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Sunday, April 14, 2024
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HomeDemocracy in DecayRent Bill will demonise landlords – and bankrupt councils

Rent Bill will demonise landlords – and bankrupt councils

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IN THE historic case of Entick v Carrington in 1765, Lord Camden famously stated: ‘By the laws of England, every invasion into private property, be it ever so minute, is a trespass.’ By that measure the Renters Reform Bill, now in its final stages in Parliament, can best be described as a wholesale and fundamental invasion into the principle of private property.

At its root the Bill insinuates that all tenants are victims, and all landlords are villains. It forces the cold, dead hand of the State into the mostly-harmonious mutual dependency of landlords and their 4.6million tenants, infantilising the parties into dumb, bad-faith spectators in their own private relationship.

A group of white knight Conservative MPs appear to be intent on rescuing the Bill from its premise, that it is somehow rebalancing the relationship between oppressor landlords and oppressed tenants. Astonishing that this nonsense Bill ever got to this stage. Astonishing that only one landlord representative was asked to give evidence to the Bill’s scrutiny committee, while handfuls of left-wing tenant groups were invited.

In National and Residential Landlord Association (NRLA) webinars and podcasts before Christmas I criticised the Bill as one of the worst pieces of housing legislation, with no redeeming features. Landlords seeking to increase rent will require government involvement. Landlords must accept tenants with pets in any property. Landlords get double the punishment at the Land Tribunal without the correct landlord licence. And most unhelpfully for the continued supply of rented properties, by abolishing Section 21 Notices, landlords cannot get back their properties without the tenant agreeing to leave.

Before the Thatcher government of the 1980s, rented housing was a moribund part of the economy replete with decrepit properties that neither government nor landlords had the money to renovate or demolish.

The Housing Act 1988 brought in Section 21 Notices, whereby once the fixed period of a tenancy is over, tenants can receive a notice period of 2 months from their landlord to formally end their monthly tenancy on a ‘no-fault’ basis. Most landlords want to keep good tenants in place, and there are no court proceedings and no ‘eviction’ unless a tenant refuses to leave. This flexibility for property owners incentivised a flow of investment to and from private rented sector housing by allowing property owners the ability to control their assets, increasing the number of homes built, and creating more choice for tenants.

What is difficult to understand is that the Government must know that this Renters Reform Bill is the disease of which it purports to be the cure because, like all bad law, it makes a bad situation for tenants worse. The Government hints that it knows this, yet it still wants to proceed, apparently having abandoned making good law that benefits everyone for the appearance of helping different interest groups.

A test for the usefulness of any proposed law is this. Does it make buying goods or services cheaper and simpler and improve supply, or more expensive, more complicated, and reduce supply? The answer with this Bill is clearly the latter. It makes renting more expensive for tenants in a shrinking rental market which, along with decade-long government tax changes and the increased monthly cost of borrowing, further incentivise landlords to cash in and sell up. In July 2023, Inside Housing reported a 41 per cent drop in the number of private properties available to rent in London. Higher demand, squeezed supply, higher costs, less choice. Worse and worse for tenants.

In summary, this Conservative government, agreeing with the opposition Labour party, has decided – due to a shortage of homes, and rather than affirming the Rule of Law, and the idea that a property ultimately belongs to its owner, and rather than encouraging more homes to be built – that the idea of a rental property being the home of a current tenant is more important than ensuring that an increasing number of potential tenants actually have somewhere affordable to live.

Landlords are leaving the private rented sector in droves. If Section 21 Notices are abolished, I do not think it is controversial for me to suggest that more landlords will sell up, increasing rents for the rented properties left behind. Meanwhile left-wing politicians tout the idea of rent levels controlled by politicians, which has never worked anywhere in the world, would make a bad situation worse, and always has to be abandoned.

This is why abolishing Section 21 Notices will also bankrupt local authorities. For the last decade there are a number of exponential costs that local authorities have been struggling to get under control. Temporary accommodation is one such cost, projected to be £2.1billion for councils in England 2023-24, which is a 20 per cent increase on last year’s £1.74billion. During my time as a councillor in Lambeth, temporary accommodation costs went up from around £4million a year in 2014 to £25million in 2022. These temporary or emergency occupants can remain in council emergency accommodation for many years, and the size and quality of that accommodation can vary, and last indefinitely, from a room in a hostel to a large house for a family.

Here is the problem. All these properties used for temporary accommodation have to be sourced by local authorities from private sector landlords. Usually, a landlord leases a property to a property company, which in turn has an arrangement with a local authority for the council to use the property for emergency accommodation. The Housing Act 1985 grants an exemption to the long-established rule that a property provided by a local authority has to be a ‘secure’ tenancy for life. No property rights in rem are granted to these emergency occupiers, just a form of licence, or personal right in personam.

If Section 21 Notices are abolished, landlords have another option – to lease a property to a company that allows the property to be used for temporary accommodation by the council. Landlords would at least be able to get their properties back when required, despite these types of possession claims being difficult and technical to plead.

So this writer predicts that more landlords will leave the private rented sector to allow their properties to be used for emergency accommodation by local authorities. This will make the situation worse by decreasing the number of properties available for private rent, increasing the rents of those properties left in the private rented sector, lowering standards and value for money, reducing choice, increasing costs, and increasing the number of people presenting themselves as homeless to local authorities.

But most galling of all, the Renters Reform Bill will see local authorities, ultimately us, the taxpayers, paying for people to rent the very same properties they used to pay to rent themselves.

Conservative MPs have realised too late that the Renters Reform Bill will be counter-productive, and a stand-out legacy of this parliament for all the wrong reasons. For the sake of tenants, scrap the whole thing now.

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Tim Briggs
Tim Briggs
Tim Briggs is a commentator, lawyer and former Leader of the Opposition on Lambeth Council, and on the Conservative list to be a parliamentary candidate for the next general election.

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