This article is more than 2 years old

Achieving a fairer private rental sector – what SUs need to know

This article is more than 2 years old

Jim is an Associate Editor at Wonkhe


This is a briefing for Wonkhe SUs subscribers.

The Westminster government has published its long-awaited white paper on reform to the private rental sector in England – and there are major potential implications for students and SUs.

At this stage this is only a white paper, although it does reflect the conclusions of previous consultations (with one small sub consultation to come) to these proposals are pretty final. There are some opportunities to strengthen the proposals in the student interest – but more importantly the powerful landlord lobby is likely to try as hard as it can to water down what is in here before it becomes a bill to be taken through parliament “in this parliamentary session”.

SUs will want to consider how they might lobby or campaign to protect and strengthen some of the proposals in the white paper.

Here we’ve summarised the most important aspects of the proposals for student tenants. There are some mind-blowingly major implications – not least of which could be that the government is about to effectively outlaw that “sign now” many months in advance thing that many SUs campaign against.

Ambition

It’s worth keeping in mind the objectives for the proposals – not least because you might take a view on whether the proposals achieve them. They are:

  • All tenants should have access to a good quality, safe and secure home.
  • All tenants should be able to treat their house as their home and be empowered to challenge poor practice.
  • All landlords should have information on how to comply with their responsibilities and be able to repossess their properties when necessary.
  • Landlords and tenants should be supported by a system that enables effective resolution of issues.
  • Local councils should have strong and effective enforcement tools to crack down on poor practice.

The topline 12-point plan

  1. Halve the number of non-decent rented homes by 2030 and require privately rented homes to meet the Decent Homes Standard for the first time.
  2. Accelerate quality improvements in the areas that need it most.
  3. Abolish Section 21 ‘no fault’ evictions and deliver a simpler, more secure tenancy structure. Reform grounds for possession to make sure that landlords have effective means to gain possession of their properties when necessary.
  4. Only allow increases to rent once per year, end the use of rent review clauses, and improve tenants’ ability to challenge excessive rent increases through the First Tier Tribunal.
  5. Strengthen tenants’ ability to hold their landlord to account and introduce a new single Ombudsman that all private landlords must join.
  6. Work with the Ministry of Justice and Her Majesty’s Courts and Tribunal Service (HMCTS) to target the areas where there are unacceptable delays in court proceedings.
  7. Introduce a new Property Portal to make sure that tenants, landlords and local councils have the information they need.
  8. Strengthen local councils’ enforcement powers and ability to crack down on criminal landlords by seeking to increase investigative powers and strengthening the fine regime for serious offences.
  9. Legislate to make it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits and explore if similar action is needed for other vulnerable groups, such as prison leavers.
  10. Give tenants the right to request a pet in their property, which the landlord must consider and cannot unreasonably refuse.
  11. Work with industry experts to monitor the development of innovative market-led solutions to passport deposits.

Safe and Decent homes

The “Decent Homes Standard” is a regulatory standard in the Social Rented Sector but there is no requirement for Private Rented Sector (PRS) properties to meet any standard of decency. The government accepts the argument that it isn’t right that social renters can expect a higher quality home than a private renter.

The proposal is therefore to legislate to introduce a legally binding Decent Homes Standard (DHS) in the Private Rented Sector for the first time, as part of a wider commitment to halve the number of non-decent homes across all rented tenures by 2030. Confusingly, a separate consultation is to come on introducing the Decent Homes Standard which doubtless landlords will be keen to water down or delay – we’ll keep you up to date when it appears.

In outline, to be “decent” will require a home to be free from the most serious health and safety hazards, such as fall risks, fire risks, or carbon monoxide poisoning. Landlords will also have to make sure rented homes don’t fall into disrepair. kitchens and bathrooms will have to be adequate, located correctly and – where appropriate – not too old, and the standard will also require decent noise insulation.

Renters will have to be given clean, appropriate, and useable facilities and landlords will have to update these facilities when they reach the end of their lives. The standard will also make sure that rented homes are warm and dry – putting an end to homes that are too cold in winter, too hot in summer, or damp and mouldy.

Obviously there are questions about the detail and the enforcement of the standard – but the introduction of this standard would represent a major step forward for student renters and in theory address long-standing complaints about safety, disrepair, damp and other quality issues.

