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The changing nature of the private rented sector

The private rented sector (PRS) has overtaken social housing and is now the UK’s second largest tenure after owner occupation. The English Housing Survey (EHS, January 2019) reports that the number of households in the sector has remained unchanged at around 19/20% (4.5 million) over the last five years. Growth in the sector has been replicated across the UK. Difficulties in accessing home ownership and social rented housing mean that the PRS is now viewed as a longer-term housing option. A 2012 report by the Joseph Rowntree Foundation, Housing options and solutions for young people in 2020, predicted that the PRS will house 37% of all young people in the UK by 2020.

A greater focus on the private rented sector

The expansion of the PRS has resulted in greater focus on conditions in the sector. There have been, and continue to be, calls for improved regulation of letting and managing agents, particularly in relation to fees and charges. Shelter, for example, has argued for tenants’ rights to be strengthened to provide a greater degree of security of tenure and to protect tenants who request repairs to their homes. In response, landlord organisations point to the ‘burden’ of existing regulation and argue that more regulation in the form of registration schemes will be ineffective in identifying and tackling the worst offenders.

Devolved administrations: divergent approaches

Housing is a devolved matter. Scotland and Wales have introduced legislation to implement a new framework for the sector – both have introduced comprehensive landlord registration schemes. Scotland acted to abolish additional fees and charges by letting agents and the Private Housing (Tenancies) (Scotland) Act 2016 has introduced a new form of PRS tenancy under which there is no ‘no-fault‘ ground for possession available to landlords. The Renting Homes (Fees etc.) (Wales) Bill, when it has completed its stages and is in force, will prohibit certain payments made in connection with the granting, renewal or continuance of standard occupation contracts. The Renting Homes (Wales) Act 2016 will replace the existing regime of residential tenancies when fully commenced.

In England, the Coalition Government adopted a less interventionist position on the basis that additional regulation would increase the burden on reputable landlords, with the risk that additional costs would be passed on to tenants. However, measures have been introduced to increase transparency around letting agent fees and, in the Housing and Planning Act 2016, to strengthen the sanctions available to tackle ‘rogue’ landlords. An appetite for further intervention has been demonstrated more recently. The Tenant Fees Act 2019 will abolish most upfront fees for prospective tenants in England after 1 June 2019 and will cap security deposits. A new requirement to licence certain smaller houses in multiple occupation (HMOs), together with minimum room sizes in HMOs, was introduced on 1 October 2018. There are further plans to regulate letting agents and to require landlords to be members of a redress scheme. On 15 April 2019, the Government said it would “put an end to ‘no-fault’ evictions by repealing section 21 of the Housing Act 1988.”

Housing is also devolved to Northern Ireland. Several mechanisms have been introduced in recent years to improve the regulation of the PRS including a mandatory Landlord Registration Scheme and Tenancy Deposit Scheme. A new licensing regime for Houses in Multiple Occupation comes into operation on 1 April 2019. Other changes include a new free landlord advice helpline designed to help landlords comply with their legal duties and to promote good practice. However, there has been comparatively less legislative activity in relation to the PRS in Northern Ireland than the rest of the UK in recent years. In January 2017 the Department for Communities (DfC) published Private Rented Sector in Northern Ireland – Proposals for Change, which contained proposals to introduce a range of changes including a new regulatory framework for letting agents, a ban on letting agent fees, and limiting rent increases to once in any 12-month period. None of these proposals have been actioned. Given the current political situation, further major legislative reform of the PRS may be dependent upon the restoration of the NI Assembly.

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