18 Jun 24

Guest article from iHowz

The iHowz™ Landlord Association submits this paper as manifesto proposals for the 2024 general election, advocating for substantial reforms in the private rented sector (PRS). These recommendations aim to create a balanced, fair, and efficient rental market that benefits both landlords and tenants.

Summary of Recommendations

iHowz™ proposes the following key recommendations:

1 – National Standard for All Rental Properties: Implementing a national standard for residential rental properties, including private, social, and council housing.

2 – Register for All Rental Properties: Establishing a register for all rental properties with a Redress Scheme to ensure accountability.

3 – Training for Landlords and Tenants: Encouraging both landlords and tenants to undertake relevant training courses.

4 – Streamlined Eviction Processes: Allowing landlords to evict unsuitable or non-rent paying tenants within a specified period without court involvement.

5 – Enhanced Tenant Protections: Adopting enhanced tenant protections when landlords use No Reason Eviction.

6 – Digitization of the Court System: Accelerating the digitization of the court system and setting up specialist Housing Courts.

7 – Business Status for Landlords: Recognizing landlords who manage their own portfolios as businesses.

8 – Fair Taxation for Landlords: Taxing landlords similarly to other investors and self-employed businesses.

9 – Tax Relief for Housing Homeless People: Granting 12 months tax relief to landlords housing homeless individuals.

10 – Review of Local Housing Allowance: Reinstating the link between Local Housing Allowance and CPIH, and reviewing the Universal Credit system.

11 – Building Affordable Housing: Enabling the construction of genuinely affordable housing.

12 – Public Access to Rogue Landlord RegistersMaking Rogue Landlord and Agent Registers publicly accessible along with local authority investigations and enforcement outcomes.

13 – Tenant Exchange Register: Setting up a Tenant Exchange Register similar to the Council House exchange register.

14 – Tenant Rent History for Credit Scoring: Ensuring tenant rent history is considered for credit scoring.

Principal Proposal: A Comprehensive Review

iHowz advocates for a comprehensive ‘root and branch’ review of the current rental system, proposing the ‘Tenant Landlord Partnership Bill’. This review aims to address the significant issues within the PRS and avoid mere superficial changes.

Background

The Rent Act of 1977 provided tenants with security of tenure but led to a decline in rental properties. Subsequent legislative measures, such as the Landlord and Tenant Acts of 1985 and 1988, and the Housing Act 1996, established a more balanced framework. However, the PRS has evolved, necessitating a comprehensive review to address current challenges.

Main Points for Consideration and Recommended Solutions

For Tenants:

  • Security of Tenure: Ensuring tenants have secure tenure while adhering to contract agreements, with compensation for No Reason Evictions.
  • Property Standards: Guaranteeing that rental properties meet appropriate standards.

For Landlords:

  • Referencing and Credit Checks: Ensuring thorough referencing and credit checks before offering a property.
  • Access for Maintenance and Certification: Allowing landlords access for necessary inspections and certifications.
  • Eviction for Anti-Social Behaviour: Enabling swift eviction of tenants engaging in anti-social behaviour.
  • Eviction for Rent Arrears: Allowing eviction for rent arrears without court involvement.
  • Recovery of Abandoned Property: Expediting the recovery process for abandoned properties.
  • Possession for Legitimate Reasons: Providing possession for personal circumstances, refurbishment, or sale.
  • Tax Treatment: Treating landlords as businesses for tax purposes.
  • Support for Energy Efficiency Improvements: Offering financial support and planning relaxation for energy efficiency improvements.
iHowz Recommendations
Property Conditions

The current review of HHSRS being conducted by the DLUHC (Dept for Levelling Up, Housing and Communities) must be reported on, and it should include a full review of the Decent Home Standard[9], which should relate to both the PRS and Social Housing.

Additionally, the review of EPC’s and the Minimum Energy Efficiency Standard (MEES) conducted by BEIS (Dept for Business, Energy and Industrial Strategy) must be reported on, giving Clarity and funding for Green Transition and retrofit of PRS stock, including skilled workers.

