The New Tenant-Landlord Partnership
Successive Governments have taken a piece-meal view of Housing, especially the Private Rented Sector (PRS).
iHowz are firmly of the view that this new Government has a perfect opportunity to take a holistic view, across all the different departments.
We therefore call upon Government to create a Housing Mission Delivery Board to ensure the following departments work together to bring a basic requirement of a roof over their head to many people:
- Ministry of Housing, Communities and Local Government (MHCLG):
- HM Treasury
- Ministry of Justice (MOJ)
- Department for Energy Security & Net Zero
- Home Office
- Department for Work and Pensions (DWP)
- Department of Health and Social Care (DHSC)
- Department for Business and Trade (DBT)
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We also ask for a review of the tax regime as this is contributing to loss of rental supply.
Key facts
- The PRS directly supports over 390,000 jobs across the UK[1]
- Almost a fifth of UK homes are privately rented[2]
- The total economic contribution of small and medium landlords in the PRS is £45bn[3]
- It is estimated for the past tax years these figures are £10-12bn:
- Income Tax on Rental Income: £5 bn
- Capital Gains Tax: £2 bn
- Stamp Duty Land Tax: £3 bn
- ATE): £500 million
- The supply of rental properties has decreased significantly, with 42% fewer rental properties available in June 2024 compared to June 2016. This shortage is a major driver of rising rents.[4]
- The latest English Housing Survey[5] found that private renters had lived in their home for 4.3 years on average. This is up from 4.1 years recorded in the 2017/18 Survey and 3.9 years in the 2016/17 report.
- In 2022-23, 77% of tenancies were ended by the tenant[6]
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1 – National Standard for All Rental Properties:
Implementing a national standard for all residential rental properties; private, social, and council.
We welcome the suggestion that there must be a stated standard for all non-commercial rental properties, but this must apply to all non-commercial rental property, regardless of ownership.
We believe the current Decent Homes Standard is too vague to be of much use. Unless and until a new Decent Homes Standard is proposed, we cannot support carte-blanche adherence to an unknown Standard.
If a new standard is introduced, coupled with landlord registration, widescale licensing schemes would no longer be required.
Should it be found that wholesale Licensing is necessary, we recommend the excellent scheme in Southampton City be looked at. We can provide more details if necessary.
2 – Register for All Rental Properties:
Drawing on the success of the two existing Agent Redress Schemes[7], we question the need to start another scheme, when there are two schemes with proven track records, thus reducing the risk of a new scheme.
If a tenant’s complaint against a landlord is not upheld and proves to be vexatious, there should be a financial penalty against the tenant, in the same way as there would be against the landlord.
We call for each property to be accessed via the Portal using the Unique Property Reference Number (UPRN)[8]and to include:
- EPC (already a public document) *
- Gas Certificate (CP12) *
- Electrical test Certificate (EICR)
- Licensing documents*
- Proof of title
* where required
Registration for these schemes should be central and to be publicly searchable for a prosecuted landlord or agent.
3 – Training for Landlords and Tenants:
All landlords should be encouraged to undertake training courses.
Landlords operating their own portfolios should be required to undertake recognised professional accreditation training and CPD (Continuing Professional Development).
Additionally, tenants should be encouraged to take tenant training and accreditation.
It would provide tenants with education about the housing system in the country, they would better understand their rights and responsibilities (e.g. mould – what causes it, what should your landlord do to prevent it, what should you (the tenant) do to avoid it).
Tenant accreditation could be coupled with a tenant card system, covering the Right-to-Rent check and tenant referencing. It would provide tenants with a photo identity document which would be very helpful for those without a driving licence or passport.
This would also shorten the time needed to complete pre-tenancy checks and get the tenant moved into their property faster. Tenants would get a tenancy accreditation handbook to refer to afterwards which could be updated regularly like the ‘How to Rent’ guide.
- All landlords should be encouraged to undertake training courses.
- Landlords operating their own portfolios should be required to undertake recognised professional accreditation training and CPD.
- Tenants should be encouraged to tenant training and accreditation, to allow them to understand their rights and responsibilities.
4 – Streamline Process for rent arrears:
Allowing landlords to regain their property from non-rent paying tenants within a specified period without court involvement.
This process would mirror the current Section 21 accelerated procedure, where good proof of rent arrears is provided, and there is no opposition from the tenant.
5 – Enhanced Tenant Protections:
Adopting enhanced tenant protections when landlords use No Reason Given Eviction.
Amend Section 8 to allow for a no fault given possession notice, subject to:
- A sliding scale of notice depending on the length of tenancy.
