Irwell’s Senior Class Underwriter, Bill Cobley looks at what the new government’s initiatives mean for private tenants and landlords.
The UK’s rental market is in crisis. Plagued by substandard housing standards, an imbalance between supply and demand, soaring costs, arrears on the rise along with the uncertainty of Section 21, the new Government has a lot to tackle to rebuild the rental market.
Labour is selling itself as the party of “wealth creation”, vowing to improve living standards for working people. Within Labour’s legislative programme, two aspects stand out which will impact landlords and renters alike.
Firstly, the Planning and Infrastructure Reform Proposal sets out to accelerate the quantity, and improve the quality, of the UK’s housing stock.
Meanwhile The Renters’ Rights Bill will address the insecurity and injustice that many renters and landlords experience by fundamentally reforming the private rented sector and improving the quality of housing in it.
Ending the bad housing pandemic
Government statistics around bad housing make difficult reading.
There are 3.5 million households in England that fail to meet the Decent Homes Standard.
2.3 million households are living in a home with at least one Category 1 hazard.
935,000 households are living in a home with damp problems.
Almost one quarter of private rented households (23%) live in a home that fails to meet the Decent Homes Standard.
The government’s ‘Decent Homes Standard is defined as homes that are overcrowded or housing which is damp, cold, infested or lacks modern facilities or is in need of substantial structural repairs.
This unacceptable trajectory cannot continue and must be addressed by all stakeholders.
How does the Government plan to improve substandard housing conditions?
With one in six UK homes at risk of flooding and the UK 9% wetter than 50 years ago, the insurance sector has experienced a surge in unprecedented flood insurance claims in recent years. Fuelled by the housing and climate crisis, Labour pledges to ‘Get Britain building’, as they seek to accelerate the delivery of high-quality homes and communities.
The Planning and Infrastructure Reform Proposal aims to create 1.5m new homes in areas with minimal risk of flooding and will implement measures to tackle resilience to climate change by improving building standards.
The proposal should result in properties that are fit for the future and can withstand flooding, extreme temperatures, high winds and subsidence, as well as improving fire safety and energy efficiency.
How does the Government plan to improve the private rental market?
The new Government is determined to transform the experience of private renting by levelling the playing field between landlord and tenant.
The Renters’ Rights Bill will end Section 21 ‘no fault’ evictions to give renters more rights and protections to stay in their homes for longer.
Meanwhile fair landlords will enjoy robust grounds for possession where there is good reason to take their property back.
However, unscrupulous landlords take heed, the Bill will crack down on those who exploit, mistreat or discriminate against tenants with poor practices such as ‘bad housing’, unfair rent increases or bidding wars intended to force tenants out.
This greater stability will allow renters to build lives in their local communities without the fear of eviction or homelessness and give landlords continuity of rental income.
How can landlords better protect their business?
Research by The National Residential Landlords Association (NRLA) found that almost one fifth of UK homes are now privately rented resulting in over 4.6 million rented properties. Demand for rental properties has more than tripled compared with the demand before the COVID pandemic.
However, 12% of landlords said they sold property in the third quarter of 2023 and 28% of respondents said they plan to cut the number of properties they rent out over the next 12 months*.
With this rental property shortfall, rent arrears on the rise and new legislation reforms imminent, it pays for private landlords to be prudent.
If landlord-tenant disagreements arise, legal costs can quickly escalate, and some landlords may not have the resources to pursue potentially lengthy and expensive legal proceedings against a tenant. That’s where Irwell can help.
Irwell’s landlord’s legal expenses protection allows clients to pursue or defend their legal rights and provides invaluable legal advice throughout proceedings. Likewise, if you become involved in a dispute with the tenant relating to the owning or letting of the property or if a tenant has damaged the property, our insurance covers the associated legal costs.
For residential clients, our policy can extend to include rent guarantee for added reassurance, whilst the landlord is using the policy to obtain repossession of their property.