A Look at Its Challenges and What’s Next for the UK Housing Market

The UK Government’s push to reform housing legislation has been a hot topic, and the Renters’ Rights Bill, spearheaded by Angela Rayner MP, has faced its fair share of challenges. As the Bill moved into its Second Reading, it became clear that while its intentions are to fast-track renters’ rights, there are significant concerns among MPs about its potential impact on both the private rented sector (PRS) and housing availability.

Key Concerns Surrounding the Bill

During the debate, MPs highlighted several pressing issues, such as the risk of decreasing rental housing supply, potential gridlock in the justice system, and rising rents. Rayner, however, dismissed these concerns, reinforcing the government’s commitment to social justice and fairness for renters while ensuring responsible landlords are not unfairly penalised.

The Role of Landlords in the Housing Ecosystem

Acknowledging the importance of landlords, Rayner emphasized that the majority of landlords are responsible, providing decent homes for their tenants. She positioned the Bill as a continuation of the previous government’s work but made it clear that this version goes further in addressing renters’ rights. However, as MPs raised their concerns, Rayner’s stance reflected the need to maintain balance, particularly regarding regulations and rent controls.

Rent Caps: A Divisive Issue

The question of rent caps emerged as a significant topic during the debate. Rayner made it clear that the government does not support rent controls, stating that they could reduce the supply of rental properties, which would ultimately harm both tenants and landlords.

This stance is supported by Propertymark, which has long campaigned against rent controls, arguing that they distort the market and reduce housing availability. Rent controls, they say, do not address the core issue of increasing housing supply and improving affordability.

The Shift to Periodic Tenancies: Controversial Changes

One of the most contentious changes proposed in the Bill is the move from fixed-term to periodic tenancies. Housing Minister Matthew Pennycook argued that periodic tenancies will prevent tenants from being trapped in substandard housing and give them more flexibility to adapt to changing life circumstances, such as a new job. However, this shift has raised concerns among industry stakeholders.

Propertymark and other organisations have voiced their opposition, noting that fixed-term tenancies offer security for both tenants and landlords. They are especially critical in sectors like student housing, where tenants and landlords alike benefit from the predictability of fixed terms. Fixed agreements also appeal to professionals like nurses or families who want stability due to work contracts or school catchment areas. The removal of fixed-term options could lead to a surge in short-term lets, driving up rental costs for individuals and families seeking long-term homes.

Can the Courts Handle the Pressure?

Rayner also addressed the issue of court backlogs, promising to digitise the possession process in County Courts to create a more efficient system. However, no timeline for this reform has been provided, leaving some sceptical. Propertymark’s research shows that 88% of letting agents are concerned that the court system won’t have the resources to handle possession cases after Section 21 (no-fault evictions) is removed. Current wait times for PRS possession claims can stretch up to 40 weeks in London, which many argue is unmanageable.

In response, Propertymark is calling for expanded online platforms for submitting evidence, more remote hearings, and an increase in judges and bailiffs to reduce delays. They are also advocating for automatic rights for landlords to access High Court Enforcement Officers to help speed up the process.

The Rise of Short-Term Lets

Another challenge raised during the debate is the exodus of landlords from the PRS due to concerns over new regulations. Many are opting for the short-term holiday rental market, which offers higher returns and fewer regulatory burdens. This shift has reduced the availability of long-term rental properties, exacerbating the supply problem.

To combat this, Propertymark is urging the government to swiftly enact short-term rental registration requirements from the Levelling-up and Regeneration Act 2023 to create a more balanced market.

Strengthening Tenant Protections and Landlord Accountability

A key aspect of the Renters’ Rights Bill is the creation of a PRS database, which will help landlords meet compliance standards, including the Decent Homes Standard and new regulations like Awaab’s Law. Local authorities will have increased powers and funding to enforce these regulations and impose penalties of up to £40,000 on non-compliant landlords.

Rayner emphasized that good landlords should have nothing to fear from these reforms, as they are intended to target rogue landlords and incentivize tenants to hold their landlords accountable through rent repayment orders and stricter enforcement of penalties.

What Happens Next?

The Renters’ Rights Bill now moves to a Public Bill Committee, where MPs will examine the draft legislation in detail. This stage is crucial as it provides the opportunity to propose amendments and debate the finer points of the Bill. The Committee is expected to complete this process by November 28, 2024.

While the government’s commitment to avoid rent controls is welcomed, there are still many unanswered questions about how the Bill will balance the needs of landlords, tenants, and letting agents. Propertymark and other stakeholders continue to push for evidence-based solutions, particularly around the removal of fixed-term tenancies and the role of property agents in the sector.

As the Bill progresses, all eyes will be on the government to ensure that it strikes the right balance between protecting renters’ rights and maintaining a viable rental market that benefits all parties involved.

What’s Next for Renters and Landlords?

The Renters’ Rights Bill promises sweeping changes to the rental market, but it’s clear that the road ahead is filled with challenges. With MPs scrutinising the Bill and industry groups like Propertymark advocating for landlord and tenant interests, the debate over the future of renting in the UK is far from over. Stay informed on these developments, as they will impact how landlords and tenants navigate the evolving PRS landscape.