On 7 February 2017 the Government published its long awaited Housing White Paper entitled ‘Fixing our broken housing market’ with a number of issues outlining the Government’s plan to improve safeguards in the Private Rented Sector and make renting fairer for tenants.
Over 4 million households now rent their home from a private landlord, which is nearly twice as many as ten years ago. Standards in the private rented sector are reported to remain below those in the social and owner occupied sectors, but are improving with just 28% of homes now non-decent compared to 37% in 2010. The Government say that an increasing number of private tenants (65%) are happy with their tenure, compared to 48% in 2004-05.
Pages 61 and 62 outline the Government’s focus on driving up safety and standards in the private rented sector, banning letting agent fees to tenants, and promoting longer tenancies. Here are the Government’s proposals in more detail and what we think about them:
The Government reiterated that they will consult early this year, ahead of bringing forward legislation as soon as Parliamentary time allows, to ban letting agent fees to tenants. Officials in Whitehall believe this will improve competition in the market and give renters greater clarity and control over what they pay.
ARLA Propertymark does not support the ban on letting agents’ fees to tenants. Our policy paper and research sets out why banning fees would be bad for landlords, letting agents and tenants.
The Government will implement measures introduced in the Housing and Planning Act 2016, which will introduce banning orders to remove the worst landlords or agents from operating, and enable local councils to issue fines as well as prosecute. We expect banning orders to come into force on 1 October 2017.
Read our response to the Government on their proposed banning order offences
Client Money Protection
ARLA Propertymark is very pleased that the Government is considering whether they should take action to make client money protection mandatory for all letting agents.
We have led the campaign for mandatory CMP and we hope that the Government will introduce the compensation scheme which recompenses landlords and tenants should an agent misappropriate their rent, deposit or other client funds. The Government will set out next steps on this shortly.
Mandatory electrical safety checks
The Government are considering whether they should take action to mandate electrical safety checks for rented properties. ARLA Propertymark has attended meetings with the Government and industry experts to help shape the rules.
We agree with the concept of mandatory electrical inspections in all private rented property – with a certificate every five years. However, we have said loud and clear that a greater emphasis must be placed on the practical implementation of current rules against the working practices of letting agents and the capacity for the local authorities to enforce these rules before more extremely prescriptive legislation is introduced.
Housing in Multiple Occupation
The Government have set out their plans to extend mandatory licensing of Houses in Multiple Occupation (HMOs) and recently consulted on the matter.
ARLA Propertymark responded to the Government’s consultation. We have warned of the unintended consequences of plans to extend the scope of mandatory licensing of HMOs.
We understand that the Government is currently analysing the results of the consultation and Ministers will be making an announcement shortly. Fortunately, they will not be implementing the proposed HMO legislation changes this April! Nevertheless, Ministers are keen to see legislation implemented at some point this year.
Build to rent and longer term tenancies
The Government is proposing to make the private rented sector more family-friendly by taking steps to promote longer tenancies on new build rental homes. The Government is separately consulting on a range of measures to support more Build to Rent developments.
Commenting, David Cox ARLA Propertymark CEO, said:
“ARLA welcomes the Government’s plans to encourage more institutional investment to boost the number of properties available for rent. Any proposals that increase supply should be applauded. However, this approach should not be at the expense of small landlords who make up the bulk of the private rented sector. Experience has shown that, even in countries where institutional investment in the PRS has been encouraged, it still only makes up a small part of the sector. Small landlords are vital to the health of our rental sector.”