Renters' Rights Bill

Written evidence submitted by Maxine Fothergill, Managing Director of Amax Estates & Property Services, Trainer for London Landlords Accreditation Scheme, and Portfolio Landlord (RRB64)

Executive Summary

· Support for tenant rights and housing standards as proposed in the Renters' Rights Bill, with recommendations for a balanced approach to benefit both tenants and landlords.

· Concerns regarding the abolition of Section 21 without a reformed, efficient court process for landlords facing rent arrears or antisocial behaviour.

· Opposition to the increase in rent arrears threshold from two to three months, suggesting early mediation services to prevent unmanageable debt.

· Proposal to retain fixed-term tenancies, particularly important for stability in student rentals.

· Support for annual rent increases under Section 13 as a fair enhancement to existing legislation.

· Agreement on prohibiting discrimination and supporting pet accommodations, with balanced insurance provisions.

· Emphasis on proper assessment of damp and mould issues, distinguishing property defects from tenant lifestyle choices under Awaab’s Law.

· Recommendations to eliminate redundant landlord licensing schemes once the landlord database is implemented.

· Request for clearer guidance on mortgage access under Council of Mortgage Lenders' (CML) criteria and impact on buy-to-let lending, including accountability measures for the CML.

· Call for tax incentives to encourage new investment in the PRS following the Section 24 tax changes, which have led to reduced sector participation and a critical rental shortage.

Introduction

I am Maxine Fothergill, Managing Director of Amax Estates & Property Services, a trainer for the London Landlords Accreditation Scheme, and a portfolio landlord with over 25 years of experience. I am providing this submission based on my professional experience as both a landlord and an advocate for high standards in the private rental sector. I support many objectives of the Renters' Rights Bill but have identified key areas where further consideration is essential to ensure fair and balanced outcomes for all stakeholders.

Key Points and Recommendations

1. Abolition of Section 21

1.1 The abolition of Section 21 presents a significant shift in the landlord-tenant relationship, intended to eliminate "no-fault" evictions.

1.2 Recommendation: To support this change, a reformed court system with efficient, accessible processes is essential to enable landlords to regain possession in cases of rent arrears or antisocial behaviour. Introducing early mediation could also provide constructive support, keeping tenants housed while addressing disputes before escalation.

2. Increase in Rent Arrears Threshold

2.1 The proposal to increase the rent arrears threshold from two months to three months could exacerbate tenant debt, posing financial risks for both tenants and landlords.

2.2 Recommendation: Rather than increasing the threshold, I suggest implementing early intervention through mediation services to help tenants manage arrears without accumulating unmanageable debt.

3. Retention of Fixed-Term Tenancies

3.1 Transitioning to exclusively periodic tenancies may create instability for tenants and landlords alike, especially in student rentals, where predictable terms are vital for financial planning.

3.2 Recommendation: Retaining the option for fixed-term tenancies will provide stability, security, and mutual predictability, particularly important in student rental arrangements.

4. Section 13: Annual Rent Increases

4.1 The annual adjustment provision under Section 13 aligns with current practices and offers a fair approach to rental management.

4.2 Recommendation: Support the implementation of Section 13 for consistent, manageable rent adjustments, benefiting both tenants and landlords by aligning with market needs.

5. Prohibition on Rental Bidding Wars

5.1 While this prohibition aims to prevent unfair practices, I question the prevalence of rental bidding within the professional rental sector based on my 25 years of experience.

5.2 Recommendation: Evidence of the impact and frequency of bidding wars would provide a clearer understanding of this measure’s necessity.

6. Prohibition on Discrimination in the Rental Market

6.1 Prohibiting discrimination against tenants with children or those on benefits aligns with the values of fair access to housing.

6.2 Recommendation: Fully support these measures, which promote inclusivity and equal access to quality rental housing.

7. Allowance of Pets and Insurance Adjustments

7.1 The proposed changes to the Tenant Fees Act, allowing landlords to require pet insurance, strike a balance by accommodating tenant needs while protecting property interests.

7.2 Recommendation: Support amendments that allow for pet accommodations with fair insurance requirements, fostering a pet-friendly environment within responsible limits.

