Leaders in the rental industry have lambasted the government’s planned changes to the ways evictions from residential properties are carried out, arguing that they are a ploy for votes that fail to do enough for tenants or landlords.
Residential investment experts instead called for an overhaul of renting policy, demanding government backing for landlord enforcement, more engagement with the private sector, and Scottish-style open-ended tenancies.
The government’s open consultation on its “modernising the rented sector” is seeking views on several changes to the Housing Act 1988, which it argues will encourage “a new, fairer deal for both landlords and tenants”.
The changes include abolishing section 21 of the act to prevent landlords evicting tenants without good reason. Other shifts proposed are aimed at strengthening legal evictions by other means (section 8 of the act), and the future of shorthold tenancies.
But critics say the reform is outdated and fails to address the real issues facing the industry.
Tracey Hartley, head of residential at the Howard De Walden Estate, said she is “pro-tenant rights” and admitted that the industry has “a long way to go” to improve residents’ experience. But she added that the suggested reforms will do little to help.
“Section 21 itself is not the issue here, but it is a vote-grabber to say you’re going to abolish it,” Hartley said. “For big institutional landlords, losing section 21 is a bureaucratic headache.”
Ed Crockett, head of UK residential investment at Aberdeen Standard Investments, said: “It is critical that the government fully engage with the investment community and tenant representatives with their proposals to allow all unforeseen consequences to be explored prior to any kind of political policy being implemented.
“We need to enter into this debate with an open mind on what a system could look like, rather than hark back to previous failed attempts.”
Open-ended tenancies
ASI criticised the government’s planned changes. In a statement, the investment firm said: “We are being led by thinking that is nearly half a century old.”
The asset manager has called for “greater discussion around open-ended tenancies”, with rental regulations and evictions in line with Scotland’s Private Housing Tenancies Act (2016).
Crockett said: “Renting should be viewed as part of the solution to the UK housing market and not the problem.
“A more transparent regulatory framework will help in this regard, but it can’t become a set of moving goalposts, as this creates greater uncertainty for both tenants and landlord.”
ASI proposed a new regime to incorporate minimum six-month fixed-term tenancies, with tenants able to opt for longer terms at a concession, followed by rent reviews with a rolling agreement at a headline rent.
Cortland’s chief investment officer Andrew Screen echoed the potential solution in the Scottish-style Private Residential Tenancy agreement. This agreement has 18 grounds for the repossession of a property, including its sale by the landlord or lender, rent arrears, criminal and antisocial behaviour and tenancy agreement breaches.
Screen said: “Eliminating section 21 without amending section 8 is likely to leave landlords without an effective repossession process.” He said the current fault-based section 8 process is “widely-accepted to be an inefficient, time-consuming and cumbersome process”.
He added: “In rare circumstances, landlords need to be able to evict tenants when justified or absolutely necessary, and they require an efficient legal system to do so.”
Public funds to police PRS
In England, landlord enforcement of tenancy agreements and evictions is currently managed through trading standards and individual local authorities.
While institutional landlords pride themselves on a professional service that is superior to that of most buy-to-let investors, the bulk of PRS is still provided by the latter. There are an estimated 5.4m buy-to-let properties in the rental sector, compared with just 32,223 completed purpose-built BTR homes.
Hartley said landlords do not use section 21 “without good reason, because that takes away their income”.
She said the proposal to abolish this legislation adds to the “hostile climate” these landlords currently face, rather than supporting them to deliver improved rental experiences.
Hartley called on the government “to fund and resource enforcement now, so that all of the existing statute can be enforced on a level playing field.”
She added: “Enforcement will do more to support tenants and empower them than any political point-scoring, but that’s not such a headline grabber.
“There is not the resourcing to police the private rented sector. There are criminal landlords out there and they should be dealt with decisively, but the vast majority of BTL landlords are normal, decent people.”
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