One aspect of this that SUs might want to raise is about insulation and energy efficiency. To meet the net zero target, the country needs to have largely eliminated emissions from housing stock by 2050 and we’ll need to make significant progress towards that goal over the coming decade to meet Carbon Budgets. For lots of homes there is an incentive to improve energy efficiency – but for many landlords there is little desire to do so as students pay the bills. Devising a mechanism that both drives energy efficiency measure adoption and in the process lowers bills for students will be crucial.

Another thing to note is that there is currently a review on of the Housing Health and Safety Rating System (HHSRS). This is the system used to assess the seriousness of hazardous conditions (one element of the Decent Homes Standard), including things like fire and falls but also excess cold (which is common in the sector) and excess heat (which is a growing concern in light of the changing climate). The review is due to conclude in autumn 2022.

Finally here, the government has announced an intention to introduce new powers for local councils to manage their local supported housing market and take action against poor quality providers, helping ensure residents receive the support they should expect. New powers are welcome, but what councils are really likely to want is more resource to use them! SUs will want to raise the question of enforcement resourcing in lobbying as there is an ongoing worry that student issues are not prioritised by local authorities in many areas.

What they have announced is “pilot schemes” with a selection of local councils to trial improvements to the enforcement of existing standards, and explore different ways of working with landlords to speed up the adoption of the Decent Homes Standard. There might be some opportunities for SUs to work with local authorities on these, perhaps to target student landlords/areas with specific work or awareness among students of the new standard and how to report a property not meeting it.

Increased security and more stability

Major drama here when it comes to students. Right now the current tenancy system mixes “fixed-term tenancies” with “periodic tenancies”.

“Fixed terms” ones – most common with students – commit both landlord and tenant for an agreed period, typically 6 or 12 months. During that fixed term, landlords cannot use “Section 21” to evict a tenant, although they can use other grounds for possession. Tenants can only leave during the fixed term with the landlord’s agreement, and they must pay rent for the duration, unless agreed otherwise.

Meanwhile “periodic tenancies” are weekly or monthly tenancies that do not last for a fixed period. If a tenant wants to leave the property, they are liable for the rent until the required notice period has expired. This is typically one month but can vary. A landlord can end a periodic tenancy with two months’ notice by using a Section 21 eviction notice or by using other grounds for possession.

Amazingly, the government is proposing to abolish Section 21 evictions and will simplify tenancy structures by moving all tenants who would previously have had a fixed term tenancy (an Assured Tenancy or Assured Shorthold Tenancy) onto a single system of periodic tenancies:

  • All tenants, including students, will only need to provide two months’ notice when leaving a tenancy.
  • Landlords will only be able to evict a tenant in reasonable circumstances, which will be defined in law, supporting tenants to save with fewer unwanted moves.
  • Students will have the right to stay on in their property – raising the prospect of a graduate staying on for a few months or a whole year at the end of an academic year.

Landlords had lobbied hard to have students exempt from these provisions – here’s an illustrative comment as to why:

How is the student market going to work if students can just bail mid tenancy? The only way that could possibly work would be if Council Tax exemptions were abolished so students could be replaced with professionals. How will it work if one student wants to leave a joint tenancy? Will they bully and coerce their housemates to give up their home? In student HMOs on individual tenancy agreements it would massively change the whole student experience if random professionals or benefit claimants were put in to replace a departing student.”

To address concerns from landlords there is a specific section in the whoite paper that addresses the issues. It says that most students will continue to move property at the end of the academic year, but:

…for certain students, this is not appropriate, for example because they have local ties or a family to support. It is important that students have the same opportunity to live in a secure home and challenge poor standards as others in the PRS. Therefore, students renting in the general private rental market will be included within the reforms, maintaining consistency across the PRS.

It won’t, however, include halls:

We recognise, however, that Purpose-Built Student Accommodation cannot typically be let to non-students, and we will exempt these properties – with tenancies instead governed by the Protection from Eviction Act 1977 – so long as the provider is registered for a government-approved code.

You could make a decent argument that tenants’ rights shouldn’t have to depend on whether your landlord can rent your room to non-students – and the DLUHC response here does imply that HMOs full of students could end up with mixed student and non-student populations which will worry some. Nevertheless landlords won’t be letting this one lie and it’s likely to be a key focus of lobbying so SUs will want to lobby specifically on this issue.

