I recently wrote that the long-gestating Renter Reform Bill finally introduced in Parliament back in May could be poorly timed, both in terms of its impact on tenants and landlords, and its political timing ahead of an election year. Since then, however, the Bill’s passage has stalled, with a second reading of the Bill not anticipated until Autumn at the earliest. Assuming the Bill does pass, it’s going to be a long journey, and likely won’t pass into law until at least 2024, if not 2025.
Might this perhaps give the government pause to consider the long-term impact of the Bill on tenants and landlords? Well, regarding the latter, there may be reason to consider whether the government is U-turning on the landlord vs tenant debate. It comes from a recent comment from the Conservative MP for Stratford-on-Avon, Nadhim Zahawi, when he met with the associate director of lettings agency Sheldon Bosley Knight, Nik Kyriacou, earlier this month. Within this meeting, Zahawi commented that while the purpose of the Renter Reform Bill was to “deal with rogue landlords,” he agreed that “at the same time we must listen to legitimate concerns.”
Upon reading this, like many others, I could not help but feel a strong degree of scepticism over this statement. Pledges are frequently made but seldom kept, and Zahawi’s comments followed on similar olive branches to the landlord sector made by Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, back in July, in which the housing secretary said that independent landlords are “vital” to ensuring a fair and functioning private rented sector.
Of course, such carrots have been offered before, and they understandably aren’t having a material impact on landlord sentiment. Indeed, findings published recently by research consultancy BVA-BDRC – in a study commissioned by the National Residential Landlords Association, found that landlords are now twice as likely to sell than buy. The results found that in Q2 2023, over one in 10 (12%) of landlords in England and Wales sold properties, compared with only 5% who bought properties during this same period. The research also found that over a third (37%) of landlords intend to reduce their portfolios over the coming year.
Managing a (housing) crisis and stakeholder expectations
It may well be that behind the scenes, the government is starting to change its tune on landlords, which would be an encouraging step forward if that is the case. But it certainly doesn’t seem to be the case. Heading into an election year, surely the government realises that the best way to capture voters, and particularly the increasing important young adult votes, is to deliver on actions with a material impact on their circumstances.
Gen Z and Millennials now collectively represent roughly 40% of the UK population, and the government’s actions are ostensibly about capturing their attention. Yet, most of the government’s headline plans for the housing market are either directed at regulatory adjustments like the Renter Reform Bill that simply readjust the lettings market in favour of tenants at the expense of landlords, or they are homeowner-led initiatives like leasehold reform which primarily only benefit existing homeowners.
Housing policy has always been important, and indeed central to the health of UK’s functional economy, but it has seemingly become increasingly challenging in recent years for meaningful action to be taken. The revolving door of housing ministers over the past decade (and six already in the past 12 months alone) is a sad testament to that, with the only outcome being half-baked plans that get dropped on an annual basis.
Propertymark CEO Nathan Emerson recently commented as such in their latest Housing Insight Report, in which he noted that “we continue to see an alarming disparity in the number of homes available to rent when compared with growing demand from prospective tenants, and that this mismatch in supply and demand is “putting pressure on rents with 6% of tenants per member branch falling into arrears doubling compared to February 2023.”
Between rising tenant arrears and landlords reducing their portfolios, the housing crisis for tenants is only going to get worse. More homes are desperately needed to increase supply and reduce average rents which have for some time not only been increasing but also strain against the affordability of many tenants. The latest Rental Index from HomeLet puts average rent increases across the UK at 10.4% on an annual basis through to July 2023, with that growth anticipated to continue.
Given that renting is now cheaper than mortgages for the first time in 13 years, it’s only going to result in, guess what, more people renting, and we all know what impact that will have. So why doesn’t the government seem to want to act on that?
Out of the long grass
The government needs to accept that there is an urgent need to address undersupply and incentivise the provision of homes in the private rented sector. Indeed, when commenting on landlord and tenant relationship back in July, Gove said that “it is vital that these relationships work for everyone, and that we strive to strike a balance for all.” Nonetheless, neglecting landlord concerns continues to harm the housing sector as a whole.
Housing policy should not be a bullet point on an electoral campaign. It’s a long-term project that will require cross-party collaboration in order to succeed. The housing sector is critical to the macroeconomy, with recent figures from Savills valuing UK housing at £5.4 trillion, and given its status, perhaps housing should be the domain of an cross-party group that won’t look at the issue in terms of electoral cycles and won’t be subject to an annual rotation of housing ministers.
By addressing landlord concerns and fostering collaboration, the housing sector can thrive and contribute even more significantly to the macroeconomy. Rather than a mere campaign promise, housing policy deserves a long-term commitment that transcends party lines, ensuring its success and stability. This approach will not only elevate the value of UK housing but also pave the way for a future where both landlords and tenants can thrive without being caught in a zero-sum game.
