The Regulation of Private Renting Report and What it Could Mean for the PRS
The Regulation of Private Renting report was published recently by the Public Accounts Committee. Here we will look at what is in the report and at what it could mean for the private rented sector.
What is the Regulation of Private Renting Report?
The Regulation of Private Renting report is a report by the Public Accounts Committee.
The report builds on an earlier report with the same name by the National Audit Office.
The Public Accounts Committee is a Commons Select Committee which examines the value for money of Government projects, programmes and service delivery. Drawing on the work of the National Audit Office the Committee holds government officials to account for the economy, efficiency and effectiveness of public spending.
The Regulation of Private Renting report is not a report on the private rental market as such. The report looks at the function of the Department for Levelling Up, Housing and Communities (DLUHC) in regulating the private rented sector or PRS in England.
The function of the Department for Levelling Up, Housing & Communities includes a responsibility to ensure that the private rented sector is fair for tenants and that they are protected from harm. It creates policies and legislation that are used to regulate the sector.
In preparing the report the committee questioned rental sector stakeholders and senior officials at DLUHC on the extent to which regulation of private renting in England is fair for renters.
Access our selection of exclusive, high-yielding, off-market property deals and a personal consultant to guide you through your options.
Background to the Regulation of Private Renting Report
The Regulation of Private Renting report was conducted to address concerns that the regulation of the private rented sector is not as effective as it might be.
The report acknowledges that the PRS has doubled in the past 20 years, now covers around 4.4 million households, and faces a number of challenges. The report says that private tenants spend more of their income on housing than other groups, are increasingly lower-income groups, sometimes have limited housing options and often lack security in their tenancies. It says that while most tenants have a good experience of renting some do not and this can contribute to serious illness, financial issues or homelessness. It suggests that a notable proportion of privately rented properties suffer defects and hazards.
The report points out that regulation of the private rented sector is a complex issue as it is covered by so many different laws some of which date back decades. It adds that both the DLHUC and local authorities are responsible for this legislation and issues such as licensing but sometimes lack a clear understanding of their duties, while funding shortages make enforcement of the relevant laws patchy. It adds that tenants are often left to their own devices when it comes to enforcing their rights, and frequently lack knowledge of what rights they have.
The report examines the extent to which the regulation of private renting in England supports the Department’s aim to ensure the sector is fair for renters and makes recommendations for ways in which it can be improved.
Conclusions and Recommendations
The Regulation of Private Renting report made a number of key conclusions in several areas together with recommendations for improvements as follows:
It is too difficult for renters to realise their legal right to a safe and secure home.
It recommended that the Department should better support renters to understand what their rights are and improve renters’ ability to exercise their rights by learning from complaints and redress mechanisms used in other consumer markets.
Local authorities do not have the capacity and capability to ensure an appropriate level of protection for private renters.
It recommended that the Department should conduct a realistic assessment of the resources needed for local authorities to regulate effectively.
The Department is not doing enough to support local authorities to regulate effectively.
It recommended that the Department should take a more proactive approach to support local regulators and share good practices.
Local authorities are constrained by the Department’s approach to licensing landlords.
It recommended that the Department should assess whether current arrangements for licensing schemes are working and whether alternative arrangements may be more efficient and effective.
The Department lacks good enough data to understand the nature and extent of problems renters face.
It recommended that the Department should develop a coherent data strategy to identify and collect the data it needs to understand the issues and problems.
The Department’s forthcoming White Paper offers an opportunity for significant improvement to the private rented sector.
It recommended that as part of its planned reforms, the Department should ensure it has a full understanding of the cumulative impact of proposed changes on tenants, landlords and the housing market as a whole.
The Public Accounts Committee summarised their report as follows:
‘The private rented sector in England has doubled in size in the last 20 years and now houses 11 million people. However, the sector is failing far too often to provide safe and secure homes for renters, with 13% (589,000) of privately rented properties currently posing a serious threat to the health and safety of renters, costing the NHS an estimated £340 million each year. Tenants are unable to realise their right to a safe and secure home due to an inaccessible and complex regulatory framework and the threat of retaliatory eviction.
‘Regulation by local authorities is under capacity and not providing appropriate and consistent protection for tenants. The sector is a postcode lottery of local authority enforcement, with 21% of all privately rented homes in one region estimated to be severely unsafe. The Department for Levelling Up, Housing and Communities (the Department) does not know what base level of resource local authorities need to ensure landlords comply with legal minimum standards, and it is not proactive enough in supporting them to regulate effectively.
‘Despite these systemic issues, the Department has only made piecemeal legislative changes in recent years, and in doing so has made the regulatory system even more overly complex and difficult to navigate for tenants, landlords and local authorities. It intends to address problems within the sector with a planned White Paper later in the year. However, to do so it will need better data to understand issues within the sector and to evaluate the impact of legislative changes on landlords, tenants, the housing market as a whole and the effectiveness of regulation.’
What It Could Mean for the PRS
In publishing the report the Public Accounts Committee gave the Government two months to respond.
The Regulation of Private Renting report does not necessarily mean that there will be any changes in the laws that affect the PRS as it stands. The report is not a law or a proposal for a law.
However, the Regulation of Private Renting report is likely to be considered when new future laws that affect the PRS are being developed. These laws could impact landlords, letting agents, tenants and their tenancies, and the actions of government departments and local authorities.
It is possible that some of the findings of the Regulation of Private Renting report will be used to help shape a White Paper and potentially a future Renters’ Reform Bill. This could be published later in 2022.