Oxford’s private rented sector (PRS) is suffering from an
under-supply of properties, together with high inflation this is driving-up
rents with tenants bidding against each other to secure the best properties. This under-supply has been apparent for at
least three years, albeit temporarily hidden by the pandemic lockdowns.
The government asserts that it’s white paper which was
published this week, will improve the market, making life easier and fairer for tenants. It is my belief that they are too late and
the effect of these proposals will be to further worsen the supply crisis of
good quality rental properties owned by decent caring landlords across Oxford.
For example, Section 21 of the Housing Act 1988 introduced
legislation specifically designed to ease a supply crisis in the private rented
sector. The Section 21 Notice served to
give landlords confidence to invest in new properties as it introduced balance
to the legal rights of tenants and landlords and gave confidence to providers
of buy to let mortgages.
Over recent years lobby groups have ensured that the Section
21 Notice is referred to as a ‘no fault eviction’ and portrayed it as a tool
used by unscrupulous landlords to throw tenants out on the street for no reason
other than malice. In reality, both
parties are protected by a fixed-term contract which can be for any period up
to 3 years in length.
The white paper includes provisions to abolish the Section
21 legislation right in the middle of a supply crisis as significant as that experienced
in the 1980’s. It seems to me that axing
legislation introduced to ease a supply-crisis in the middle of a supply crisis
is not sensible.
But, the white paper goes further, enabling a tenant to end
a tenancy at any time with just 2-months’ notice, but restricting landlords to narrow
legally-defined reasons for termination.
I have always been taught that good legislation is balanced legislation –
the principle of reciprocal rights is embedded into every good contract. The white paper favours one group over
another, with some commentators suggesting the imbalance is so marked, that it
amounts to discrimination.
What many commentators are missing is the separate Minimum
Energy Efficiency Standards legislation which is running in parallel to the new
White Paper. Whilst details and dates remain
vague, it is expected that by 2025 PRS properties will have to have a minimum
EPC rating of C (currently a minimum of E is required). Where a property is incapable of achieving a C-rating,
landlords are expected to be required to invest a minimum of £10,000 on
improving the energy efficiency of their property before they will be
considered for an exemption. In Oxford,
that is roughly two-thirds of annual rent in many other parts of the UK it will
be a multiple of annual rent.
The legislative burden on landlords is now too great for
many and landlords are selling-up. The
white paper together with MEES legislation will accelerate the sale of rental
properties, worsening an already acute supply constraint.
The government is going too far too late and it has failed
to adequately consider the wider consequences of its populist policy paper.