8. Awaab’s Law: Right to a Decent Home

8.1 Awaab’s Law rightly addresses tenant rights to live in homes free from structural damp and mould. However, it’s essential to differentiate between issues stemming from property defects and those related to tenant lifestyle choices.

8.2 Recommendation: Involve Environmental Health Officers (EHOs) in assessing damp-related claims to ensure fair determinations. This will protect landlords from exploitative claims while supporting genuine tenant grievances.

9. Landlord Database and Redress Schemes

9.1 The establishment of a landlord database is a positive move towards transparency, yet it raises questions regarding the necessity of additional licensing schemes.

9.2 Recommendation: With a comprehensive database, I see no need for selective or general licensing schemes, which could be redundant and financially burdensome for compliant landlords. I suggest these schemes be phased out within 12 months of full implementation of the database. Additionally, the lack of similar oversight for letting agents is concerning. Regulating agents to Level 3 qualifications as outlined by ARLA Propertymark would raise industry standards and protect landlords and tenants alike.

10. Impact of Section 24 Tax Changes, Council of Mortgage Lenders (CML) Accountability, and the Need for Incentives in the PRS

10.1 The introduction of Section 24 tax changes in 2019 has significantly affected the financial viability of the PRS, prompting many landlords to exit what was previously a thriving sector. The restrictions on mortgage interest relief have compounded this issue, leading to a drastic reduction in available rental properties and contributing to the current shortage, with an average of 24 people now applying for each available property.

10.2 Recommendation on Tax Incentives: To address this critical shortage, I recommend that the government introduce targeted tax incentives aimed at attracting new investment and supporting responsible landlords who wish to expand their portfolios. Such incentives could alleviate the strain on the PRS, stabilising the market by increasing rental property availability, thereby reducing homelessness and promoting housing affordability.

10.3 CML Accountability and Mandatory Landlord Training: The Council of Mortgage Lenders (CML) also plays a pivotal role in supporting a sustainable PRS. Given the high level of responsibility landlords hold for their properties-regardless of whether they use an agent-I believe the CML should require any new buy-to-let investor to complete a mandatory one-day training course, either online or face-to-face. This training would cover essential landlord responsibilities, compliance, and sector standards. Making such training a requirement for mortgage approval would foster responsible practices among landlords and help lenders ensure that their clients understand the obligations tied to property ownership. This step would create a more accountable, knowledgeable base of landlords, leading to sector improvements in a very short period.

11. Decent Homes Standard and Hazard Remediation

11.1 The "decent homes standard" and associated hazard remediation are positive steps that reinforce a landlord’s duty of care.

11.2 Recommendation: Support this measure, which will enhance housing quality across the PRS, aligning with responsible landlord practices.

12. Private Rented Sector Database and Enforcement

12.1 The PRS database and enforcement provisions signal a commitment to fair oversight. However, effective implementation will depend on adequate resources for local authorities.

12.2 Recommendation: Ensure sufficient funding and training for local authorities to enforce compliance consistently, benefiting all stakeholders.

Conclusion

The Renters' Rights Bill presents an opportunity to foster a more equitable and transparent PRS. However, without careful consideration, some provisions may have unintended consequences that deter investment, reduce rental stock, and place additional burdens on responsible landlords. My recommendations, outlined above, aim to achieve a balanced, fair approach that supports tenant protection while ensuring a viable rental market.

Summary of Recommendations

1. Establish a reformed court and mediation process post-Section 21 removal.

2. Implement early mediation services to manage arrears before escalating debt.

3. Retain fixed-term tenancy options, particularly in student rentals.

4. Support annual rent adjustments under Section 13.

5. Assess rental bidding practices to determine prevalence before enacting prohibitions.

6. Fully support prohibitions on discrimination.

7. Introduce pet-friendly accommodations with insurance protections.

8. Ensure EHO assessments under Awaab’s Law to distinguish structural issues from lifestyle factors.

9. Eliminate redundant licensing schemes within 12 months post-database implementation.

10. Introduce tax incentives to attract new PRS investment following Section 24 impacts.

11. Engage with the CML to ensure accessible buy-to-let financing and require training for new landlords.

12. Support "decent homes standards" and hazard remediation as positive measures.

13. Ensure adequate local authority resources for consistent enforcement of PRS regulations.

October 2024