Renters Reform Bill – what next for the PRS?

The highly anticipated Renters Reform Bill has passed its Second Reading in the House of Common, meaning progress on delivering some of the most significant changes to the English private rental market in decades gets closer.

Following the initial announcement earlier this year, a number of significant changes have occurred within the reforms and the overall private rental sector (PRS). Ahead of the Second Reading, the UK Government separated out student accommodation renting from the reforms and recently announced a series of major energy policy shifts, one of which has seen minimum energy efficiency standards of EPC C for new and existing lets removed.

Key developments:

• Abolition of Section 21 ‘no fault’ evictions: The government made clear in Parliament their intention to deliver on the Conservative Party 2019 manifesto commitment of scrapping Section 21 – however this will not progress as part of the reforms until changes occur within the court system. Landlords have expressed concerns to RICS that without a reformed court system, they fear the abolition of Section 21 will further pressure landlords into leaving the sector due to the risk of long-drawn legal processes to evict a tenant in high rent arrears or due to anti-social behaviour.

• Expansion of the Decent Homes Standard: Creating high-quality private homes is an essential element of the reforms. The existing Decent Homes Standard already applies to the social housing sector and is helping to drive up quality – something the government now wants to see extended to the PRS. Michael Gove, Secretary of State for Levelling Up, Housing and Communities stressed during the announcement that the standard supports the improved energy performance of the PRS. The government have indicated minor changes to the standard to apply to the PRS but has not been explicit on the details yet.

• Introduction of the PRS Ombudsman and Property Portal: The creation of a PRS Ombudsman will support disputes, rent and quality concerns. While aimed at supporting tenants, it will create a more formal channel for landlords to address challenges. The government are currently exploring the suitability of the existing Housing Ombudsman to take on their role. The new Property Portal will help tackle rogue landlords and support further enforcement.

What RICS wants to see:

• A digitised and prioritised court system: RICS has called on the government to reform the court system first, including the digitisation of the process and the ability to prioritise the most severe cases.   

• Sufficient time to meet the Decent Homes Standard: If introduced to the PRS today, an estimated 14% of London homes would fail to meet the standard and, more worryingly, 38% in Yorkshire and The Humber. RICS is stressing to the government the essential need to allow sufficient time for the implementation so landlords can deliver improvements and not be forced to sell the property due to time and cost pressures.  

• Government to work with RICS to advise on home improvements and assessments: Thousands of landlords will be required to undertake home improvements to meet the Decent Homes Standard. RICS members are well-positioned to offer holistic, impartial support to landlords to create effective, and economical improvement plans. We are also concerned about landlords self-declaring they meet the standard, without any independent verification. RICS can support verification and enforcement by providing impartial, professional surveys where required to meet the Decent Homes Standard.

• A simple, low-cost and streamlined Property Portal: Whilst the introduction of the portal will be a relatively minor reform in the face of the overall changes, it is important that landlords are not overburdened with red tape and multiple fees. The government must confirm how the Property Portal will work alongside existing licensing schemes many local authorities employ, or how they can work in conjunction with each other.

Importantly, RICS are concerned that these reforms don’t address one of the biggest challenges facing the PRS – affordability. The government stressed during the Second Reading that they are working closely with landlords and industry professionals to ensure the reforms do not force landlords to exit the market, further putting pressure on renters. However, very little was said about increasing PRS supply, a key to addressing affordability.

RICS welcomed the government's commitment earlier this year to create 1 million new homes during this term, with a reformed planning system – however, this figure is down from their initial 1.5 million target set in 2019. The recently launched RICS manifesto, ‘Empowering a sustainable future’, calls for the creation of a housing delivery framework, which will commit the government to work with industry to outline how future housing targets will actually be met ahead of committing to a figure.