Jeremy’s Blog 24th June 2022: Private Residential Tenancies

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 23rd June 2022

Somewhere, perhaps seven years ago, the wheel turned and Government thinking on private landlords flipped from respecting valued providers of flexibility in the economy to seeing them more as a problem. Increases in transactions taxes and the removal of Income Tax reliefs particularly affected buy-to-let, until then seen as a valid self-reliant alternative to pressured pension provision but now a mis-direction of investment. Minimum Energy Efficiency Standards followed in England and Wales, then Scotland and are now to come in Northern Ireland.

Now tenancy legislation tightens in each part of the UK. England’s new White Paper follows a similar path to Scotland’s 2017 Act abolishing no-fault notices to quit. In England, this has gathered force since 2017 election when the insecurity felt by many tenants, especially families and elderly, became an electoral factor. Rising house prices and high deposits exclude many from buying who do not otherwise feel assured of sustaining local roots.

In re-arranging the chairs of a stressed housing market, the Government hopes that “Build to Let” will be the new institutional answer. As yet, it is only on a small scale and might not help rural areas that, virtually by definition, lack housing for the employees and others needing it while seeing strong demand from buyers. Rural owners, typically wanting tenant stability, could feel they are collateral damage for the poor behaviour reported from parts of London’s intense housing market.

We have gone a full 60 year cycle from the symbolic demon of London’s Peter Rachman and “Rachmanism”, with descriptions of landlords as exploiters of squalid accommodation, oppressing even those who might not ordinarily be vulnerable. That led to the Rent Act 1968 with its controls and the collapse of the let sector that followed as investment fled its restrictions. By the 1970s, some owners demolished then unwanted rural housing when it came vacant. Yet the Rent Acts were not meant to achieve that. Fair rents were not meant to be low rents but inflation, regulation and practice produced just that.

It took the no-fault notice and shortholds of the Housing Act 1980 to turn the tide and build a new let sector with its investment. Now, the let sector is already seen to have lost some 250,000 houses since 2019, some to sale and some to AirBnB and holiday lets. The irony is that restricting supply has predictable effects; reducing opportunities for tenants prompts higher rents.

Private investment in housing standards is desirable, eased with the prospect of return but already facing energy efficiency work, sometimes ill-directed by the curiosities of EPCs, limited contractor capacity and rising building material costs.

Professionals will now need to master the long unused, now to be revised, grounds for possession. Here the White Paper proposes helpful changes with grounds for landlords wanting to sell and for farming, as requested by the CAAV:

• where the dwelling is needed for an agricultural worker
• on the end of an agricultural tenancy.

It appears to limit mixing of out-of-season lets with holiday lets, hardening the boundary between these uses. Much will then rest on reforms to the procedures with courts clogged and more detail needed on the Government’s Ombudsman and hopes of mediation.

The coming Bill should indeed be seen in conjunction with a review of housing finance, permitted development rights to change commercial property to residential and the possibility of locally-led development corporations with compulsory purchase powers, but, stepping back, it is not obvious that, however well-intentioned, revisiting the 1970s will have a different result this time.

Immersion in detail can be an avoidance strategy; the Wall Street Journal has waspishly noted that attention is paid to tenant’s pets, not to reforming the economy for growth. Soothing the inflamed symptoms of under-supplied housing markets alters nothing structurally and leaves the real problem, accumulating and festering.