Lettings Regulation Update

Our Group Lettings Technical Director talks about the latest hot topics

In our latest Q&A, Andrew Culverwell provides his insight on the regulatory situation for landlords – what the current landscape is and what the future may hold this year and beyond. Read on, or listen to the podcast here.

What is your take on the recent Renter’s Reform White Paper?

First and foremost it is important to remember that the White Paper is not law and will be subject to the usual passage through both parliamentary houses before that happens. This gives ample opportunity for changes to be made.

We can but guess as to whether a new Prime Minister and Cabinet will have the same enthusiasm for tenancy reform, but in any event change is highly unlikely in the short term.

The Government confirmed that it intends delivering on its manifesto promise to abolish Section 21 evictions. At the same time new and stronger grounds for possession will be introduced making it easier for landlords to gain possession where there are cases of increased rent arrears and anti-social behaviour. Abolition of these so called “No fault evictions” under Section 21 is understandably of concern to both landlords and agents. The principal of tenants being able to enjoy security of tenure without the constant threat of being asked to leave hanging over them is understandable; however, landlords being able to regain possession when things go wrong or if they wish to – for example – sell, or move back into the property is an important factor in maintaining a healthy private rented sector. It’s useful to remember that implementation of the 1988 Act was designed to encourage landlords into the market, and whilst updating it is long overdue, we don’t want to through the baby… or more accurately… the landlord… out with the bathwater.

We should be encouraged that Government has made positive noises in this regard, hopefully having understood that uncertainty here risks damaging landlord confidence and therefore the supply of much needed property to meet a growing demand. How this will work in practice will be interesting, particularly in relation to landlords looking to sell as this could easily be open to abuse.

Other topics of interest included:

  • A proposal for an Ombudsman to help reduce the number of possession cases coming before the courts.
  • An extension to the Decent Homes Standard to improve those homes currently of an unacceptable standard. (Consultation in the summer, covering ventilation, refuse management and water efficiency)
  • A portal for landlords to better understand their obligations and to log safety certification.

  • Tenant lifetime deposit solutions are being monitored by Government with a view to considering whether regulatory changes are required at some point in the future.

    What do the proposed rental reforms mean to you?

    Should we look to Wales for any lessons learned around the introduction of tenancy reform in England?

    That’s a very good question, which I imagine comes off the back of news at the end of May that the planned introduction of tenancy reform under the Renting Homes (Wales) Act has been pushed back from 15th July 2022 until 1st December 2022.

    Planned changes in Wales include minimum six month notice periods from landlords to end a tenancy, with tenants required to serve one month when a tenancy is in a periodic state. Changes like this are obviously aimed at increasing protection for tenants.

    If anything can be learned from our experience to date in Wales, it surely has to be that when fundamental changes to housing regulation like this are being drafted and implemented it is essential that key stakeholders such as landlord and industry groups are engaged from the outset. Underestimating the complexity and nuances around the letting and management of property, and therefore the time required to formulate well considered and rounded policy risks the level of confusion and uncertainty that has sadly dogged the Renting Homes (Wales) Act. Also of course… detailed guidance and adequate time for landlords and agents to implement change are also essential.

    Is there any more news on Regulation of Property Agents (RoPA)?

    Government has confirmed that it is still considering recommendations by the Regulation of Property Agents Working Group Report published back in 2019. Government has clearly signalled its commitment to driving up standards… and has welcomed the industries own efforts in this regard.

    Now, two considerations – with a lack of direct measures from Government, could we be forgiven for interpreting this as a move away from regulatory change, perhaps in favour of the industry itself driving change? If so, would that necessarily be a bad thing? We will all have our own views, but arguably this could be a more sensible approach than wholesale change given that local authorities are already empowered to deal with poor industry standards. I can hear people questioning whether that power is always applied appropriately, judiciously and with adequate resource, but nonetheless it’s an existing mechanism designed to improve standards. A key concern for agents is that in practice this will result in higher standards for the majority, together with time and cost associated with meeting those standards, whilst the minority underbelly, which arguably poses the greatest risk to standards, is left largely unchecked as a result of a lack of appropriate enforcement where it’s needed most. If so, that clearly goes against the principal of what Government is trying to achieve.

    We will all have our own views of course, but RoPA looks unlikely to be disappearing too far into the shadows.

    Safety never seems far from the headlines. Have there been any recent developments?

    Indeed there have, Government confirmed that from 1st October this year all rented property in England will need to have a Carbon Monoxide Alarm in rooms where there is a fixed combustion appliance. In practice, this extends existing requirements from appliances like wood burning stoves to now include gas heaters, fires and boilers, but not gas ovens and hobs.

    The changes we have already mentioned in Wales include mandatory electrical safety testing… mirroring requirement in England, as well as the provision of mains operated and interlinked smoke alarms. Carbon Monoxide alarm provisions are similar to those in England, albeit without the gas oven/hob exception. Unlike Smoke detectors in Wales, CO alarms do not need to be mains operated or interlinked.

    Full details are available on the gov.uk and gov.wales websites.

    The Building Safety Act, which comes off the back of the Grenfell tragedy, has now received Royal Assent. In practical terms we are unlikely to see provisions of the Act coming into force until the middle of 2023. Before then we should expect to see regulation and guidance supporting the provisions of the Act.

    Over the pandemic there were obvious concerns amongst landlords, tenants and agents around tenant arrears. Are the Breathing Spaces that were introduced still in play?

    Interesting you should ask that. For those unfamiliar with Breathing Spaces they involve the temporary cessation of debt recovery, including for rent arrears, whilst the individual receives advice from specialist agencies such as Citizens Advice. We have seen only a few of these, all of which to date have ended with the landlord resuming proceedings once the Breathing Space ended. With that in mind it's impossible for us to judge their value and effectiveness.

    Notwithstanding that, Government has published proposals for Statutory Debt Repayment Plans (SDRPs)… as if we needed yet another acronym… covering both England and Wales.

    Interestingly, an SDRP focuses on repayment as opposed to the relief offered by a Breathing Space, and potentially provides a fair degree of protection to debtors. If a debtor has rent arrears they can be included in any debt plan but apparently it’s not mandatory under the proposals. Tenants may decide not to include rent arrears as the longer repayment period could prejudice the future of the tenancy, including its renewal. It strikes me that in practice excluding rent arrears could prove to be impossible unless the plan provides a speedy way of clearing them. However, we will see as this develops. When the plan is formulated, tenants should continue to make rental payments, with rental expenditure very much factored into the equation.

    A consultation has been launched which closes on 5th August 2022. This is obviously a complicated and nuanced topic, with full details available on gov.uk in the usual way.

    How much rent could you generate?