A Labour Government - What does it mean for the Private Rented Sector?

In its pre-election manifesto the Labour Party pledged to overhaul the private rented sector, stating:

“We will immediately abolish Section 21 ‘no fault’ evictions, prevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards, including extending ‘Awaab’s Law’ to the private sector”

The commitment largely reflects previous promises by the Conservative Government which fell by the wayside once the election was called. 

No detail has been given as to how soon "immediate" will be – but let's give the new Deputy Leader and Secretary of State for Levelling Up, Housing and Communities, Angela Rayner, a moment to settle into her new office and look at some of the challenges she will face:

1. If there is no Section 21, what grounds will make it into the new legislation? Will they reflect the previous draft bill, or will amendments be required?
2. For too long Section 21/Accelerated procedure has been used by landlords who feel they have no other option, to obtain possession "quicker" than under the Section 8 / standard procedure. In my experience, to describe the s21 process as "accelerated" is not reflective of the actual time it can take to obtain a possession order. If all possession claims will require a court hearing, this is going to have a catastrophic affect on the amount of time it will take to obtain a possession order, and in turn, the prejudice caused to landlords in circumstances where a tenant is not paying or has committed some other breach of the tenancy. The system is already creaking at the seams (some would say this is a generous assessment) and substantial investment into and reform of the justice system is required if there is to be any hope that possession claims can be dealt with in a timely manner. Angela Raynor herself, when questioned on abolishing section 21,  referred to the challenges of the courts and the need to fix this prior to the abolition, so it is clear that this issue is on her radar.
3. As a result of the uncertainty caused by legislative and system reform, many landlords are leaving the private rented sector. It is yet to be seen how the Labour Government will respond to the anticipated decline in housing stock and mitigate the effects on an already over subscribed and strained housing market, particularly in light of its committment to build more homes.
4. In relation to housing conditions, how will investigations and enforcement be resourced? According to Gov.uk  "In 2021-22, 14% or 3.5 million households lived in homes that failed the Decent Homes Standard. A much greater proportion of private renters lived in non-decent homes (23%, 1.0 million) than those living in all other tenures." This suggests that extensive resource, over current capacity, is going to be required and local authority level to carry out these functions.

At Howard Kennedy we are keeping abreast of developments and are here to support and advise our clients with their property and investments.