Landmark University of York report criticises lack of strategy in the private rented sector

A landmark review of the private rented sector in England was published this week by academics at the University of York, criticising a fragmented approach to policy and a lack of strategy from successive governments in their handling of the private rented sector.

The Evolving Private Rented Sector: Its Contribution and Potential’, by Dr Julie Rugg and David Rhodes, was funded by the Nationwide Foundation. The report is an independent analysis of changing demographics in the sector, how tenants’ needs are being met and the impact of Government policy interventions over the last decade.

NLA response to landmark review of the private rented sector in England                                                  

The NLA has welcomed the review, arguing that the sector would benefit from a more strategic approach from government. NLA CEO Richard Lambert, who spoke as part of the panel at the launch event, and who sits on the Nationwide Foundation’s PRS Partnership Board, commented:

“Everyone calls for ‘evidence-based policy’, but too often we have policy-based evidence. This report clearly states the case for better understanding of landlords, their motivations and their business plans, recognising that neither landlords nor tenants are a homogenous group. Understanding the customer is vital to ensure that the private rented sector meets the needs of tenants and it’s essential that landlords develop a stronger consumer focus.

“At the same time, it’s important to recognise that the overwhelming majority of tenancies pass successfully for both landlords and tenants, and policy interventions to address those that don’t must be strategic and targeted. The Government must reflect what we as a society want to see from the private rented sector, and we urge the Ministry of Housing, Communities and Local Government, and Housing Ministers, to lead, advocate and coordinate across Government. We’ll only get that if there is some stability in the person in government who’s actually responsible – so we need a Minister who stays in post for more than a year at a time.”

Fundamental rethink of the role of the PRS is needed, says author of landmark review

The underlying issue, says the report, is that the government has no evidence base to help decision making and too many departments involved in making the rules.

The review is a follow-up to the authors’ 2008 report, which was the first to analyse the private rented sector in detail. Speaking on the findings of the report, Dr Rugg said:

“Since our first review was published, declining home ownership and a shortage of social rented homes have led to a surge in the number of people privately renting – particularly families with young children. Unfortunately, in its current form the private rental market isn’t providing a suitable alternative, and, in the absence of an overarching vision from any government, we’ve seen reams of policies and regulations which are not joined up or thought through. We need to see a fundamental rethink of the role that private renting plays in our housing market and a comprehensive strategy to ensure it meets the needs of every renter.”

 

Main findings of the landmark review into the private rental sector in England

Four main findings arise from the research covering the market in England:

  • Regulation is confusing and contradictory for landlords and tenants, leaving both unsure of their rights and responsibilities
  • Poor housing is rife, with a fifth of the most expensive homes to rent and a third of the cheapest failing official ‘non-decent’ standards, while the research found conditions deteriorate the longer a tenant stays in a home, which suggests poor management by landlords is to blame for bad housing rather than ageing housing stock
  • Housing benefit changes under Universal Credit are creating a slum market at the bottom-end as tenants cannot afford their rents or find decent homes
  • Policies like build to rent are allowing landlords to cherry pick middle to high income tenants priced out of buying a home rather than accommodating the needs of low income renters

Call for a landlord and letting agent register and a property MOT

The Review calls for the introduction of a combined national landlord and letting agent register, recommending that it should not be legal to let property without being on the register. The Review suggests that a small, tax-deductible charge be made for being on the register, which would also fund the operation of a national redress scheme, which both landlords and tenants would be able to use.

Paul Shamplina, Director at Hamilton Fraser, broadly supports the findings of the report and agrees with Dr Rugg’s assessment of the changing dynamics of the private rental sector. Commenting on the call for a landlord and letting agent register, Paul cautions:

“The government has been taking steps towards a landlord register and the introduction of a national redress scheme. However, I fear that a register may encourage some landlords to go underground to avoid declaring their rental income. If this were to happen there would still be a lot of illegal rental properties at the lower end of the market, which would defeat the object of raising standards for those vulnerable tenants. Not wanting to sound like a broken record, but focusing on educating both landlords and tenants is in my view the crucial thing to do. Many landlords will view a register as just another mechanism for HMRC to ensure that rental income is declared.”

The report also recommends a property MOT to help drive up standards in rental homes – Independent inspectors would carry out a standard annual inspection that would cover looking at gas safety certificates, electrical tests, fire safety and energy efficiency reports, and a new assessment testing if a house passes a basic minimum standard to live in. The MOT would be a tax-deductible expense for landlords.

“There is no minimum standard rented homes must reach before letting,” said Rugg. “A million renters put up with damp, disrepair and sometimes life-threatening hazards. A property MOT would give people confidence before they sign a tenancy that the property is fit for purpose, and that standards won’t lapse in the future, while for landlords, it offers greater clarity and protection against prosecution.”

Commenting on the suggestion of a property MOT, Paul Shamplina adds: “A property MOT would force landlords to become more professional and has the potential to raise standards in the private rental sector, especially if it is a prerequisite to renting a property. Some elements of it are already in place, for example gas safety certificates, how to rent guides, electrical tests and fire safety requirements, but the new assessment testing for a basic minimum standard would be additional to what is already in place.”

To read the full report click here.

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