This has been a long journey.
It started with me picking up on a report which said that current statistics indicate that the private rented sector is set to house a considerably higher proportion of the population than it does now.
This made me wonder whether the time has come to change our rules and regulations.
These were mainly made in a time when the private rented sector houses a considerably smaller percentage, around 7% of the population, rather than the 12-20% as of now and the predicted 20-40% for the future.
Along the way I have looked at registration and accreditation, longer fixed terms and getting rid of bad tenants.
It is time to set out my conclusions. However first I want to talk about :
The point of view
When considering housing law and the private rented sector, there are three ways you can approach it.
1. From the point of view of the landlord. Looking at the situation with a landlord’s eye there is probably not a lot of reason to change things.
The system is not perfect but works reasonably well from the landlords point of view.
2. From the point of view of the tenant. Here the situation is unsatisfactory and tenants’ supporters often express a desire to go back to the days of the Rent Act 1977 when tenants had long term security of tenure and protected rents.
However realisitcally this is not possible. People are not going to invest in property under those cirucmstances, neither are banks going to lend money. A return to this regime, or anything like it, is more likley to kill the private rented sector dead. Therefore it is not really an option.
3. From the point of view of society. This is the point of view that government has (or should have). Here you need to strike a balance between the rights of the landlord and the rights of the tenant, but the most important thing is the interests of society generally. This is the point of view I have striven to take in this series.
With that in mind, lets take a look at the various solutions I have come to.
1. The current system is not fit for purpose
There are two main issues –
- dealing with bad landlords and
- giving tenants who want it, greater security of tenure
Bad landlords are largely ‘getting away with it’ due to the difficulties of prosecution and the lack of local authority staff to do the prosecuting.
Landlords are discouraged from giving (and lenders from permitting) longer fixed terms to tenants who want them (mainly older people and families) because of the difficulties of evicting bad or non paying tenants.
The only reliable and (comparatively) quick method, section 21, can only be used once the fixed term (and the tenants long term security) has come to an end.
Both of these problems are bad for society.
- Poor housing leads to poor health and increased costs for the NHS (which we all pay for).
- Families in particular need long term security so children can remain in their schools
- Local communities suffer if residents cannot put down roots due to the risk of being ‘moved on’ after six months.
2. Landlord / letting agent registration and accreditation is the best solution to the ‘bad landlord’ problem
Stopping bad landlords from letting in the first place is more cost effective than prosecuting them when they break the law.
I propose a nationally operated registration scheme where all rented properties have to be registered.
All properties would have to be managed by an accredited letting agent unless the landlord had undergone training and obtained a landlord qualification.
The letting agent industry should be properly regulated with agents being required to have an accredited letting agent qualification, CPD obligations, professional indemnity insurance and client money protection.
Where properties are not properly registered, penalties should apply and landlords be unable to use the quicker eviction procedures.
3. The eviction process needs to be be changed to make it easier to evict bad or non paying tenants
This is key.
The problems involved in evicting non paying tenants during the fixed term is the main (and perhaps the only) deterrent to longer fixed terms.
If change in the eviction procedure does not happen then neither will the longer fixed terms.
I suggest that landlords be entitled to prompt possession orders against non paying tenants as of right, and that if tenants seek to defend these, for example because of the property’s poor condition, they be required to pay their rent into court (or an authorised organisation) to abide the event.
However hopefully tenants will be able to deal with poor property conditions under the registration / licensing system and will not need to deal with it by way of withholding rent.
If after an order for possession is made (based on rent arrears), tenants want extra time before they are evicted, this would be on condition that the rent is paid to the landlord, or into court.
I also suggest fast processing for bailiffs appointments as this can cause long delays, especially in London.
This system need not be more burdensome on the courts – indeed if a paper based procedure such as the accelerated procedure can be used, this would save court time as there would be considerably fewer hearings. It would require some amendments to the Civil Procedure Rules and maybe to the Housing Act 1988.
An efficient and speedy repossession system for rent arrears would give landlords more confidence in the system and encourage them to grant longer fixed terms to their tenants. Crucially also this would make it more difficult for lenders to object.
4. That (once the eviction process is changed) tenants should be entitled to apply for a longer fixed term.
For example after they have been in a property for, say, a year. This would be on payment of a premium fee which if not agreed between the parties could be set by a court, following a prescribed formula.
This would allow tenants who cannot afford to buy their own homes, to buy long term security in their rented property, allowing them to settle in the community without fear of being evicted after a few months.
However tenants who do not want to remain in the property long term, could continue to sign up for6-12 month fixed terms allowing them greater flexibility. It would be the tenant’s choice.
Landlords would continue to be able to use the section 21 procedure after a fixed term has come to an end. However maybe there could be a right for a tenant who has purchased a premium tenancy to be able to renew this within a set period of time upon making a further payment.
5. Mandatory core terms for tenancy agreements
Freely available and in plain English.
These are just ideas. On further consideration they may prove unviable. On the other hand they may be just the job!
Further investigation and analysis will be needed and extensive consultation if any change in the law is to be made.
I hope you will agree with me however that SOMETHING needs to be done. These suggestions and the analysis set out in earlier posts is my contribution to the debate.