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The evolving role of the landlord

The changing face of the rental sector

By Prospect Team  

The housing market poses big policy challenges for every government and chief among them is the private rental sector. Ensuring adequate supply at affordable rates, in a way which works for both the landlord and the tenant is no small feat; there are competing interests to weigh and innumerable adverse consequences to consider. Tenants understandably demand greater security and affordability, while landlords despair over anti-social renters and rent arrears, and the risk to their portfolio. Governments of all stripes have grappled with the difficulties and proposed their own fixes.

To discuss the way forward Prospect and the National Landlords Association (NLA) convened a panel at Conservative Party conference in Manchester on 30th September. In attendance were Chris Norris, Director of Policy and Practice at the NLA; John Fuller, leader of south Norfolk council and deputy leader of the Conservative Party in local government; Greg Beales, Campaign Director at Shelter; and Dawn Foster, a freelance journalist with a specialism in housing. The panel was chaired by Prospect’s Deputy Editor Steve Bloomfield.

The background to the discussion was a significant change in regulation published earlier in the year: the abolition of no-fault evictions as laid out in Section 21 of the Housing Act 1988. This currently allows landlords to seek eviction of renters on assured shorthold tenancies with two months’ notice, after the expiry of an initial fixed term (typically six to 12 months). This is at the landlord’s discretion and legal whether the tenant has done anything wrong or not, in contrast with Section 8 notices which require proof of a ‘ground’ for possession, such as rent arrears and anti-social behaviour.

Explaining what recent changes mean for the sector, Norris kicked off the conversation, arguing that new uncertainties are causing real problems for Britain’s 2m landlords. Owing not just to uncertainty around Section 21 but other changes to things like mortgage relief and capital gains tax, “they can’t plan their futures, they can’t plan their investments, they often can’t plan their retirements.” In his view this isn’t just bad for the landlord but for everybody: landlords “can’t offer the range of households the homes that they’ve been asked to offer,” meaning that “you’ve got an industry that has money to invest, that wants to provide something and doesn’t feel able.” Landlords “need to have an exit mechanism… if things go wrong or [their] plans change.” Section 21 provides this.

Headlines might focus on security for the tenant but you could argue security for the landlord is crucial. Fuller was just as keen to stress the rights landlords require to provide the homes we all need. The government must give them “an opportunity to make a reasonable return on a responsible basis,” and also recognise that sometimes their circumstances do change. “Managing local housing markets as we do” in south Norfolk, “we’ve got to be respectful” of that fact, with certain policies—arguably the abolition of section 21—creating challenges in this regard. It is not fair if “just because someone becomes a landlord in the first place, they’re handcuffed” to the system in perpetuity.

“The overarching consequence” of making the situation less appealing for landlords, is that you could end up “with a reduction in supply, and that doesn’t help anybody.”

Of course vulnerable tenants can find themselves on the sharp end of the market and Fuller stressed that his local authority provides the “backstop” of support in that event. “It’s not just the tenants, it’s not just the landlords, our job is to help run the middle.”

There is no question that tenants can face immense uncertainty too. For Beales, the government’s commitment to abolishing Section 21 is welcome. Section 21 gives “landlords the power to evict children who then have to move school, they might have to change their doctors, might change all the public services that go with that and be uprooted.” In its research Shelter has “come across examples of elderly people being evicted… on the basis that the landlord doesn’t want to pay for the adaptations that are necessary for that person staying in the home.” For Beales, the landlord certainly needs the right to turf out problematic tenants, but they should “pursue it through section 8” if it is anti-social behaviour or similar. Young people and the elderly should not be “at the whim of a system that gives them no protection and no right of recourse.”

Foster, meanwhile, explained that she herself was in the private rental sector “like most in the millennial generation” and had often suffered from unjust practices. Over six years she “lived in ten properties because we kept being evicted.” There is “a huge amount of uncertainty for tenants.” There have been some improvements, particularly with the recent abolition of letting agents’ fees, but the fact remains that “if you are a private renter, you are completely at the mercy of your landlord.” Section 8 means that “it’s quite straightforward to evict problem tenants, people who aren’t paying their rent” or keeping the property in good condition. That means section 21 is not necessary and arguably that abolition is defensible.

However this position was questioned, with landlords challenging the characterisation of section 8 as “straightforward”. Norris said, “I don’t have a problem losing section 21 in theory – if we can get the rest of the system to work.” Beales agreed that it was “worth twinning court reform” with the abolition of section 21.

The wide-ranging discussion went on to cover the idea of rent controls, regulation in comparable democracies like Germany, and other recent reforms to the housing sector. The theme though remained the balance of responsibility between the tenant and the landlord. There can be a lot of antagonism between the two sides. But all have an interest in getting this right. And as Beales said, usually when markets work well there is not so much antagonism between the user and provider of the service.

“Lessor” and “Lessee” were suggested by the audience as new terms: a way to break the mindset that has set in around the words “tenant” and “landlord.” Most panellists, despite urging their own policy reforms, agreed that might be a good start.

 

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