- The last two months of the tenancy to be rent-free.
6 – Digitisation of the Court System:
Accelerating the digitisation of the court system, setting up specialist Housing Courts and more use of the First Tier Tribunal (FTT).
However, we urge more phased resources be put into the FTT before it becomes bogged down, as the court system is now
7 – Business Status for Landlords:
Landlords operating their own property portfolios are treated as an ‘activity’ for taxation purposes, whereas agents doing similar are treated as a business.
8 – Appropriate Taxation for Landlords:
Over the years landlords have had various relief removed whilst being required to pay higher rates of taxation than other activities/businesses.
For example, when a private landlord sells an investment property and invests the capital into another property, they have to pay Capital Gains Tax (CGT) with no indexation or tapering, reducing the capital available to re-invest.
Landlords should be allowed to roll-over the Capital Gains Tax (CGT) tax.
Landlords should not be required to pay a surcharge on normal capital gains. Similarly, they should not be required to pay an additional Stamp Duty on each additional property purchased.
Interest payments on mortgages for rental properties should be treated as a fully allowable expense when calculating a landlord’s taxable income, as they were prior to 2017.
9 – Tax Relief for Housing Homeless People:
Letting to a Homeless person offers more challenges than letting to an employed person. There are many reasons for this, including no background; cash; lack of references.
Providing a tenancy to a homeless person offers a route to employment and is significantly cheaper than the alternatives.
Landlords housing homeless people should be granted 12 months tax relief in respect of that let.
Additionally, landlords charging at or below the LHA rate should enjoy a 50% tax discount in respect of that let.
10 – Review of Local Housing Allowance (LHA):
LHA’s were introduced to streamline benefit payments, whereby landlords and tenants alike would know the rate they would be paid, rather than the previous claim by claim approach.
Originally (2008) set as the average of local rents (50th percentile or median), they were dropped to be the 30th percentile in 2011. Then in 2012 they were capped, rising annually by the Consumer Price Index (CPI). Finally, in 2015, all LHA rates were frozen for 5 years; then frozen again in 2020, though some high-cost areas receive a 3% uplift in LHA rates.
Whilst many landlords try to accommodate tenants at the LHA rates, their costs are rising, and it is proving difficult for landlords and tenants alike to manage under this regime.
Additionally, many landlords letting to tenants on Universal Credit frequently report problems with the system.
We recommend to re-instate the link of Local Housing Allowance to CPIH, and to review the Universal Credit system.
11 – Building Affordable Housing:
Successive Governments have made the housing situation worse by not building enough houses in general, and specifically affordable/social/council housing; then complain when private landlords step up to fill the shortfall – at the private landlords’ expense and risk.
Currently, affordable is defined as ‘Homes let at least 20% below local market rents (affordable rental properties) or let at rates set between market rents and social rents (intermediate rental properties).[9] Even with this definition, rents are frequently unaffordable for many tenants.
The Government needs to strongly encourage the building of genuinely affordable housing.
Affordable Housing needs to be redefined as a maximum of 30% of the average local salary.
12 – Public Access to Rogue Landlord Registers:
There are landlords who don’t fully comply with rules and regulations. This might be due to a misunderstanding of the complexity of letting, in which case all landlords should be trained (as mentioned above).
Unfortunately, there are landlords who choose not to follow rules and regulations, even if they know, fortunately they are in a minority. The Government chooses to call these miscreants ‘Rogues’, we prefer to call them ‘Criminal’.
A database of rogue landlords and property agents was started in 2018 but is maintained, and only available to Local Authorities. We are given to understand that it is virtually empty.
Rogue Landlord / Agent Registers must be made public as should public access to local authorities’ investigations and enforcement on the PRS and social housing.
13 – Tenant Exchange Register (TER):
Government should introduce a ‘Tenant Exchange Register’ (TER) for tenants who want to leave a fixed term early.
It would work in a similar way to the Council House exchange register[10] and would go some way towards meeting tenant associations concerns about fixed terms. Landlords already have a duty to help a tenant in this scenario but the TER would be a much higher profile and clearer way to help a current tenant move on if they need to and it would also be a significant new avenue for prospective tenants to find a new rental property/room.
Government should set up a Tenant Exchange Register (TER), similar in manner to the Council House exchange register to provide a clear way to help a current tenant move on if they need to and it would also be a significant new avenue for prospective tenants to find a new rental property/room.
14 – All agreements to be in writing.
