What does the Fairer Private Rented Sector white paper mean for the BTL market?

The secretary of state confirms there are currently 2.8 million rented properties, approximately 21% of the PRS market, that are not fit for the 21st century.

Hazards that present the highest risk of serious harm or death, such as cold, damp, and mould, or without functioning bathrooms and kitchens, exist in 12% of properties, posing an immediate risk to 1.6 million people who are living in dangerously low-quality homes.

The paper seeks to address the issues while recognising that 80% of landlords offer good-quality homes.

The paper proposes a range of measures through a 12-point plan.

One of the most debated of these points is the abolishment of Section 21 grounds to end a tenancy by a landlord. This legislation currently gives the right of a landlord to ask a tenant to leave a property without providing a reason.

Tenants sometimes are fearful of reporting a property issue in case they become seen as a ‘problem’ tenant and are evicted, with currently no right of redress. Removing Section 21 means a landlord must give a specific reason to end the tenancy under a different notice called ‘Section 8’. However, to support good landlords, the paper proposes that new eviction reasons, such as the ability to evict tenants for persistent arrears or anti-social behaviour, will be added.

A new ombudsman will be appointed to resolve disputes more quickly than the courts, and a property portal will be launched. The portal will give detailed information to help landlords comply with the legislation and contain details of the landlord’s information and conformity for tenants to check, helping prevent fraudulent sub-letting.

Ultimately it’s another step toward a professional landlord market and increases the confidence in letting, which benefits the PRS market and the professional investor. In turn, property investors need a professional adviser with sufficient knowledge of the market and the financial solutions that best suit the investor’s requirements.

With the housing shortage still with us, rental demand is strong, and with rising rental incomes, the PRS market is likely to continue to be of interest to property investors. Advisers who invest time growing their market knowledge of the issues and the lender’s criteria will be able to add the most value to their customers.