The latest political and legislative update for the private rented sector - Part 1
By Carl Agar
It’s that time again, a quick summary of the latest political movements and legislative updates that will impact on the private rented sector in the coming months.
This quarter there is a lot to talk about so the update will be split into two parts. Part one will cover covering the snap general election; the letting agent fees ban consultation and the HMO licensing consultation.
Perhaps the most important ‘movement’ of all is the snap general election. This essentially puts everything on hold as the government enters ‘Purdah’ - a period of time in which no government activity can take place until after the election. The immediate impact on any proposed legislation will be a delay of at least a few months. What we should see now is a variety of manifesto pledges looking to tackle elements of the PRS with a likely focus on longer term tenancies and rent controls.
What the snap election does mean is that things like the consultation on client money protection, the rent a room relief consolation and the consultation on sub letting will all happen after the election and could potentially be scrapped if a conservative government is the outcome. In contrast consultations have already commenced for both HMO licensing and the ban on letting agent fees, so whilst no decisions will be made until after the election, they are still likely to continue regardless of which party wins.
The letting agent fee ban consultation was announced in the Autumn 2016 statement and the consultation document was finally released last week just before Purdah. In short the government is giving consideration to a blanket ban on all fees including any charged by landlords or other third parties which relate to a letting. Consideration is also being given to capping deposits and enabling tenants to pay deposits in instalments.
My personal view on this is that a ban of some kind will come into force - and I think that’s been made clear by the chancellor on more than one occasion. The only positives I can take from the consultation is that it does appear some consideration is being given to non-refundable holding deposits for tenants withdrawing from properties and in tenancy management service charges as a result of tenancy behaviour such as tenant damage or late payment charges. We can only hope that a sensible outcome is achieved which does include the aforementioned exemptions, but also other exemptions for such things as referencing fees or a cap on application fees.
Looking at the HMO licensing consultation this is continuing to move forward, some measures were brought up by respondents in which the government is giving further consideration to. One key consideration is if the fit and proper person check should be made mandatory.
My personal view is that this will cause a massive backlog on the processing of licensing to an already clunking and cumbersome process. The general proposed changes are looking at remove the number of storeys that qualifies a property as a HMO, to extend mandatory licensing to flats above and below business premises and setting a minimum room size to 6.52 sqm. This was meant to come into effect in October 2017 but we will need to wait until after the election to see what happens here.