With the Renters (Reform) Bill receiving its Second Reading in the House of Commons today, 23 October 2023, the UK Government has responded to recommendations made by the Levelling Up, Housing and Communities Committee (LUHCC), promising to align the removal of Section 21 with court improvements, protect the right of landlords to set rents in line with the market, and ensure the student market is protected with a new ground to guarantee landlords can gain possession each year.
ropertymark is heartened that the UK Government recognises a strong, well-functioning private rented sector is necessary to provide quality homes for all renters, and that actively supporting the many good landlords and agents who provide these homes is a vital part of achieving this.
Positive steps
The LUHCC report agreed with Propertymark’s stance in a number of areas and was broadly appreciated by the sector. Having campaigned on these areas since the White Paper was introduced, we warmly welcome several of the amendments to the Bill.
Speeding up the court process so landlords can quickly regain possession of their property if a tenant refuses to move out has been confirmed. The abolition of Section 21 and new possession grounds will be aligned with court improvements, which include:
- Digitising more of the court process to make it simpler and easier for landlords to use
- Exploring the prioritisation of certain cases including antisocial behaviour
- Improving bailiff recruitment and retention and reducing administrative tasks so bailiffs can prioritise possession enforcement
- Providing early legal advice and better signposting for tenants including helping them find a housing solution that meets their needs
Mediation and dispute resolution services will also be strengthened to enable more problems to be settled without resorting to courts, and this service will be embedded within the functions of the new Ombudsman.
Protecting the student market. The student market is cyclical and landlords must be able to guarantee possession each year for a new set of tenants. The UK Government will introduce a new ground for possession to facilitate this.
Rent increases and rent review clauses - The UK Government is clear that rent should be agreed between the landlord and tenant, stating that they do not support the introduction of rent controls because the evidence suggests that these would discourage investment in the sector and lead to declining property standards.
Scrapping proposals to require landlords to meet EPC C from 2025 in their private rented properties, as announced by the Prime Minister in September. Landlords can still take advantage of the many government-backed schemes available to improve energy efficiency at a time that suits them.
Tax incentives and LHA rates
Regrettably, two key recommendations made by LUHCC, and supported by Propertymark, were rejected:
Tax – The UK Government did not accept the recommendation to review the impact of recent changes to taxation rules in the buy-to-let sector, with a view to making changes so it is more financially attractive to smaller landlords. They stated that the government keeps the tax treatment of property income under review and any decisions on future changes will be taken by the Chancellor in the context of wider public finances.
LHA Rates – The Committee recommended that the UK Government should increase LHA rates to realign them with the 30th percentile in each broad rental market area and commit to conducting a review as soon as possible into whether they should once more be aligned with the 50th percentile. However, in response, the UK Government stated that LHA rates are not intended to cover all rents in all areas, and the challenging fiscal environment means that difficult decisions must be made to ensure support is targeted effectively.