Tessa Shepperson Newsround #189

Two weeks of news this week as I took a break on Good Friday.  What do we have for you?

Are rent controls a bad idea?

There is quite a bit in the news today about Sadiq Khan’s bid for the London Mayorship where one of his main manifesto proposals is to try to introduce rent controls.

The National Residential Landlords Association has pointed out that a report published by The Treasury in 2010 under the last Labour Government, when he was a Minister, had found that rent controls would have a devastating effect on inner-city housing.

As it had under the old Rent Acts prior to 1988 when (the report said) low rents were a major factor in the ‘decay of much of the inner city housing stock’.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

Rent controls would be a disaster for London as the last Labour Government made crystal clear. They would mean tenants actually paying higher rents than leaving them to market forces.

The story of rent controls wherever they have been introduced is that they exacerbate an already serious shortage of available homes.

Rather than calling for things he cannot deliver, the Mayor should focus on using the powers he already has to boost the supply of available housing, including for private rent.

Another article on rent has Andy Halstead, HomeLet and Let Alliance chief executive saying that government interference is resulting in higher rents.  Speaking as his latest HomeLet index showed rents across the UK rising for the fourth time in as many months, he said

With almost one in five people living in the private rented sector, it’s fitting that the government should focus on it, with an informed policy that strives to achieve a balance between letting agents, landlords and their tenants, but unfortunately that isn’t the case at the moment.  The continued increase in rents above the rate of inflation is a symptom of current policy.   …

The continued assault on landlords through policies that disincentivises property investment will only drive rental value upwards for tenants.  … As demand increases, the UK needs more rental stock for tenants, not less and without policy informed fully by property professionals, rents will rocket to record levels this summer.

An interesting article on LandlordZONE features comments by Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, who says that ‘like socialism’ rent controls have been tried dozens of times and just don’t work’, citing the Scottish Government who have admitted that their rent cap zones have not worked and Berlin where

After the introduction of a rent cap, the supply of rental properties coming on the market fell by almost half, at a time when it increased in comparable German cities.

I wonder if the trend for working from home may ease things as people to move away from the big cities to places where housing is cheaper.  There is probably sufficient housing overall in the UK, just not where the jobs are and where people want to live.  But the increase in working from home may change things.

The new Government Mediation Service guidance published

The government is introducing a new court mediation service as part of the current court process for housing possession cases.  If you and your opponent are unable to reach an agreement at the ‘review’ stage of proceedings it will, if both parties agree, be referred to mediation.

There is a new government guidance document now available online here which explains how the new system works. It will be free to use for landlords and tenants and will involve as a third party a trained neutral mediator, independent from HM Courts and Tribunals Service, to help identify issues and work to resolve them.

The problem is, for rent arrears cases anyway, that by the time the case has got to court it will probably be too late to do anything about it.  Unless the mediators are able to help the tenant’s source additional funding to help clear their arrears.

There has also been criticism of review hearings on LandlordZONE, who cite users saying that they have been a waste of time which is costing landlords money.

HMO Landlords Face Unlimited Fines Under New Fire Regs

Landlords and managing agents of houses in multiple occupation (HMO) could face unlimited fines under new measures to be included in the Building Safety Bill, likely to come into force in 2022.

The Fire Safety Order will be amended to

• improve the quality of fire risk assessments and competence of those who complete them;
• ensure vital fire safety information is preserved over the lifespan of all regulated buildings;
• improve cooperation and coordination among people responsible for fire safety, making it easier to identify who they are;
• strengthen enforcement action, with anyone impersonating or obstructing a fire inspector facing unlimited fines;
• strengthen guidance issued under the Fire Safety Order so that failure to follow it may be considered in court proceedings as evidence of a breach of compliance;
• improve the engagement between Building Control Bodies and Fire Authorities in reviewing plans for building work;
• require all new flats above 11 metres tall to install premises information boxes.

The unlimited fines relate to the offence of obstructing or impersonating fire inspectors, and form part of the Government’s response to the Fire Safety Consultation that ran from July to October 2020.

Energy Efficiency Targets

The Lettings Industry Council (TLIC) has written an open letter to the government expressing its concern about their plans to increase the minimum energy rating for rental properties to C by 2025.  The letter has been signed by a number of large letting agents, and says that the time frame from implementing a minimum C rating is too small.

The letter puts forward alternative proposals:

•  By April 2026: all new and renewed tenancies to have a minimum D rating – the average rating for all homes.
• By April 2028: all existing tenancies to have a minimum D rating and all new and renewed tenancies to have a minimum C rating
• By 01 January 2030: all existing tenancies to have a minimum C rating
• Bring the start date forward for the refurbishment works cap from 2023 to 2020.

Adding

We believe our proposal will reduce the pressure on stock available in the PRS market whilst still achieving the overarching goal of all properties in the PRS (unless exempt) achieving an Energy Performance Certificate rating of a C by 2030.

Snippets

• Employed agents can claim working from home allowance for new tax year
• Hidden factor behind the UK’s housing crisis
• Does a missing landlord address invalidate a Section 8 notice?
• A significant increase in energy-efficient new homes
• Only 39 rogue landlords and agents hit with banning orders
• Overseas landlords still investing in UK property in large numbers
• MP backs law change to allow tenants to pay pet damage insurance