on two months’ notice for no apparent reason, it may be worth questioning how many landlords would be so capricious: a good tenant who looks after the property is immensely valuable and empty houses cost money,” she wrote in a blog post.
“The updated grounds in Schedule 2 attempt to redress the loss of section 21, but the fact remains that many of the grounds are only discretionary (the court may, but may not, order possession). All grounds, furthermore, are tied to specific conditions which must be met in order for the landlord to rely on them. The tenant can challenge the reasons given and require the landlord to prove them in court, before a possession order is granted. Given the added cost, delay and uncertainty this entails, it is possible this will deter landlords from letting in the first place, if they are unwilling to commit to a long-term arrangement with limited opportunities for regaining possession.”
“With 11 million tenants in England, it is hard to see how the court and tribunal systems are going to cope with the volume of applications,” added Earle.
JOINED UP THINKING NEEDED WHEN IT COMES TO EPCS
Faced with over 160 current regulations to comply with and the prospect of further uncertainty as a result of this reform, The Royal Institute of Chartered Surveyors has said if the government doesn’t get its act together and give landlords more clarity when it comes further EPC requirements it could spell disaster.
“We would like to see joined-up thinking between new EPC measures and decent homes so that landlords can plan for the introduction of both and tenants know what to expect,” the organisation said.
ABOLISHING SHORTHOLD TENANCIES
As part of the reforms the government has removed the six-month shorthold tenancy effectively in favour of a rolling tenancy from day one with a tenant being able to serve notice that they are leaving as soon as the keys are handed over to move in.
“By not prescribing a minimum tenancy length the Government further risks fuelling a booming shortlets market, where holiday lets replace much needed permanent homes, at a time when the rental market is already suffering a significant lack of supply,” warned Ian Fletcher, director of policy, British Property Federation. The proposed removal of clear end dates for a tenancy has the potential to throw student landlord’s business model out of the window.
As the NRLA pointed out, in Scotland, where this part of the bill has effectively been introduced it has prompted a “student housing crisis”.
“By giving students the right to remain indefinitely, landlords would have no guarantee that their property would be free to rent at the start of the next academic year, making it impossible for them to find new tenants – and making it increasingly harder for new students to find somewhere to live.”
“In Scotland, where similar changes have already been made, landlords have left the sector in droves with many declaring a student housing crisis,” warns the organisation. So, while most landlords are not opposed to tenants enjoying more security and most of all safe housing and much of the Bill is indeed reasonable, there is a long way to go and a lot of track to be laid before it should be considered fit for purpose.
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