Another quite extraordinary week, ending yesterday (19/10/22) with the resignation of the Prime Minister, Liz Truss.
So, where does that leave us now?
According to the news services, with either Rishi Sunak, Penny Mordant or (unbelievably) Boris Johnson as PM by the end of next week.
How the change will affect the private rented sector, we don’t know.
The sector has already been badly hit by the turmoil caused by the Truss government, which has resulted in higher interest rates for mortgages. Which means that landlords who own subject to a buy-to-let mortgage will probably have to increase their tenants’ rent in order to stay solvent.
Not to mention the increases in energy bills, even with the famous energy cap, which affects landlords and tenants alike. Indeed landlords renting on an ‘all bills included’ basis could be pushed into insolvency if their tenants’ rents are not high enough to cover the inevitable increased bills they will have to pay.
As regards the Renters Reform Bill – who knows? The Truss government confirmed that it would be introduced in this Parliamentary session, but the Truss government is now no more.
Even if the bill is introduced (and remember, we have not even seen a draft bill yet), my understanding is that the removal of section 21 is dependent upon improving performance in the courts. Which I suspect is not going to happen any time soon.
So I do not expect the removal of section 21 to become effective for some time, probably not for two years, if not longer. But it’s impossible to predict anything with any certainty.
We live in interesting times. Let’s take a look at some of the other news.
EPC ratings need to be realistic
The government has been told to stop having a ‘one size fits all’ for net zero targets when dealing with older properties in the PRS.
The Propertymark trade body is in support of the government’s net zero aim, but following a formal consultation process, says impacts will be huge on landlords given the short deadlines and no financial support.
We warn that the devastating impact of the pandemic, confusion over the absence of a long-term strategy and the lack of financial support, is likely to lead to further shrinkage of supply in the private rental system. This is going to be hardest felt in parts of England and Wales with the lowest house-price values and subsequently where economic growth is sluggish.
The government must get realistic to the challenges in decarbonising the PRS which has some of the oldest housing stock, most off-grid properties and high numbers of vulnerable tenants. Landlords need to be supported in improving stock gradually otherwise we may see a continuation of landlords exiting the market.
It calls for a package of financial support and taxation incentives to support landlords to get their properties up to an EPC rating of at least B by 2030 with a cost cap of £10000.00. They are calling for
- The reintroduction of the Landlords Energy Saving Allowance (LESA), which let landlords claim on their income or corporation tax return against the cost of buying and installing certain energy saving items. Tax relief was for a maximum of £1,500 per property
- Additional funding at local authority level that is tenure blind that addresses the challenges the PRS has in obtaining grant funding
- Implementing a new streamlined Green Homes Grant that is flexible to the sector’s needs
- Considering tax incentive measures such as a reduction in VAT for energy efficiency measures or incentives for landlords and home buyers through stamp duty.
Shocking EPC ratings within the PRS
Staying with energy efficiency a campaign called Energy Guide states that stats taken from the government proves that 6.3 per cent of PRS properties are EPC rated F and G. Against 0.7 per cent in the social housing sector.
The campaign gives some quick steps landlords can take to improve efficiency: –
- If you heat your home with gas, you could save as much as £275 a year by installing ‘zonal heating controls’ which heat specific spaces rather than the entire property
- Installing a modern thermostat along with thermostatic radiator valves, so the heating will adapt to where you are based on the time of day and your location as it learns to adjust your heating based on your behaviour
- Upgrading your roof insulation to the recommended 270mm depth
- Upgrading appliances too, particularly a gas combi boiler – if yours is over 10 years old, it’s very likely to be G-rated under the ErP (Energy Related Products Directive) boiler rating system, meaning it could be less than 70 per cent efficient
- Encouraging tenants to switch off standby mode on all appliances
- Trading traditional light bulbs for LEDs
- Avoiding the installation of a tumble dryer, which is one of the most expensive appliances to run.
It is important to remember that the climate crisis is still with us. The planet is not going to stop overheating just because we have a bit of turmoil in our leadership.
The future for our children and our children’s children looks very frightening. It is imperative that we cut emissions as much as possible as quickly as possible to minimise the damage.
Landlords have an important part to play in this.
Supply issues in the sector
The sector is currently seeing an increase in would-be tenants seeking accommodation while the number of available properties to rent is falling. LandlordZONE reports that Propertymark’s latest housing insight report reveals that since February, letting agents have seen an 88% increase in new tenants wanting to register, reaching a new peak of 147 in September, despite rising rents.
Apparently, there is on average, just one property available for 13 new registrants in September in addition to those already registered. Propertymark CEO Nathan Emerson saying
The pressure is on for private landlords, and the situation is not improving,” adds Emerson. “Raising interest rates, increasing legislation and tax burdens mean that many landlords are faced with increasing their rent to cover their rising costs or to cut their losses and sell.
Landlords have been demonised recently, but in truth they provide homes for those who can’t be served by social housing or afford to buy.
With the expected massive rise in mortgage interest rates next year, meaning that many families will be unable to afford to stay in their current properties, the housing crisis is set to get considerably worse.
Whoever is in government will have to accept that, however much they may dislike it, for people unable to buy, the private rented sector is the only option. So discouraging landlords by higher taxes and excessive regulation is only going to make this worse.
The problem is that with the ever faster revolving door to the Housing Ministers’ job, Ministers don’t have enough time to get on top of what is a very complex brief. Let us hope that things slow down next year, so that government can proceed in an orderly manner.
Snippets
- Rent freeze in the UK can be template for action across Europe – Claim
- Arrests made by HMRC in tax repayment frauds
- 29 tenants battling it out out each rental property in London, says Foxtons
- Landlords face grim winter as rent defaults loom
- Alarm over sharp rise in Airbnb listings in coastal areas of England and Wales
- EPCs – Which areas have the worst rental energy efficiency?
- Tenant receives 30-week suspended sentence for £155k cannabis factory
- Economic crisis could lead to a ‘mass exodus of landlords’
Newsround will be back next week.