It is surprising how many agreements are oral, and almost always cause problems in court. The Law Society tried to bring this in over 20 years ago, but the Government of the day were not convinced to implement it.
15 – Awaab’s Law/Decent Homes:
We agree that all property, whether rented or not, should have minimal danger from mould arising from damp/condensation. However, we question the attitude of always blaming the landlord.
We call for a revised Decent Homes Standard, covering all rental property alike, whether private, social, or council. This would then make it easier for landlords and councils alike to fully understand their responsibilities.
We hope the new Decent Homes Standard will make it clear how to avoid damp from external factors and how to minimise condensation, but it should also make clear that tenants have to take responsibility to use the supplied facilities correctly.
16 – Updates:
We call for the publication of updates on:
- HHSRS (Housing, Health, and Safety Rating System)
- EPC methodology (Energy Performance Certificate)
- MEES (Minimum Energy Efficiency Standard)
- Decent Homes Standard
This would ensure landlords are aware of the requirements from them, and plan accordingly.
17 – Standards/licensing:
Licensing in its many forms has cost landlords’ large sums of money for little benefit for tenants and inconsistent reporting of outcomes. Additionally, the cost of licensing puts upward pressure on rents.
Although all discretionary schemes were designed for a fixed period, very many Local Authorities have renewed them and clearly see them as an income producer.
If the national rental property standard (referred to earlier) were introduced, licensing would be unnecessary, apart from the original reason – to control the small number of poorly managed properties.
Additionally, the introduction of a Redress Scheme (similar to the current agents’ scheme[11]) would further negate the need for licensing, where tenants should be made to pay a small application fee, which would be fully refundable if their complaint were upheld; this would help to minimise possible vexatious claims made.
The formation of a property register for all landlords with a Redress Scheme for complaints by tenants (with refundable fee) as an alternative to Licensing.
We recommend the excellent licensing scheme in Southampton City be looked at.
18 – Section 8 notice:
A new ground (reason) be introduced to Section 8 to allow a no fault-given eviction. If used, the tenant would be eligible for the last two months rent free as compensation.
We also call for additional grounds to Section 8 to allow for eviction where the tenant does not allow access for seven identified solid reasons for access.[12]
19 – Rent increases:
Use of a proven process, the Section 13 notice, and use of the First Tier Tribunal (FTT) is sensible to continue.
However, we urge more phased resources be put into the FTT before it becomes bogged down, as the court system is now.
20: Retain Fixed Term Tenancies:
To enable tenants and landlords alike to have clarity and security of tenure we urge that the current system of allowing Fixed Term Tenancies be retained.
There are frequent occasions where the tenant requires security of remaining in a property for a period of time, if their children are in education for instance.
It is also critical for letting to students in full-time tertiary education that both landlords and tenants are aware existing tenants will be leaving at the stated time to allow the next student tenants to take occupation.
Students are under enough pressure at the commencement of a new term without the worry previous tenants might not vacate.
In the same light, landlords need to be sure their tenants will remain in place for the stated period and not leave early. Unlike other lets, it is extremely difficult to fill a student vacancy part-way through the period. Additionally, a student giving notice in a joint and several tenancy gives notice for all. The remaining student tenants do not want this possibility.
[1] Economic Contribution of the Private Rented Sector – pwc. Published by Paragon and NRLA
[2] https://www.uswitch.com/mortgages/buy-to-let-statistics/private-rental-statistics/
[3] Economic Contribution of the Private Rented Sector – pwc. Published by Paragon and NRLA
[4] https://www.hamptons.co.uk/articles/buy-to-let-purchases-fall-to-record-low#/
[5] https://www.gov.uk/government/collections/english-housing-survey
[6] https://www.gov.uk/government/statistics/english-housing-survey-2021-to-2022-private-rented-sector/english-housing-survey-2021-to-2022-private-rented-sector
[7] https://www.gov.uk/redress-scheme-estate-agencies
[8] https://uprn.uk/
[9] https://www.gov.uk/government/publications/new-homes-fact-sheet-9-what-is-affordable-housing/fact-sheet-9-what-is-affordable-housing
[10] https://www.houseexchange.org.uk/advice/help/looking-to-join-house-exchange/
[11] https://www.gov.uk/redress-scheme-estate-agencies
[12] https://www.landlordlawblog.co.uk/2024/08/24/seven-reasons-why-landlords-should-be-entitled-to-evict-tenants-who-refuse-access-for-inspections-and-repairs/?inf_contact_key=faba0413e03599709144ea2b23a2ccd1680f8914173f9191b1c0223e68310bb1