A national standard should be set for the condition of all rental property at the time a property is on the market and let.  Proof of this should be in the form of a Rental Safety Certificate.

This Rental Safety Certificate would link to all required documentation:

  • Gas Inspection Report (CP12)
  • EPC
  • Electrical Certificate

It would be accessed by the Unique Property Reference Number (UPRN). Currently, the EPC is a public document, accessed by anyone; we believe the electrical and gas certificates should also be publicly available.

Additionally, a report on the property condition (probably an HHSRS report) should be available for all rental property. Any Category 1 matters would have to rectified, and a new property condition report issued before renting the property. This condition report would need to be valid when renting a new property but would not require renewing during an existing tenancy.

It would then not be necessary for all rental property to be inspected under national [LA] licensing.

Recommendation 1

A national standard should be agreed for the rental property, including clearly defined energy requirements.

Against that standard, tenants should have the right to report breaches to the Local Authority.

Proof of compliance with the standard would be in the form of Rental Safety Certificate.

Tenants have inherent security of tenure, and they should not be in fear of eviction if they report unsatisfactory conditions, as the Deregulation Act 2015 prevents retaliatory evictions.

Licensing vs Redress Scheme vs Landlords Register

Licensing in its many forms has cost landlords’ large sums of money for little benefit and inconsistent reporting of outcomes.

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[10]) 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 minimise the inevitable vexatious claims made.

Recommendation 2

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.

Training

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.

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 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.

Recommendation 3

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.

Eviction for Rent Arrears

If a Landlord serves a Section 8 eviction notice for provable rent arrears, and the tenant refuses to leave it is currently necessary to hold a full court hearing.

All too frequently these hearings are not attended by the tenant to hear judgement made against them.

This is a waste of the courts, and the landlords time and money.

If the rent arrears are more than the appropriate amount (currently 2 months), and are fully provable, there should be no need for a court hearing if the arrears are un-opposed.

Recommendation 4

To give landlords the ability to evict unsuitable/non-rent paying tenants, within a time period without the need to attend court.

Proposed removal of the Section 21

iHowz has separately proposed that the last two months’ tenure being RENT FREE.

The rationale behind this radical proposal is as follows:

  • The rent which would have been paid to the Landlord would cover:
    • The rent in advance and/or deposit at the new Property.
    • Any costs of removal.
    • It would follow that the tenant’s deposit would be returned at the end of the tenancy.
  • This removes the fear of eviction, as all tenants will be safe in the knowledge that their costs of moving, and out of pocket expenses, are underwritten by their landlord in the event a Section 21 notice is served.

By adopting this particular radical proposal, and avoiding the abolition of Section 21, it would avoid the necessity for landlords to make an application to Court in the event they wish to sell their Property; thus, saving much Court time, expense, and anxiety for the tenant. It would, of course, continue to provide the much needed safety mechanism of Section 21 evictions in the event of abhorrent ASB.

Recommendation 5

The recommendations, proposing enhanced tenant protections be adopted when the landlord wishes to use a No Reason Eviction that the last two months be rent free.
This should only be required for Anti-Social Behaviour affecting other tenants, and/or neighbours.

Review of the Court System

The courts are clogged up[11] resulting in long delays for justice.  If the previous demands to move to only using Section 8 eviction notices are brought in, all current evictions not requiring a court hearing will worsen the situation.

This is exasperated by judges being expected to have detailed knowledge of many disciplines, including housing.

iHowz therefore suggest urgent considerations are given to specialist Housing Courts, and that the digitisation of the whole court system be expedited.

Recommendation 6

Urgent progress on digitisation of the court system, including purchasing property. Specialist Housing Courts be set up.

Landlords as a Business

Landlords operating their own property portfolios are treated as an ‘activity’ for taxation purposes, whereas agents doing similar are treated as a business.

Recommendation 7

Landlords who operate their own portfolios should be given business status.