The important reason why this is a “gamechanger” when it comes to student house HMOs is as follows. Lots of landlords and agents like to sign students in advance – but if a student has the right to stay at the end of an academic year that would theoretically stop a landlord from agreeing a tenancy agreement on that room until that student has issued their 2 months’ notice! We could move from students panicking about signing early to students all having to sign (very) late during exams!

There could also be some complications for students who have individual contacts with a landlord in an HMO that surround council tax, and a desire on the part of a landlord to fill a room with non-students if a student stays on and then leaves halfway through an academic year.

A few other bits on this. Implementation is going to take a little while – the government will provide at least six months’ notice of a first implementation date, after which all new tenancies will be periodic and governed by the new rules, and then all existing tenancies will transition to the new system on a second implementation date. There will be at least twelve months between the first and second dates.

And then on the ability for landlords to “take possession”, a few things to note:

  • Introduction of a new ground for landlords who wish to sell their property (although not allowed in the first six months of a tenancy).
  • Eviction will be mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years.
  • Increased notice period for the existing rent arrears eviction ground to four weeks and retention of the mandatory threshold at two months’ arrears at time of serving notice and hearing.
  • In cases of criminal behaviour or serious antisocial behaviour, the government will lower the notice period for the existing mandatory eviction ground.
  • Requirement of two months’ notice in circumstances beyond a tenant’s control, such as the landlord selling.

Improved dispute resolution

A huge problem that we’ve reflected on here at Wonkhe over the years is that even if students know their rights in this area, it’s very difficult for them to be able to enforce those rights. So it’s striking that the proposals include a single government-approved Ombudsman covering all private landlords who rent out property in England, regardless of whether they use an agent.

The ombudsman will:

  • Protect consumer rights in this area.
  • Provide fair, impartial, and binding resolutions for many issues without resorting to court.
  • Tackle the root cause of problems, address systemic issues, provide feedback and education to members and consumers, and offer support for vulnerable consumers.
  • Allow tenants to seek redress for free, where they have a complaint about their tenancy. This could include complaints about the behaviour of the landlord, the standards of the property or where repairs have not been completed within a reasonable timeframe.
  • Membership of the Ombudsman will be mandatory for landlords and local councils will be able to take enforcement action against landlords that fail to join the Ombudsman.
  • The Ombudsman will have powers to put things right for tenants, including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
  • As part of providing compensation, the Ombudsman will be able to require landlords to reimburse rent to tenants where the service or standard of property they provide falls short of the mark.
  • The Ombudsman’s decision will be binding on landlords, should the complainant accept the final determination. Failure to comply with a decision may result in repeat or serious offenders being liable for a Banning Order.

This is massive – it’s effectively an OIA for student renters – and advisor staff in SUs will get to bone up on and promote a new set of scheme rules and best practice frameworks.

There are also proposals on better processes involving the courts which we won’t cover here in detail.

There is some confusion in the white paper as to whether those operating halls (either in the university sector or the private sector) will have to be part of the single Ombudsman scheme – the white paper says that it will “explore extending mandatory membership of a redress scheme” to residential park home operators, private providers of purpose-built student accommodation and property guardian companies. The obvious thing would be for all student tenants – in HMOs nor private or public halls – to be included in the single main scheme. That’s another thing to consider lobbying on.

Rent (increases)

It may not surprise you to learn that the government has declined suggestions from NUS and others to introduce rent controls. But there are some interesting proposals here on rent of interest to students in the context of the “periodic tenancy” thing described earlier.

The first proposal is to only allow increases to rent once per year, and the government will increase the minimum notice landlords must provide of any change in rent to two months. It will also end the use of “rent review” clauses that prevent tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price.

For students who will now be on periodic tenancies, the danger is that a landlord gets them out at the end of the year by jacking up the rent – but the proposal here is to make sure that tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal. Presumably that would stop a landlord from charging a student who wanted to stay on double the rent of a student they were newly recruiting – but that might be something to raise in lobbying.

International student klaxon – the government says that landlords charging multiple months’ rent in advance of a tenancy starting is currently uncommon, but notes that landlords may choose to do so where tenants do not have guarantors, are moving to the UK from abroad, or cannot provide references. The proposal here is to require landlords to repay any upfront rent if a tenancy ends earlier than the period that tenants have paid for – so if an international student paid six months in advance but then ended the tenancy via the two months notice period, they’d get a refund on any unused rent. The government is also proposing to introduce a power through the Renters Reform Bill to limit the amount of rent that landlords can ask for in advance – but will only use the power if the practice of charging rent in advance becomes widespread or disproportionate.

