Private Rented Sector Review – Summary

The Private Rented Sector Review summary published by the Communities and Local Government Committee:

The private rented sector has seen sustained and consistent growth in recent years. A structural change from owner occupation towards renting began a decade ago, long predating the economic downturn. The sector is home to an increasingly wide range of people—from young professionals to housing benefit claimants—and a growing number of families with children. The regulation and legislation governing the sector has, however, evolved over many years, often in response to problems that arose decades ago. Only in the 1980s did the sector begin to emerge from tight rent control and the shadow of Rachmanism and begin to develop. The market is a developing one which we need to help edge its way towards maturity. This requires a careful balancing act which does not upset the market developing naturally. It therefore requires not a single step but action across a number of different areas.

First, there has to be better, simpler regulation. The Government should have a wide-ranging look at the legislation covering the sector and put in place a much simpler, more straightforward regulatory framework. Once it does this, it should launch a campaign to publicise this new framework, to ensure that all tenants and landlords are fully aware of their rights and responsibilities.

Next, we need to give councils the flexibilities they require to enforce the law and raise standards. They need the freedom to implement approaches that meet the needs of their areas. They should be: afforded more flexibility over landlord licensing; given greater ability to generate resources; and encouraged to learn from each other. Local authorities should be able to recoup housing benefit and tenants the rent paid, when landlords have been convicted of letting substandard property.

Third, there is strong evidence of sharp practice and abuses by letting agents, making a clear case for a new approach to regulation. Letting agents should be subject to the same controls as their counterparts in the sales sector. In addition, it is time to crack down on the unreasonable and opaque fees charged not only by a few rogues but by many well-known high street agents.

Next, with the sector home to an increasing number of families, we have to ensure that the market offers longer tenancies to those who need them. To do this requires a cultural change and the removal of barriers, both real and perceived. We need action to speed up eviction processes where tenants breach the tenancy agreement, tackle the objections of lenders, and encourage letting agents to explore all options with landlords and tenants with regards to longer tenancies. Alongside longer tenancies, we should find more systematic, less arbitrary approaches to setting and increasing rents. There should also be a full review of local housing allowance to bring to an end the vicious circle whereby rents and housing benefit drive each other up.

Finally, we cannot escape the need to increase supply across all tenures of housing. Doing so will provide more choice, allowing renters to select housing on the basis of quality as well as price. The Government has to ensure that the benefits of its support for build-to-let development extend to the sector as a whole. It should also revisit the recommendations of our earlier published report on the Financing of New Housing Supply, to ensure it is doing all it can to support the building of new homes.

Taken together, these measures should lead to a more mature market and a sector that better meets the needs of those who live in it. It is important that private renting is seen as an attractive alternative to owner occupation.

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