Published: 13/04/2023 By Ricky SodhaThe private rented sector in the UK has been undergoing significant changes in recent years. With an uncertain outlook for property prices, the rental market continues to see strong demand and low supply in some regions.
In this article we explore how the proposed reforms to the sector will impact landlords and tenants, and the current outlook for the private rented sector in 2023.
Background to the reforms
In 2019, the government launched a consultation paper outlining proposed reforms to the sector, with the aim of improving standards for tenants and increasing protection for landlords. The response to this paper has been mixed, with some parties welcoming the proposals and others arguing that they do not go far enough.
The 2019 Government Consultation Paper
The government's consultation paper, “Overcoming the barriers to longer tenancies in the private rented sector”, proposed a number of reforms to the private rented sector. These included:
- the introduction of mandatory electrical safety checks,
- the implementation of a minimum energy efficiency standard (MEES) of EPC band C,
- the establishment of a Housing Court to provide a streamlined dispute resolution process, and
- the abolition of Section 21 'no-fault' evictions.
The response to these proposals has been mixed. Landlords have argued that the proposals will increase their costs and make it more difficult for them to evict problem tenants. On the other hand, tenant advocates have welcomed the reforms, arguing that they will improve the quality of rental accommodation and increase protection for renters.
This response confirmed that the proposed reforms would be implemented, with some changes to the original proposals; for example, the MEES standard would be set at EPC band B, rather than C, and the proposed Housing Court would be established as part of the existing court system, rather than as a separate entity.
Improving the standard of social and rented housing
The Decent Homes Standards, introduced in 2006, also play a role in the reforms to the private rented sector. These standards set out minimum requirements for the condition of social housing, but they have not been extended to cover the private rented sector.
The Renters Reform Bill is another important development in the private rented sector. This bill, which was first announced in the Queen's Speech in December 2019, proposes a range of reforms to improve security for tenants. These include:
- the abolition of Section 21 'no-fault' evictions,
- the introduction of open-ended tenancies, and
- the creation of a new system of grounds for eviction.
The Renters Reform Bill has not yet been introduced to Parliament, but it is expected to be a key focus for the government in 2023. If passed, the bill would represent a major overhaul of the private rented sector, with significant implications for landlords and tenants.
Local councils have introduced selective licensing schemes in certain wards which requires landlords to meet specific standards for their properties.
Implications for LandlordsFor landlords, the reforms represent a mixed bag. On the one hand, the introduction of mandatory electrical safety checks and the MEES standard will increase landlords' costs. However, these measures are likely to lead to improvements in the quality of rental accommodation, which could benefit landlords in the long run by making their properties more attractive to tenants.
The abolition of Section 21 'no-fault' evictions is likely to be a concern for some landlords. This measure would make it more difficult for landlords to evict problem tenants, and could increase the risk of rent arrears or damage to property. However, the proposed introduction of open-ended tenancies could provide some reassurance, as it would provide landlords with greater security and reduce the need for frequent tenancy renewals.
Improving housing for tenantsFor tenants, the reforms represent a significant step forward in terms of improving the quality of rental accommodation and increasing protection from eviction. The introduction of mandatory electrical safety checks and the MEES standard will ensure that rental properties are safer and more energy-efficient, while the proposed Housing Court should provide a more streamlined and efficient dispute resolution process for tenants.
The abolition of Section 21 'no-fault' evictions would give tenants greater security and stability, while the introduction of open-ended tenancies would reduce the need for frequent tenancy renewals and provide tenants with greater control over their housing situations.