UK private and social rented sector headlines 15 April 2021
Welcome to the April issue of the Rent Report. It’s been an exciting week! I hope you’re all enjoying the reopening of pubs, non-essential shops, hairdressers and gyms.
It’s all happening in the property sector too. In this issue, we’ll be covering the following industry developments:
New ‘breathing space’ rules will prevent agents and landlords from chasing missed rent payments or charging late fees. In our first story, we talk about the impact on your business.
In our second story, the government has launched a new eviction mediation scheme to help landlords and tenants resolve issues and sustain tenancies. Can it work?
Three years after local authorities were given the power to ban landlords and letting agents, just a handful of banning orders have been issued. We look into this for our third story.
Fourth, the London mayoral election has put rent control back on the political agenda. How will this affect the private rented sector in the capital and beyond?
In our fifth story, we report on the end of the Green Homes Grant. What does it mean for landlords, and what options do they still have for energy-efficient improvements?
Finally, agents at Hamptons International completed their ‘Relay around the World’ for Cancer Research this month. Find out how they did it, and how much they raised.
The new Debt Respite Scheme (or ‘breathing space’ rules) will prevent landlords and agents in England and Wales from chasing arrears or charging late fees – and give them new administrative burdens to manage.
The scheme, which begins on 4 May, will temporarily protect tenants (and other people in debt) from enforcement action or mounting debts.
A standard ‘breathing space’ can be awarded to a tenant once a year by an FCA-approved debt adviser or the tenant’s local authority. If approved, interest and other charges are frozen for 60 days and enforcement action is paused, with a review halfway through.
Alternatively, tenants in treatment for a mental health crisis can be awarded stronger protections. These last for the length of the treatment plus 30 days, with no review, and can be reissued as often as required.
On receiving notification that a tenant has started a breathing space, agents are required to check their records for the debts they have been notified about. They must also report any other debts owed by the same tenant, after which the debt adviser will decide whether or not these extra debts are covered by the breathing space rules.
Tenants are still required to pay rent and other liabilities as normal during an allotted breathing space. However, landlords and agents can’t collect or enforce debts, start legal proceedings or serve notice on the grounds of rent arrears.
They are also banned from contacting tenants about breathing space debt, except when asked to do so by the tenant or when required to by other laws – and may need to check that their lettings software isn’t automatically sending debt reminders.
The government has asked property professionals to check that their processes comply with the new rules. With the scheme starting in just a few weeks, they will need to check quickly.
Could formal mediation between landlords and tenants help to sustain tenancies?
The government has released details of the new Housing Possession Mediation Service after a pilot scheme earlier this year.
As part of the new process, landlords and tenants can agree to work with an independent mediator to reach an acceptable outcome in the runup to a court hearing. If they reach an agreement enabling the tenancy to continue, it must be signed off by a judge and can be legally enforced if either party breaks it.
The new scheme has one big advantage for landlords and agents: speed. The Society of Mediators aims to look at cases within 10 days of referral. By contrast, landlords who hold out for a court hearing face what a recent House of Lords committee report called an “unacceptably high” backlog of cases. Even in 2019, an average County Court eviction case took over 10 months. Industry experts now predict that landlords could have to wait an extra six months once the eviction ban ends, as courts struggle with the extra case load.
But it remains to be seen how many issues the new system can actually solve. For one thing, landlords are already encouraged to communicate and agree arrears repayment plans with tenants before starting eviction proceedings – suggesting that professional mediators might just be re-treading old ground in these cases.
And with the ongoing eviction ban, the cases now entering the court system solely concern tough cases like extreme arrears, anti-social behaviour and domestic violence – putting less serious cases outside the scope of mediation. Serious cases in turn are less likely to be fixed by mediation.
Lawyers also have concerns. During the pilot, the Law Society warned that mediation could not replace court hearings and that vulnerable tenants would not be properly represented.
Even so, a system that encourages communication, makes quick decisions and sustains tenancies could be a useful addition to the evictions process. Landlords and tenants alike will hope that it works as advertised.
An investigation by The Guardian has revealed that only 39 landlords and letting agents have been banned from letting properties in England since banning orders came into force in 2018.
At the time, the government estimated that there were around 10,500 rogue landlords in England – and that as many as 600 could be banned.