This is very interesting – because once you can leave with two months’ notice, there’s an interesting legal interaction between “upfront rent” and “deposits” – the latter of which have strict regulation surrounding them. The proposals here effectively turn some or all of an advance rent payment into a massive deposit – but the size of deposits is capped and deposits have to be put in a special scheme, etc. This will be something to raise and clarify in lobbying – and SUs will want to consider arguing for the power to reduce or outlaw advance rent payments to be used.

Something called “Rent Repayment Orders” are something a tenant can get imposed on a landlord where there’s a problem, and the proposal here is that they will cover repayment for non-decent homes. In other words if a home doesn’t meet the standard discussed above for 6 months, they’d be able to get six months rent back even if they’d paid upfront. There’s bound to be devil in detail here – but this sounds like good news.

One other note here. The practice now of asking students to sign tenancy agreements very early – often months in advance – will be difficult enough given the new “right to stay on” offered by periodic tenancies. But even if it was possible – all a student has to do is give two months’ notice, so if they were due to move in on September 1st they just have to tell the landlord by July 1st. And even if they paid some upfront rent – they will be entitled to it all back. That whole practice may therefore now be completely untenable and there could be unintended consequences.

Compliance and enforcement

This is interesting. Something called a “new digital Property Portal” will provide a single space to help landlords understand, and demonstrate compliance with, their legal requirements. Local councils will be able to take enforcement action against private landlords that fail to join the portal. The aim is to integrate compliance and legal requirements into the portal.

Via the portal tenants will get a trusted one-stop-shop for guidance on renting in the PRS – “levelling up” awareness of tenants’ and landlords’ rights and responsibilities across the country. Tenants will be able to access necessary information in relation to their landlord’s identity and compliance with key legislative requirements.

There’s lots of stuff on freeing up councils to regulate which we won’t cover in detail here – but it’s worth mentioning that there will be a new expectation on councils to prioritise Private Rented Sector enforcement in the same way as public health, to which housing is a key contributor.

A positive renting experience

A weird section at the end of the white paper deals with pets, deposits and bans.

As it stands there is evidence that some landlords and agents are actively discouraging, or even preventing people in receipt of benefits or with children from renting their properties. The government is proposing to make it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits. That would not include students – but the government will “explore” if action is needed for other vulnerable groups that may struggle to access PRS accommodation. That sounds like a good issue for SUs to raise in lobbying especially in relation to international students.

On pets, the government will legislate to ensure landlords do not unreasonably withhold consent when a tenant requests to have a pet in their home, with the tenant able to challenge a decision – and they will make it easier for landlords to accept pets by amending the Tenant Fees Act 2019 to include pet insurance as a permitted payment, so landlords will be able to require pet insurance, so that any damage to their property is covered. This could be very important for student mental health.

When a student moves from one house to another, having the money for a new deposit before the deposit for a the current home has been returned can be a challenging barrier to moving. Apparently, the private sector has begun to develop innovative solutions to this problem including loan and insurance products for tenants to bridge the period where deposit requirements overlap. The plan is to monitor these “market-led solutions”, keep the impact and risks of market-led solutions under review, and only take further action, including legislation, if needed.

Supply?

Obviously this isn’t a planning white paper – either in the general sense of the word or in the specific sense in relation to housing! But it is possible that when the landlord lobby says that the changes will put people off from renting at all or renting to students, they might be right – at least in the short term while the market “settles”. And as we know, when there’s a dearth of supply prices go up and quality goes down – as well as making for a miserable student experience.

That’s not a reason to oppose any of the changes proposed here – far from it. But it is a reason to consider the contingency plans that the university has for a sharp downturn in available HMO stock in your local area coming years.

Read more

White paper: A fairer private rented sector

Blog: Students are about to get better housing rights – and landlords are absolutely furious

Plus:

Local authority enforcement in the private rented sector: headline report
Local authority enforcement in the private rented sector: headline report
Property guardians: headline report
English Housing Survey: a segmentation analysis of private renters
Mobile homes: The impact of a change in the maximum park home sale commission
A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants
Considering the case for a Housing Court: call for evidence
Tenancy deposit reform: a call for evidence
New deal for private renters published today

SUs latest Latest SUs blogs

Leave a Reply