A Labour MP has warned that landlords feel “demonised” and “challenged” by new legislation in the rental sector.
Speaking at an industry event hosted by the Social Market Foundation, Naushabah Khan, the MP for Gillingham and Rainham, revealed the “huge challenges” facing the rental market.
These challenges include the abolishment of so-called no-fault evictions, which can result in landlords being stuck with a tenant who will not leave their property.
She said: “We have seen some huge challenges in the private rental sector.
“Some of the biggest challenges are people falling out of the private rental sector, not being able to afford the rents, their landlords selling up, and us having nowhere to house people.”
She explained that this meant the current housing situation is “spiralling out of control”, and much of this was down to what is happening at a local authority level.
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She highlighted some of her own constituents who say they have had a no-fault eviction and don’t know what to do.
“At the minute, we are not able to get control of the housing situation because this is spiralling out of control at a local authority level.
“For example, the process around a no-fault eviction is very clunky.
“The advice we give is to stay in your property until the court order comes through and you are physically removed from the property. At that point, you will trigger a homelessness duty and the council will try to step in and help you.
“If you do anything before that, you will make yourself intentionally homeless. So the system needs to work better together.”
She suggested there needs to be further legislation around dealing with some of these trigger points in the system.
Section 21 ‘not good’ for landlords
“That Section 21 situation is not good for landlords, as they are then stuck with a tenant who will not leave their property.
“Councils approach these differently and we need a standardised approach.
“The changes to local authority powers to be able to work with landlords and better protect tenants,” she said.
She referred to some local authorities who are doing well due to systems in place such as accreditation schemes.
She said these schemes help landlords feel valued if they are doing a good job and encourages them to stay in the sector.
One of the consequences of landlords feeling demonised is that some may leave the sector and end up causing more difficulties for tenants in the long term.
Also speaking at the event was Grainne Gilmore, director of research and insights at Cluttons.
She explained there when supply is restricted, rents go up and become even more unaffordable than they already are for many tenants.
“The landscape for private landlords has become more challenging.
“Reliefs have been taken away and now we are looking potentially in the budget something around capital gains tax [CGT] for landlords,” she added.
It is mooted that the CGT rates will be increased for landlords in the Autumn Statement.
An unattractive arena
She added: “So it… may be a less attractive arena and if landlords start to leave and sell properties, there will be even less supply and therefore rents will go up.
“Just trying to tackle growing rents with one bit of policy, that won’t address the whole of the ripple effect… when you start to fiddle with bits of the housing market.”
The event looked at where the private rented sector fits into Labour’s plans for housing.
It was sponsored by Paragon, and also speaking was the group’s chief executive Nigel Terrington.
He said of the buy-to-let (BTL) sector: “We want a good, thriving sector that is for its intended purpose.
“Since 2015, there has been disinvestment in the sector. It has not been an attractive place to bring new landlords and existing landlords to expand into.
“The dangers of either implementing new regulation too aggressively or without full consideration of the implications is that you will see further disinvestment for the sector.
“There is a finite capacity as to how much people will be able to buy a house. Some simply don’t want to and some will find it very difficult to because of their own circumstances.”
Social housing
Terrington continued: “You can say the Government will supply the housing we need through the reformation of the council house programme. But the problem is that is expensive.
“If you wanted to move 1% of the private rented housing into a council house programme, it would cost something in the order of £16bn to do that, something not too far short of a black hole.
“The rental sector needs to be done right, with appropriate regulation and powers. Only when we get the confidence in the sector will we have the right investment we need.”
