What was discussed in the White Paper and how will this affect landlords?
The publication of the Government’s White Paper on rental reform produced a range of reactions from stakeholders – some that were pleased with the recommendations, many more who were not.
The White Paper represents the biggest change to the private rented sector in England in over three decades, with many of its proposals setting the stage for a wholesale transformation of the market.
First and foremost, the NRLA welcomes the White Paper’s acknowledgement that the majority of private landlords provide good quality housing. Such a simple statement should be a given, but sadly the hard work of landlords in providing good quality homes is rarely recognised.
Yet the Government hasn’t outlined a comprehensive new system to replace the soon-to-be scrapped Section 21 clause. There are notable, and important gaps. For instance, it remains unclear how buy to let landlords can deal with anti-social tenants. The NRLA continues to press the Department for Levelling Up, Housing & Communities for further clarity on how they will address this issue.
Likewise, student landlords are also likely to be hit adversely by the Government’s proposed shake-up of student lets. With student tenancies typically running on a highly cyclical basis, there is now a real risk landlords will not have a guarantee their rental properties will be vacant for the start of each new academic year.
These are obviously hugely significant proposals. But with a change in Government set to potentially delay the arrival of all new legislation, it’s crucial that landlords don’t make firm plans until the final shape of the Bill is confirmed.
The cost of living and the impact that this is having on the sector
As the national press reminds us daily, the cost-of-living crisis is likely to be the UK’s dominant political issue of the year.
The country’s ongoing economic woes ensure the supply and demand crisis worsens month by month. According to research compiled by the consultancy Capital Economics, commissioned by the NRLA, an extraordinary 260,000 additional homes a year are needed in the private rented sector in order to meet Government targets over the next decade.
Industry and households alike have been hit by the impact of inflation, and the private rented sector (PRS) is no exception. The rising costs associated with maintenance, professional services and utilities mean that many landlords have been forced to increase their rents. This of course increases the chance that tenants will fall into arrears.
What do investors/landlords need to be aware of this year?
With inflation still high, landlords need to be prepared for further interest rate rises and the likely impact this will have on mortgage payments.
More broadly, with the sector set to face considerable change in the way it operates, landlords and investors need to ensure they keep abreast of what the cost of living crisis means for them and how they let their properties.
With the affordability crisis continuing to worsen, any households which are concerned that they are missing out on opportunities to reduce their bills, should speak with their landlord.
In the longer term we need a clear Government plan to help landlords introduce energy efficiency measures which will help cut the average tenant’s bills. Although this is not an immediate solution to the problems facing households today, high utility bills are likely to be with us for some considerable time and in the long-term our housing stock needs to perform more efficiently if it is to appeal to the renters of tomorrow.
The Government must urgently announce a plan of action mapping out how it will facilitate the introduction of measures which will improve the overall energy efficiency of the UK’s privately rented housing stock. Landlords will have to do their bit, but we cannot be expected to carry the weight of these reforms alone.
Written by the NRLA – National Residential Landlord’s Association. The NRLA will be attending Property Investor Show on 7th/8th October 2022 at London ExCel