Six ways the Renters Rights Act will change renting: Part 7, Looking ahead

The Renters Rights Act has now been in force for over a fortnight. Maybe you are wondering what all the fuss was about?

However, it will take some time for the changes to filter through.  Many landlords, tenants, and perhaps even some letting agents are still unaware of the scale of the changes.

Government aims for the Renters Rights Act

This is what the government hopes the new legislation will achieve:

• Longer security for tenants, with many able to remain in their homes long term, plus
• An end to tenants feeling trapped in properties they do not want to live in
• A decrease in the rate of rent increase, so over time, rented property becomes more affordable
• A fairer tenant selection process, with the abolition of large up-front lump sum payments (other than deposits) and rental bidding, and a prohibition on blanket bans on tenants on benefit or with children
• Tenants feeling more empowered to enforce their rights – particularly once the new Ombudsman service comes on board
• Rogue and criminal landlords being properly punished by Local Authorities, who are then able to use the fine money to fund further enforcement work
• More control over and understanding of the extent of the PRS by government and Local Authorities

It will be interesting to see whether these aims are successful over the coming years.

The Role of Local Authorities

To a large extent, the success of this legislation will depend on Local Authorities doing their job properly and enforcing against the many rogue and criminal landlords.

However, there is a fear among the many good landlords that Local Authorities will feel intimidated by the rogues and criminals, and so will instead build up their funds by enforcing mainly against good landlords who make a mistake.

Hopefully, they will not be allowed to do this, and tenants’ organisations will pressure them into enforcing against the rogues. I know that many tenants’ organisations are gearing up to bring Judicial Review claims against Local Authorities who drag their heels.

Increasing affordability

Making rented accommodation more affordable is another aim. However, the real problem is a lack of suitable accommodation in many areas where it is needed. Until this is dealt with, market forces will inevitably result in higher rents.

There is also the fact that it is not cheap to be a landlord, and the rent needs to be sufficient to cover these costs and give a decent profit.

So if rents are to be kept down, landlords will need financial help, for example, to bring substandard properties up to scratch and allow landlords to carry out work to make properties more energy efficient.

Forcing landlords to rent out properties where they are not allowed to make a decent profit, or (as some are advocating) any profit at all, will simply result in most landlords selling up.

This will lead to a contraction of the PRS, to the detriment of those who have no alternative but to live in it.

Changing attitudes

Another aim of the legislation is to change attitudes towards housing. In particular, to focus on rented property as a home for the tenants rather than an investment opportunity for the landlord.

At present, many properties are purchased by investors who are simply interested in their increasing value.  Indeed, it is often more cost-efficient for them to just leave it empty.  Something which should be discouraged if not actively prohibited.

This will all take time.

There is also the problem that the Renters’ Rights Act cannot, in itself, solve all problems.

The Renters’ Rights Act’s success is also dependent on other factors

There are many issues with the PRS, and not all of them can be resolved by this legislation. For example:

The social housing deficit

There is a massive need for more affordable social housing. As much of the older stock has been sold off under Mrs Thatcher’s ‘right to buy’.

This Labour government has promised more social housing, but this is easier said than done. There are problems with planning, sourcing suitable sites, securing trades to do the building work, and the availability of essential supplies such as bricks.

These are all big problems which will have to be overcome before new social housing can be built.  Although maybe using the modular housing method of building could help?

Empty and holiday homes

Then, many properties which formerly housed families are either lying empty or are now used as holiday homes.

Many landlords find renting to holidaymakers more financially rewarding. But although holidaymakers may bring money into an area, those providing services to them need to have somewhere to live!

This is a massive problem in many areas such as Cornwall, Cumbria, Devon and North Norfolk.

In some areas, it has resulted in ghost towns, for example, in many coastal areas.

Changing the rules, for example, tax rules, to make renting to families more profitable, could help to reverse this.  As is now already happening.

Escalating financial penalties against empty homes can also help, or even taking them into public ownership under compulsory purchase orders. Making this process easier for Councils would help.  At present, it is expensive, bureaucratic and very slow.

And finally

It’s far too early to say whether the Renters’ Rights Act will achieve its aims.

Not all of the act is in force yet. The new Database and Ombudsman schemes are critical to its success, but are still several months or years away.

Another important part of the Act is the decent homes standard and Awaabs law, which are not expected to come into force until the 2030s.

This is a long way off, and we could even have another government by then.

This legislation has many good parts, and hopefully it will help ease the many housing problems we have.

However, it cannot do that on its own. It needs to work in conjunction with other new legislation dealing with planning, new financial initiatives to overcome problems such as the heavy cost of improving property standards, and the practical issues of building new social and other housing.

We shall have to wait and see. What do you think?

Read the other posts in this series: Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6