This month, Chris Norris, Director of Policy and Practice, outlines how the NLA will respond to the government’s consultation on longer tenancies.
- The issue: the government consultation on ‘overcoming the barriers to longer tenancies in the private rented sector’
On 2 July, the secretary of state for communities, James Brokenshire, published an eight-week consultation document outlining proposals to introduce a minimum three-year tenancy term, with a six-month break clause, “to help renters put down roots, and give landlords longer-term financial security” in England. You can find the consultation documents here.
We have been working with the government for a number of years in the knowledge that there is a cross-party political desire to facilitate longer private tenancies, and will continue to robustly defend the flexibility that landlords need to offer tenancies. We believe that NLA members need the ability to offer a range of tenancies – including shorter terms.
We do, however, agree with the government that the private rented sector would benefit from some behavioural changes to allow it to function appropriately and allow landlords and tenants to negotiate more freely on the most appropriate tenancies for all parties. If this consultation leads to incentives for longer-term tenancies, that’s a positive.
But our line in the sand will be that we do not want to uproot Section 21 no-fault evictions. We do not think that a three-year tenancy is a ‘one size fits all’ solution for landlords and tenants alike.
Some members will recall that the NLA ran a series of working groups for the government last year to look at the issue of longer tenancies. And, based on the outcome of those research groups, our concern would be that, if the government does propose incentives such as tax breaks to encourage landlords to offer longer tenancies, those incentives will have to be proportional to the risk that landlords take on.
Our members polled in the focus groups last year categorically told the government that small tax incentives would not encourage them to offer longer tenancies. NLA members unequivocally sent policy makers the message that landlords who choose to let for three or five years take on a risk that could equate to thousands of pounds over the period of the tenancy. For any incentive to work, it has to be proportionate to the risk we are being asked to accept.
Currently the consultation offers no evidence as to what incentives, if any, there will be. We will certainly be working with the government to ensure that, if there are incentives, they will be meaningful.
Crucially, however, in all our discussions with the government over the issue of longer-term tenancies, we have always said that, if ministers want to encourage landlords to offer longer tenancies, then they have to show that it is safe to do so by fixing the court process – it can take up to a year to regain possession of a property via the Section 8 process.
The government has said it agrees that regaining possession is an issue that needs to be looked at but that it will review the court process later in the year.
But we would counsel ministers to either fix it earlier or look at it in parallel with the current consultation on longer tenancies. If landlords are to be encouraged to let for longer, they must have confidence that they can regain their property effectively.
We are prepared to work with the government to promote the use of longer tenancy agreements but only if the court service works better for landlords. We cannot in good conscience tell you to let your properties for longer if you do not have recourse to a well-functioning court service.
We would, however, like to encourage landlords to look at their businesses to see if longer tenancies can work for them and their tenants, and let us know their views. If you have feedback on the consultation, please contact us at email@example.com by Monday 13 August to allow us time to incorporate your comments into our response to the government.
- The issue: the Renting Homes (Fees etc.) (Wales) Bill
The Welsh Assembly introduced the Renting Homes (Fees etc.) (Wales) Bill into the National Assembly for Wales on 11 June 2018. The bill will prohibit certain payments in connection with the granting, renewal or continuance of standard occupation contracts. It will also make provision in respect of the treatment of holding deposits. Any person guilty of an offence under the bill will be liable on summary conviction to a fine.
I gave evidence to the Welsh Assembly on 5 July on its Renting Home (Fees etc.) (Wales) Bill. Having given representatives of the various letting agent bodies a grilling over charges to tenants, the committee was keen to hear from the NLA about the impact its proposals are likely to have on landlords.
It was incredibly useful to be given the opportunity to dispel some of the myths, or misunderstandings, about what makes up ‘move-in monies’ with members of the committee, who were clearly uncertain about how security deposits, holding deposits and fees are all used for different purposes. Likewise we seized the opportunity to refute the assertion that landlords will simply be able to absorb more and more costs.
- The issue: Social Security (Scotland) Act
After years of opposition to elements of the government’s austerity approach to welfare provision and reform, the Scottish government has made a firm claim for greater control over social security provision in the country. The Social Security (Scotland) Act 2018 received royal assent in June, and drives a wedge between the way in which benefits are delivered in Scotland and the rest of the UK.
The Act has been described by Scottish ministers as the biggest transfer of powers from Westminster to Holyrood since the early days of devolution, and will see responsibility for 11 state benefits devolved, although, crucially, it will not see administration of Universal Credit moved north of the border.
The relevant benefits range from Personal Independence Payments and Carer’s Allowance to Cold Weather Payments and Severe Disablement Allowance, and, perhaps most importantly for those living and working in the private rented sector, Discretionary Housing Payments (DHPs).
It is envisioned that control of DHPs will remain the domain of local authorities rather than the Scottish government, but that may mean guidance and practice relating to how they are used will vary in future in line with national policy.
This cleavage in responsibility for benefits has been described as labyrinthine by Scottish Conservatives concerned about the potential for split control over individuals’ claims.
From a landlord’s perspective, it is hard to imagine any steps the Scottish government could take to make the various systems more complex to engage with but, if the direction of travel in this policy area is towards greater devolution of power, landlords may have even more uncertainty to come.
Do you need advice? The NLA’s Telephone Advice Line is staffed by our team of experienced landlords, who have a wealth of knowledge. The Advice Line (020 7840 8939) is free for members.