If I had the magical power to make New Year’s resolutions on behalf of other people, I would ensure that Michael Gove determined to sort out conditions in the private rented sector and did something positive for both landlords and tenants to enjoy in 2022.
Specifically I’d like the still new(ish) Levelling Up & Housing Secretary of State to encourage and reward investment in improving the energy efficiency of older, colder and hard to heat rental properties.
Before anyone thinks I have totally gone off on a flight of fancy, I should remind readers that a long overdue White Paper on private rented housing is due to be published early in the New Year.
Without such information it’s hard to see how sensible and progressive policies can be developed and delivered
While it’s primary aim is to introduce some outstanding reforms of the sector – such as the abolition of Section 21 ‘no fault’ evictions and the introduction of Property MoTs – there is a good chance Mr Gove will also take the opportunity to tackle other issues. The 64,000 dollar question is ‘Which ones?’
What better way to demonstrate his ‘levelling up’ credentials than to sort out one of the largest conundrums facing the private rented sector, while at the same time making a massive step towards delivering on the Government’s climate change agenda and potentially recovering the Government’s lost reputation for Green investment.
Just before Christmas the Government’s spending watchdog, the National Audit Office (NAO) issued a pretty damning report of Mr Gove’s department and his predecessors, in terms of it’s inability to draw up and deliver coherent and impactful policies that benefit the private rented sector and protect its tenants in particular.
In fact Gareth Davies, head of the NAO, said about 13% of private rentals (approx 600,000 properties) have been classed as a serious threat to health and safety and that treating the injuries and conditions caused to private tenants through living in such squalid homes is costing the NHS £340 million a year.
The watchdog said its findings were “concerning” and added that the Department for Levelling Up, Housing and Communities did “not yet have a detailed plan to address the problems that renters face” and lacked understanding of the problems plaguing some private tenants, such as harassment and eviction.
With evictions returning to pre-pandemic levels, there is pressure on Mr Gove to take urgent action.
In recent years, the Department has made various regulatory changes including the banning of letting fees and introducing temporary protections from eviction during the COVID-19 pandemic.
But the way that private renting is regulated has meant the changes have not been effective in delivering fair outcomes for tenants.
There is also a postcode lottery in terms of compliance by landlords and enforcement by councils.
A clearer strategy is needed
To make matters worse, the Department lacks data showing where problems are occurring, which regulatory approaches work best, or what impact regulation is having on both landlords and vulnerable households.
Without such information it’s hard to see how sensible and progressive policies can be developed and delivered.
But it’s not just the NAO who are on Mr Gove’s case.
Ben Beadle, chief executive of the National Residential Landlords Association, said in response to the watchdog’s report that regulation needed to focus better on “rooting out criminal and rogue landlords who bring the sector into disrepute”.
He specifically called for a more strategic approach and criticised “a proliferation of initiatives such as licensing, banning orders and a rogue landlord database with little evidence to show they are working”.
So while Mr Gove, his political advisers and civil servants are putting the finishing touches to the White Paper, he would do well to keep the following matters in the forefront of his brain:
- Nearly one in five households in England live in the private rented sector, but this type of housing tends to be older, more difficult to insulate and to keep warm.
- The market is increasingly populated by low-income groups, benefit recipients and families, whose access to other housing options is severely limited.
- A majority of tenants say they have a good experience of renting, but a sizeable minority do not and they say it contributes to serious illnesses, financial issues and/or homelessness.
- On average, private tenants spend more of their income on housing costs (32%), compared with those living in their own properties (18%) or social housing (27%).
- The average cost of bringing a privately rented home up to EPC C standard is £7,646, according to the Government’s own figures.
- While landlords must pay for any changes to their property, they generally don't see the benefits of lower bills.
- Similarly due to a lack of long-term security and protections against eviction, tenants often lack the means or the incentive to invest in making improvements to their homes.
- Tens of thousands of households are made homeless every year following an eviction that was not their fault.
With energy costs spiralling and the ongoing security of gas supplies from Russia threatened by tensions in the Ukraine, private tenants are facing a particularly difficult set of challenges this Winter and they are struggling to keep their homes warm.
One obvious solution would be to incentivise landlords to invest in a major programme of improving the levels of insulation in their properties, whether this is installing new glazing and external doors or upgrading the type and thickness of insulation in walls and roof spaces.
Additionally tenants could be encouraged to do some of the smaller works, such as draughtproofing, on the proviso that any costs will be reimbursed.
For benefit claimants, they could be issued with vouchers, redeemable at DIY stores or building supply yards, to reduce or eliminate upfront costs.
The Government could also be more generous with the grants for installing heat pumps in residential properties, as well as deducting tax from any spending on energy efficiency works, for both landlords and tenants.
While tackling the above, a twin-track of complementary changes could see landlords incentivised to give longer letting periods and more security given to tenants so they are no longer in fear of being evicted at short notice, while they are also encouraged to put down roots in the areas where they live.
If Mr Gove managed to do this, he could deliver improvements in the quality and standard of life for private renters, as well as cutting the cost of NHS treatment and reducing the level of carbon emissions from private rentals.
It would also allow him to address the criticisms from the NAO, by setting out such changes in the context of a clear and target driven strategy for the rental sector.
Surely this would also be delivering a key objective of levelling up, although we’re all still a bit in the dark as to what the term actually means.