The past twelve months have seen two major housing commitments from government relevant to the private rental sector (PRS).
Last October, then prime minister Theresa May committed to making the government’s database of rogue landlords and property agents accessible to tenants. In April, the former Communities Secretary James Brokenshire announced that the government would put an end to so called ‘no-fault’ evictions by repealing Section 21 of the Housing Act 1988. This decision was touted as “the biggest change to the private rental sector in a generation”.
Together, these commitments point to a government looking to reset the balance of rights and responsibilities between landlords and tenants. Unsurprisingly, this direction of travel is popular among renters who tend to be younger and spend a larger portion of their income on housing costs when compared to households in other housing tenures, according to the English Housing Survey. Landlord groups, however, are less keen on these developments and have expressed concern that the compounded impact of the policy changes impacting the PRS will deter investment, leading to a reduced stock of rental property and higher rents.
Overall, UK Finance is supportive of the government’s plans. The measures proposed will help to enhance trust between landlords and tenants. This promotes long-term stability in the private rented sector, which improves investor confidence in buy-to-let. Our members in the buy-to-let mortgage market collectively hold nearly £250 billion in loans, which back about one in three properties in the PRS.
However, we caution that the removal of Section 21 can only be successful if executed correctly. Specifically, we called for the government to (1) expand the grounds which can be used for Section 8 evictions; (2) expand the range of circumstances under which accelerated possession can be used (i.e., evictions without a court hearing), and (3) sufficiently equip the court system so the increased eviction caseload (which will inevitably arise when section 21 is removed) can be accommodated.
Additionally, we support the government’s decision to expand access to the Rogue Landlord Database. We believe that it should be accessible not only to tenants, but to organisations with an interest in the private rented sector, including mortgage lenders, letting agents, and landlord groups. By making this information widely available to organisations which deal with landlords, the sector will be able to adopt a degree of “self-policing” as lenders and letting agents will be able to better vet the landlords they provide services to. This will make it more challenging for unscrupulous landlords to operate and help drive them out of the sector.
Members of UK Finance can view our responses to A New Deal for Renting and Rogue Landlord Database Reform.
The UK Finance Annual Mortgage Conference takes place on Wednesday 6 November. Topics will include The View from the Regulator, The Changing Shape of the Mortgage Market & Emerging Trends to 2025, LIBOR to SONIA transition, Mortgage Regulation, and Housing Supply. Visit the event webpage to learn more.