Last month saw the long-awaited Queen’s Speech, which took place during the traditional formal opening of a new session of parliament.
The ceremonial event saw the biggest shake up to the private rented sector (PRS) for over 30 years, when Her Majesty announced a white paper which will outline the government’s plans to reform the sector to ‘deliver a better deal for renters’.
The white paper is expected to flesh out the government’s plans for widespread rental reform, including the Renters’ Reform Bill, which first appeared in the 2019 Conservative general election manifesto.
Here at Canopy, we explore the key housing announcements outlined in the white paper and how it could impact landlords operating in the private rented sector.
Using the Renters’ Reform Bill as the vehicle for reform
As stated by the government, the Renters’ Reform Bill will include measures to abolish Section 21 rights for landlords and their agents, while strengthening the Section 8 eviction process.
The controversial Bill will also introduce lifetime deposits which can allow deposit payments made in relation to one property to be shifted to another. The aim of this is to speed up and reduce the cost of moving rental properties for tenants.
Other reforms include ensuring all tenants have a right to redress, and ensuring well-targeted, effective enforcement that drives out criminal landlords, which could potentially involve requiring all private landlords to belong to a redress scheme.
The Bill is also expected to explore improvements and possible efficiencies to the possession process in the courts, to make it quicker and easier for both landlords and tenants to use.
Her Majesty also said ministers would establish a new Building Safety Regulator to ensure ‘the tragedies of the past are never repeated’, in reference to the Grenfell tragedy.
At this stage, it is unclear whether the government still intends to abolish Section 21 or whether its reform of the sector will extend to other measures such as lifetime deposits and a landlord register.
Will lifetime deposits hit the sector soon?
A major element of the Bill, lifetime deposits aim to ‘ease the burden on tenants when moving from one tenancy to the next, helping improve the experience of those living in the private rental sector’.
It is speculated that the lifelong deposits will act as a transferable sum of money which follows tenants through their rental journey.
Currently, most agents and landlords take a five-week security deposit at the outset of a new tenancy. In most cases, a tenant will not have received the deposit on their previous property back before paying a deposit on the next property.
However, the Tenancy Deposit Protection Working Group noted that it’s ‘unclear how significant the problem of deposit affordability is for tenants and how they are managing to bridge the gap of needing to find two deposit amounts’.
While the government is yet to disclose any details on how lifetime deposits might work, potential issues have since been raised.
These include the question of what would happen if the previous landlord wanted to make reductions from the tenant’s deposit when they move. Would the new landlord receive a lower deposit, or would the tenant be expected to top it up?
Additionally, Money.co.uk’s review of the lifetime deposit concept points out that not all moves between rental properties are seamless, with gaps and overlaps between contracts. Therefore, it needs to be made clear what happens to the deposit in these circumstances.
What does this mean for landlords?
It is clear that rental sector reform is high on the government’s agenda, but what that reform will look like and when it will be brought into play remains uncertain.
It’s hoped the anticipated white paper will shed some light on how lifetime deposits will be implemented more effectively and how further reform could impact the PRS.
In the meantime, landlords should keep an eye on the news while focusing on their existing compliance obligations, and working with a proactive letting agent can help you to achieve this.