The sigh of relief across the housing industry last week was almost audible, as the Bank of England cut the base rate from 5.25% to 5%.
With sticky services inflation, however, it was no shock that the Monetary Policy Committee (MPC) was divided, with four of the nine committee members voting against the cut.
Whether we’ll have a further cut in the autumn – or even this year – is debatable. Still, with a more positive market sentiment, we can expect more movement in the buy-to-let (BTL) market now, with potentially more price reductions from lenders who haven’t already acted on the recent dip in swap rates.
While things are looking up, there remains the Renters’ Rights Bill to be resolved. This replaces the Conservative Party’s Renters Reform Bill, which ran out of time as Parliament disbanded.
Labour’s Renters’ Rights Bill is still in early draft, with no timeline as yet for it to become law. Normally, it would first be reviewed by a select committee before the government considers enacting a full bill. It seems unlikely that we’ll receive full details until October.
The purpose of the Renters’ Rights Bill
So, what does the Labour government want the Renters’ Rights Bill to achieve? The King’s Speech outlines its purpose as being to “transform the experience” of the private renting sector (PRS), giving tenants greater rights and protection so they can remain for longer in their homes, build lives in their communities and avoid homelessness.
The pros and cons of the bill for landlords are arguable, as some of the proposed amendments to existing law will suit some and not others.
There are nine key elements of the bill:
- Abolishing Section 21 ‘no-fault evictions’
- Creating a digital PRS database for landlords, tenants and councils
- A new ombudsman to support quicker dispute resolution and avoid court
- Strengthening tenants’ rights and protections
- Giving tenants the rights to request a pet
- Applying a Decent Homes Standard
- Applying Awaab’s Law
- Making discrimination against tenants with children illegal
- Strengthening local council’s enforcement powers to identify and fine unscrupulous landlords
Evictions remain a point of contention
The most hotly debated of these so far is the abolishment of Section 21. This is definitely one to watch. The fundamental premise behind abolishing no-fault evictions is good in terms of providing tenant security. And perhaps we can take some comfort in the King’s Speech acknowledgement of the rights for landlords’ possession “where there is good reason to take their property back.”
Points two and three are positive for landlords in the long run. While some may shout “more red tape!”, a digital PRS database would bring together key information for landlords, as well as for tenants and councils. The idea is to help landlords better understand their responsibilities and demonstrate compliance.
Likewise, the introduction of a new ombudsman service geared specifically around providing “fair, impartial and binding resolution” should help reduce court time by preventing the escalation of disputes. The new service would be mandated to support “quicker, cheaper resolution when there are disputes – preventing them escalating to costly court proceedings.”
Some landlords may find the subsequent elements of the proposed bill more challenging, although we can all support actions to drive out “unprincipled” landlords and “bad actors” from the industry.
Demand for rental property, however, remains extremely high, so landlords who provide good-quality properties to rent can embrace a buoyant market and help provide secure homes to renters up and down the country.
In the meantime, the National Residential Landlords Association (NRLA) is campaigning for fair and workable reforms for both landlords and tenants.
