Private Rented Sector White Paper Introduces New Reforms

The Department for Levelling Up, Housing and Communities published the fairer private rented sector White Paper. This White Paper forms and builds on the government's wider plans for leveling up. The government's 12-point plan of action detailed in the White Paper considers the main issues affecting commercial landlords in the country’s private rented sector (PRS).

Introduction of a Private Rented Sector Decent Homes Standard (DHS)

The government has a target of reducing the number of rented homes that do not comply with the DHS by 50 percent by 2030. This will be achieved by getting the private rented sector landlords (PRS) to comply with the DHS through legislation. This would require PRS properties to overcome serious health and safety hazards. The landlords must also agree to ensure that PRS homes do not become seriously damaged and beyond repair. Commercial and institutional landlords in the build to rent (BTR) sector are already facing the market and reputational pressures to maintain decent housing stock. It is expected that the DHS will not add any significant burden on them.

Ensuring Quality Improvements

The government intends to improve private rental sector housing stock quality, where in some areas improvements are critically needed. This will be done through a pilot scheme involving a selection of local councils. However, the White Paper does not suggest how landlords who need possession of the property to carry out the improvements will be able to contribute to stock quality improvements - as not all decent home standard improvements are possible to carry out with residents in situ.

Abolishing No-Fault Evictions

The government has proposed abolishing section 21 No-Fault evictions and changes to the existing tenancy structure. A more straightforward structure based on periodic tenancy is proposed. The tenant can terminate the contract at any time by giving two months' notice. The argument put forward is that a two-month notice period will give landlords the time to recoup the costs of finding a tenant thereby avoiding lengthy void periods.  The proposals will also provide greater flexibility to tenants. Tenants will not have to sign fixed-term contracts and can challenge any wrong moves by the landlord.

Reforming Grounds For Possession

Under the new rules, a tenancy will only end if the tenant ends it or the landlord has a lawful ground for possession. To counteract landlords for the losses they suffer because of no-fault evictions, the government proposes to provide landlords with effective means to gain control of their properties when necessary.

Introducing Limitations on Rent Review

The government has proposed a few measures, such as limiting rent increases to once a year and increasing the notice period provided by landlords for a rent increase to two months.  Tenants can challenge excessive rent increases through the First Tier Tribunal. Other measures are also proposed to restrict rent review and simplify tenants’ lives.

Appointing Of an Ombudsman

The White Paper proposes the introduction of a new single government-approved ombudsman. Local councils will be allowed to take appropriate action against landlords who refuse to join the ombudsman.

Making Court Processes More Efficient

The government plans to put an end to the intolerable delays in court procedures related to tenancy disputes. They also aim to support conciliation and encourage alternative dispute resolution. This will help landlords and tenants collaborate and reduce the chances of problems escalating and getting out of hand.

Introduction of Property Portal

A new Property Portal is proposed.  If introduced the Property Portal will act as a single platform for landlords and tenants to express their grievances and get them addressed. It would be mandatory for landlords to register their properties on the portal. Tenants would then be able to access the portal to see information about the compliance record of relevant landlords.  Effectively, reducing the supply of tenants to rent from rogue landlords.

The Property Portal is expected to support the reforms and ensure their effective enforcement. The portal will help tenants identify good landlords and do business with them.

Providing Enforcement Powers For Local Councils

The government aims to make local councils stronger by giving them enforcement powers to crack down on erring landlords. The government is also exploring the possibility of local councils reporting on their enforcement activity.

Doing Away With Blanket Bans

The government will bring in legislation preventing landlords or agents from imposing blanket bans on renting to certain families.  Some landlords are wary of renting to families that have kids or are receiving benefits. The government also intends to support landlords who encourage people with benefits from renting their property.

Allowing Pets And Decoration

The government proposes to bring in a law restricting the ability of landlords to prevent residents from having pets.   Consenting to tenants' requests to keep pets in rented homes will be implied. Landlords will also be encouraged to allow tenants to redecorate the interiors by hanging pictures or changing appliances. Tenants are expected to return the property to its original state at the end of the contract.

Passporting Deposits

The government recommends the introduction of innovative solutions to find a deposit. The aim is to allow tenants struggling to raise a second deposit to move around the PRS more conveniently.  This would be achieved by deposits transferring more easily from property to property and not having tenants have to raise money for a new deposit before the old one has been returned. Changes to the regulation of private rented housing have been in the offing for a long time. They constitute part of a broader government strategy to level up and increase fairness across the property market.

The White Paper has suggested comprehensive reforms. Those that end up implemented will be implemented through the Renters Reform Bill, which will most probably be introduced in this parliamentary session. Honest and conscientious residential landlords need not worry as they can easily fulfill the various proposals suggested in the White Paper. A major part of these changes aims to eject unscrupulous landlords and unfair practices.

References:

https://www.lexology.com/library/detail.aspx?g=846ff730-0e7a-4865-9290-23cb77a5003c

https://btrnews.co.uk/prs-white-paper-vote-of-confidence-in-build-to-rent/

https://www.propertymark.co.uk/resource/white-paper-claims-a-fairer-deal-for-the-prs.html

https://www.jdsupra.com/legalnews/uk-private-rented-sector-white-paper-3090608/

https://www.paragonbank.co.uk/blog/fairer-private-rented-sector-prs-white-paper-published