The White Paper, A Fairer Private Rented Sector, published in June 2022, sets out what the Government calls its long-term vision for the PRS. The proposals are to be implemented this Parliament through a renters reform Bill and are primarily a response to concerns about security of tenure and housing quality. The first concern is that section 21 of the Housing Act 1988, which allows landlords to quickly evict tenants without having to give a reason, leaves tenants vulnerable to “no fault” eviction and so afraid to complain to their landlord. The second concern is about the condition of private rented accommodation, which is more likely to be non-decent than homes in other tenures and to contain hazards that pose an immediate threat to health and safety.
In response to the first concern, the Government says it will repeal section 21 and replace fixed-term tenancies with a system of open-ended (periodic) tenancies. We conclude that the abolition of fixed-term tenancies, combined with the repeal of section 21, would undoubtedly give tenants greater security of tenure, and we therefore welcome the proposals. The one exception is the general student PRS market. Currently, the proposal is to include this part of the PRS in the tenancy reforms, but we conclude that abolishing fixed-term contracts here could make letting to students considerably less attractive to private landlords, as the student market mirrors the academic year and benefits greatly from 12-month fixed tenancies. We agree with the evidence that not exempting the student PRS could push up rents or reduce the availability of student rental properties, at a time when the market in many university towns and cities is already very tight. We therefore recommend that the Government retain fixed-term contracts in the student PRS.
On the repeal of section 21, we believe that most private landlords are responsible and have no desire or financial incentive to evict tenants without good reason, and that for these landlords section 21 feels like an indispensable means of evicting bad tenants, but we also believe that the blight of unfair eviction and insecurity of tenure experienced by too many tenants can only be remedied by its repeal.
The repeal of section 21 will leave landlords reliant on section 8 of the 1988 Act, which requires a court hearing, and the grounds for possession set out in Schedule 2. The Government says it will amend the section 8 regime to compensate for the loss of section 21. In particular, it plans to:
We conclude that the proposed sales and occupation grounds could be too easily exploited by bad landlords and become a backdoor to “no fault” evictions, and we therefore recommend that the Government:
Landlords are perhaps most concerned about the capacity of the courts to expedite possession claims, particularly in respect of rent arrears and antisocial behaviour, and this is one of our greatest concerns too. The courts system is already struggling to process housing cases quickly enough. The pressures on the courts will be exacerbated by the repeal of section 21, as landlords will seek to regain possession under section 8, especially in the case of rent arrears and antisocial behaviour. As we have concluded before, the best way to improve the housing court system is to establish a specialist housing court, but the Government has rejected this idea, for reasons we find unsatisfactory. Furthermore, in relation to in-tenancy rent increases, the Government proposes that it will remove the power of the First-tier Property Tribunal to increase rents. If this proposal has the desired effect of giving tenants greater confidence to challenge rent increases, it ought to result in a heavier workload for the tribunal. However this is already a time-consuming and resource-intensive process. Both these proposals present a real risk that the current systems will be overwhelmed, and there will be a logjam with lengthy delays before verdicts are reached.
It is not clear whether the Government fully appreciates the extent to which an unreformed courts system could undermine its tenancy reforms. For this reason, we again recommend that the Government introduce a specialist housing court. Whatever it does, however, the Government must:
In response to the concerns about housing conditions in the PRS, the Government says it will:
We support the introduction of a legally binding DHS, given the high rate of non-decency in the PRS, and the property portal. The cost to landlords of meeting the new standard could, in some instances, become an obstacle to compliance, but we do not think this point should be overstated. This is partly because the Government has proposed a £10,000 cap on costs resulting from improvement works in relation to three of the four criteria (B, C and D), meaning a property would be considered compliant with those criteria once the cap has been reached. We conclude, however, that for criterion D, on energy efficiency, this cap should not mean some properties get neglected, given the very strong correlation between energy efficiency and levels of damp and mould. We therefore call on the Government to come up with financing solutions where the necessary energy efficiency works would exceed the cap. It should also align criterion D with the minimum energy efficiency standard.
The DHS will not help to raise standards in the PRS unless local authorities can enforce it vigorously, but at the moment levels of housing enforcement activity vary hugely between local authorities, with many local authorities opting for informal engagement with landlords rather than enforcement action. The precarious position of local government finances, the shortage of qualified housing and environmental health officers, and the lack of reliable data are all obstacles to effective enforcement. Since the Government is unlikely to make significant extra funding available for housing enforcement, given the current economic climate, the success of the regime will depend on whether it can become self-financing, and this depends on local authorities being confident of their ability to collect financial penalties imposed on landlords who breach standards. To this end, the Government should:
Currently, letting agents are required to belong to one of two government-approved ombudsman schemes, but membership for landlords is voluntary. The Government plans to introduce an ombudsman for all PRS landlords, regardless of whether they use an agent, and says a single scheme will mean a streamlined service for tenants and landlords and avoid the confusion and perverse incentives resulting from multiple schemes. We do not understand why the Government is not proposing to replace the existing letting agent schemes with a single ombudsman covering all letting agents and landlords. We therefore recommend that the Government introduce a single ombudsman for the whole of the private rented sector.
The most serious challenge currently facing many private renters is neither security of tenure nor housing conditions but the high cost of renting caused by the housing crisis. Many smaller landlords believe the White Paper proposals will aggravate the problem by driving them out of the PRS. For them, the proposals are an extension of other anti-landlord policies pursued by Governments since 2015 that have resulted in a significant reduction in the size of the PRS. We share some of the concerns expressed about the reduction in the size of the PRS, and we recommend that the Government review the impact of recent tax changes in the buy-to-let market with a view to making changes that make it more financially attractive to smaller landlords.
The White Paper does not include any proposals to address the underlying cause of the affordability crisis in the PRS, which is the decades-long failure of successive Governments to build enough homes. We accept that this was not the purpose of the White Paper, however, and that the Government is investing in house building. Nonetheless, there are questions about the housing sector’s ability to deliver the necessary number of new homes, particularly given the enormous financial pressures on housing associations and local housing authorities. The affordability crisis in the PRS, the source of many of the other problems in the sector, can only be properly solved by a significant increase in house building, particularly affordable housing. We therefore call on the Government to recommit to delivering the affordable homes the country needs, particularly the 90,000 social rent homes we have previously concluded are needed every year.
The full report can be read here; https://committees.parliament.uk/publications/33924/documents/185831/default/