Taxation

Over the years landlords have had various relief removed whist 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.

Recommendation 8

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 2016.

Landlords Letting to the Homeless

Letting to 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.

Recommendation 9

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.

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 the 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.

Recommendation 10

Re-instate the link of Local Housing Allowance to CPIH. 

Review the Universal Credit system.

Housing Crisis

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).[12]  Even with this definition, rents are frequently unaffordable for many tenants.

Recommendation 11

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.

Miscreant landlords

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 chose 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.

Recommendation 12

Rogue Landlord / Agent Registers made public as should public access to local authorities’ investigations and enforcement on the PRS and social housing.

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[13] 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 more high profile and 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.

Recommendation 13

Government to set up a Tenant Exchange Register (TER), similar in manner to 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.

Tenant Rent History.

Whilst a credit check will pick up any legal action against a tenant for rent arrears, it will not be aware where a landlord has perceived legal action would be a waste of time.

Recommendation 14

We call for a central register where landlords can place a provable record of rent arrears, where pursued through the courts or not.

Housing Minister

A general election can only mean one thing: a new Government, and almost certainly, a new Housing Minister.  Each incoming Housing Minister is keen to leave their mark, but as a landlord association, we urge the following:

  1. Continuity: The role of Housing Minister should have stability, ideally remaining unchanged for the duration of the Parliament. Since 2010, there have been 16 Housing Ministers, a turnover rate that undermines the position’s importance.
  2. Housing Knowledge: While expertise in housing for a new minister is beneficial, it is secondary to the need for continuity.
  3. Pragmatic Changes: Despite the last significant overhaul of the Private Rented Sector (PRS) occurring in 1988, with a notable Act in 2004, we implore that the new minister avoids unnecessary changes driven by personal ambition.  Currently, landlords navigate over 170 pieces of legislation, and many Local Authorities lack the resources to enforce them adequately.
Future Legislation.

It is true that the market has changed substantially since 1985, some legislative updates are necessary, particularly to address ambiguous language in older laws. Future legislation should rest on three principles:

1 – PRS housing is the tenants’ home.

2 – PRS is a business for landlords, crucial for their livelihood.

3 – Legislation must be fair, proportionate, and explicit.

Conclusion

iHowz concludes that PRS legislation requires a comprehensive review and are always happy and willing to participate in this.

[1] iHowz Landlord Association have been in existence, in one form or another, since 1974; based in the Southeast, it supports landlords over the country.

[2] https://www.houseexchange.org.uk/advice/help/looking-to-join-house-exchange/

[3] https://www.legislation.gov.uk/ukpga/1977/42/body

[4] https://www.legislation.gov.uk/ukpga/1985/70/contents

[5] https://www.legislation.gov.uk/ukpga/1988/26/contents

[6] https://www.ft.com/content/f5785194-cc7c-11e3-9b5f-00144feabdc0#axzz3RMMoNLND

[7] https://www.thisismoney.co.uk/money/mortgageshome/article-3260218/Number-households-renting-private-landlords-hits-30-year-high-home-ownership-drops-levels-seen-1985.html

[8] https://england.shelter.org.uk/media/press_release/274000_people_in_england_are_homeless_with_thousands_more_likely_to_lose_their_homes#:~:text=More%20than%20274%2C000%20people%20are,are%20currently%20without%20a%20home.

[9] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/7812/138355.pdf

[10] https://www.gov.uk/redress-scheme-estate-agencies

[11] https://news.sky.com/story/should-courts-sit-24-7-for-protest-hearings-and-will-it-tackle-the-backlog-13061672#:~:text=’Courts%20in%20chaos’&text=A%20mixture%20of%20COVID%2C%20strikes,around%2040%2C000%20before%20the%20pandemic.

[12] https://www.gov.uk/government/publications/new-homes-fact-sheet-9-what-is-affordable-housing/fact-sheet-9-what-is-affordable-housing

[13] [13] https://www.houseexchange.org.uk/advice/help/looking-to-join-house-exchange/

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