The low number of banning orders could be, in part, a result of improvements in the sector. The most recent English Housing Survey found that the proportion of “non-decent” rented homes was falling, as was the share of homes with severe hazards.
However, time and money may be bigger and likelier barriers. Getting a banning order against a landlord or agent is long and complex. The local authority must notify the landlord, give them time to make representations, and then refer the case to a First-tier Tribunal. The Tribunal then decides whether to ban the landlord or agent, and for how long.
Despite increased funding in recent years, industry groups say local authorities don’t have the resources to effectively enforce housing regulations and pursue rogues. Experts also argue that local authorities often seek civil penalties instead of pushing for bans.
The news also raises questions about the future of the Rogue Landlord Database. The much-delayed Renters Reform Bill is supposed to give tenants access to it, but with so few names on it, it is unlikely to help them make informed decisions. Landlords can only be added to the database if they have either been convicted of a banning order offence, or received two fines for banning order offences within 12 months.
Sadiq Khan looks set to win next month’s London mayoral election, reigniting arguments over rent control.
The Labour candidate has said that winning re-election would give him a mandate to cap rents in the city. However, he would need permission from the government to do so, and is unlikely to get it.
Even so, property industry organisations have spoken out strongly against the idea. ARLA and the NRLA both argued that rent controls would force landlords out of the market and reduce the supply of housing in the city. Both groups called on the Mayor to focus on building more homes instead – an area where he has more powers.
Understandably, the policy has won support from tenant groups. Generation Rent has backed rent freezes within tenancies as well as city-wide controls to reduce rents overall, arguing that renters face unacceptably high costs.
The debate isn’t confined to the capital either. In Scotland, the Scottish National Party plans to introduce a rent-capping Fair Rents Bill if it keeps its majority in next month’s elections. Like Sadiq Khan, the SNP are front-runners – though unlike the London Mayor, they wouldn’t need Westminster’s permission to impose rent controls.
But rent control – a key part of Sadiq Khan’s platform in the postponed 2020 mayoral election as well – risks looking out of date in 2021. Over the last year, London rents fell 2.1% despite big rises in the rest of the country. As prospective tenants return to city centres, including London, capping rents before the market can recover could lock those prices in permanently even as demand bounces back.
The Green Homes Grant has been scrapped at short notice, removing subsidies for landlords looking to increase the energy efficiency of their properties.
The scheme, launched in September 2020, allowed homeowners to claim up to £5,000 towards the cost of insulation, double glazing and other energy efficient improvements before March 2021.
But administrative problems (see February’s Rent Report) made it difficult to claim money or find certified contractors to carry out the work. By February, just £71 million had been spent out of a £1.5 billion budget.
At the time, the government extended the programme for an extra year, though with a much smaller budget. However, at the end of March, the Energy Secretary announced that it would close to new applicants on 31 March. Applications made before the closing date will still be processed and vouchers already issued can be extended on request.
Landlords can still receive some help towards energy efficiency upgrades. The money earmarked for Green Homes Grant vouchers will now be handed out through the Local Authority Delivery scheme. Private and social landlords can apply for up to £5,000 to cover two thirds of the cost of energy-efficient improvements. However, this only applies to lower-income households living in properties with an EPC rating of E, F or G.
The news will come as a blow to landlords. With energy efficiency requirements for rented homes only getting tougher, subsidies like the Green Homes Grant could be very valuable – even when the execution wasn’t perfect.
Leading residential estate agency Hamptons International is celebrating a big win for charity this month, after raising almost £5,000 for Cancer Research UK.
Last October, employees at the agency decided to one-up their annual ‘Relay around the Regions’ initiative, pledging to walk, run, swim and cycle 24,901 miles between them – equivalent to one trip around the world.
Now, five months later, they have completed their epic journey, and naturally the top performer was a letting agent. Shona Fraser, head of lettings at Hamptons Teddington, covered 2,050 miles during the challenge!
All funds raised go towards Cancer Research UK and Channel 4’s Stand Up To Cancer initiative, which funds life-saving cancer research and clinical trials. A massive well done to all involved!
An annual challenge is a great way to make a real impact for your favourite charity. To start a corporate fundraiser and get your employees fired up for social change, go to leading online fundraising platform GivenGain (PayProp’s group Foundation). Need help fundraising or registering your charity? E-mail robyn@givengain.com.