Hello Medway property investors,
We were expecting to have a good read through the long-awaited white paper for the rental reform bill this autumn, however, again (predictably?), the publishing of the paper has been delayed!
The bill, which first appeared in the 2019 Conservative General Election manifesto and subsequently in the Queen’s Speech was initially delayed due to the COVID-19 pandemic. It has now been further delayed until 2022 (possibly 2023) to allow extra time for the Government to produce what it is calling a “balanced package of reforms”.
I’m sure the original bill should have been a balanced package of reforms! So, what do we know about it to date?
Proposed to ease the financial burden tenants face when moving between properties, lifetime deposits are a ‘portable deposit’ that moves with tenants from property to property.
I personally think that this is an excellent proposition as deposits do tend to mean that a sizeable chunk of money needs to be found every time a tenant moves.
Scrapping Section 21 Evictions
This is something that has concerned landlords, however, is an area that politics seems hell-bent on changing.
Having read the discussion paper, it appears that rather than simply ‘scrapping section 21 evictions’ the reform encompasses a review of eviction procedures and potential strengthening of section 8 conditions.
The concern around Section 21 Evictions is not them existing, it appears to be how they are used by some landlords (that may simply not like their tenants). This is one to watch, however, as it could become even more difficult for landlords to regain possession of their property.
A National Landlord Database
The third point I know that the rental reform bill will potentially include is the creation of some form of national landlord database. This could be a national register of rogue landlords instead.
We’ve read about things such as a national register for all rental properties and, again, this is something I am for. However, I would hope that it does not require a blanket paid license as has been adopted by some areas in the UK.
A national database should help increase the standard of rental properties however I don’t doubt that the rogue landlords will continue to fly beneath the radar!
I certainly don’t believe that landlords (and ultimately tenants with rental increases) should be penalised for the failures of local authorities to properly manage the rental properties within their vicinity and pay for the prevention of rogue and sub-standard landlords!
A Right To Redress
This is one which was in the background of the notes, the Communities Secretary (then James Brokenshire) has previously announced that all private landlords would be legally required to join a ‘housing redress scheme’.
Whilst nothing has come of this, I expect we could see some form of recommendation for all private landlords to join a redress scheme which would give tenants the ability to escalate complaints and concerns much as they can do with lettings agents through the Property Redress Scheme or the Property Ombudsman.
Again, I think this is a positive proposal but the costs of doing so need to be carefully thought out in order not to further drive up the price of renting.
What Else Could We Expect?
So, the paper has been delayed to give a more balanced package of reforms, so what else could we potentially expect to see?
Well, I would not be surprised if we see something around the proposal for a minimum EPC C along with, potentially, other green reforms.As I have previously mentioned in the above article, my concern about this is who will pay for the reforms. With a proposed cap of £10k, this could be costly to tenants and landlords alike.
A Climate Of Uncertainty
All of this goes contributes to a climate of uncertainty for property investors. I certainly know that the continued uncertainty is something that could be preventing landlords from entering the market or expanding their portfolios at a time when rental stock is low.
The problem here is that the longer these reforms hang over the head of the rental market, the longer potential investors will consider spreading their risk further elsewhere. Property has proved to be a strong, long-term asset class; however, a growing number of investors are now thinking twice.
I’d be interested to hear your thoughts on the state of the property market and proposed rental reform changes. Are you considering expanding your portfolio and if you are, I’d be interested to hear what safeguards you are putting in place to control any future potential costs.
As usual, I trust you found this article helpful and if you have any questions, the best way to contact me is by replying to this email.