The overall experience of renting is positive but its poor for a significant minority
Rental reform is back on the agenda for the new Government with a rebranded Renters Rights Bill. It brings forward many of the proposals that were making their way through Parliament before the election was called.
While debates on rental reform are often framed in examples of poor or bad practice, the reality is that most private renters are satisfied with their experience of renting.
A recent survey of private renters found eighty five percent were satisfied, or better, with their rental experience while 86% were satisfied, or better, with the condition of their home.
However, there remains a small but not insignificant number of homes which are in poor condition, where renters are having a poor or unsatisfactory experience.
This is where reforms are needed to improve standards for renters, while still encouraging more investment to expand the number of homes for rent - both private and social.
Static number of homes for rent making problems worse
The stock of social rented homes has been static for 20+ years, meaning the private rented sector has absorbed a growing proportion of demand from those in the greatest housing need.
A quarter of private renters are on low incomes and in receipt of full or partial housing benefit.
Consumers recognise the problems facing renters and want reforms
We ran a pre-election survey with Ipsos on what the new Government's priorities should be when it comes to renting.
Controlling the pace of rent rises was the 4th most popular response, while rolling out improved rights and protections for renters came in at number 10.
But building more homes was the top priority across the board.
What is in the proposed Renters Rights Bill?
The bill applies to renting in England with some elements also including Wales.
Scotland and Wales have already made a series of changes to improve the rights and protections for renters, so the Renters Rights Bill mainly covers how England plans to improve its rented sector.
Renters will be pleased to see a raft of proposals such as the ending of section 21, so called ‘no fault’ evictions, while still allowing landlords grounds for possession.
There are plans to improve rights to challenge rent increases as well as a right to request a pet, which landlords must consider and cannot unreasonably refuse. Landlords will be able to request insurance to cover potential damage from pets if needed.
Less clear is how the Bill will ‘stop bidding wars’, given there are simply not enough rented homes, with 15 people chasing every rented home right now, double the pre-pandemic level.
As well as more protections for renters, there are some important plans to improve the quality of rented accommodation, such as a new rented property database and plans to introduce a Decent Homes Standard for private rented properties.
Zoopla’s lettings advisory board, formed of leading industry figures, also supports this proposal. Deployed correctly, these proposals will improve the standards and safety of rented housing, pushing out the minority of rogue landlords who offer poor quality homes.
What is missing from the Renters Rights Bill?
These reforms don’t go as far as in Scotland and Wales in terms of security of tenure but they are an important step to ensuring greater balance between landlords and renters.
The Government has also avoided any talk of rent controls, which might sound attractive at face value but put off investment in new supply. Growing supply is the most sustainable way to stop rents rising quickly.
Mandatory training for anyone involved in letting and managing property is another option that exists today, and which many agents undertake, but it could be rolled out across the market.
What impact does the Renters Rights Bill have on landlords?
Landlords have faced greater taxation and increased regulations for some years now. And renting property is a complex process.
Together with higher mortgage rates, this has led some landlords to decide to sell up. There isn’t an exodus of landlords but those who don’t see it as a business and for whom the costs and risks are too high are deciding to sell.
The underlying cashflow from renting is set to remain strong but, as with everything, the costs of business have increased.
Landlords who see renting as an income-producing business should not be overly concerned by these proposed reforms.
The focus for landlords will continue to be buying homes in areas of high tenant demand that are in good condition, with low maintenance and running costs to minimise the impact on rental income.