Charlotte Cook, Partner in the Social Housing team at Winckworth Sherwood, considers whether rent reforms will drive up demand for social and local government housing.
The Government in its May Queen’s Speech reaffirmed its commitment to reform of the ‘broken’ rental market. Its legislation is likely to drive up demand for social and local government housing.
The proposed Renters Reform Bill looks to strengthen the rights of tenants and will, amongst other things, see the abolition of Section 21 Notices and the creation of a new Ombudsmen to settle disputes between landlords and tenants. The reforms will effectively see the end of shorthold tenancies.
Reform, whilst needed, comes at a challenging time for private landlords. Tax changes over the past decade have undermined the attractiveness of the buy to let market, and with soaring property prices many private landlords may decide that now is the time to cash in. Properties sold are unlikely to remain in the rental market, adding further pressures on renters.
Research (1) in June 2022 by industry body PropertyMark reports the number of rental properties available to renters has already halved over the past 12 months with rents increasing.
Full circle
Housing associations and local government have traditionally offered the best security of tenancies possible, but here too there has been change. In most instances, the old ‘homes for life’ approach offered by social housing does not exist, replaced with ‘starter tenancies’ enabling tenants to move towards assured tenancy agreements. More common are fixed-term tenancies, reviewed every five years, giving social landlords the option to move tenants on should their personal or financial circumstances change. It can only be right that, where an individual no longer needs the support of a social housing provider, they make way for those that do.
Yet these reforms, particularly the abolition of Section 21 Notices, will, it could be argued, reintroduce the concept of ‘homes for life’ for renters, with landlords now facing a tough regime should they wish to remove a tenant. Whilst possession action may be taken for a defaulting tenant, they can be time and cost prohibitive for many.
Whilst Landlords and lenders need the ability to remove problematic tenants and to have freedom to sell a property should they wish, they do also have a responsibility to their tenants. Rather than the abolition of Section 21 notices the Government would have been better to extend the notice periods from two to six months, giving more suitable time for tenants to find a new home and providing landlords and lenders with the protection they need.
Private landlords are choosing to exit the market, with private rents increasing as a result. Many families are already struggling: facing a cost-of-living crisis not seen in decades. For many renters, this will leave them with little or no option but to turn to social housing providers and local government. Demand will increase, in a market already dominated by long waiting lists.
Reform of the rental market is undoubtedly needed, but the question remains as to who exactly is being reformed?
