Exclusive: Propertymark warns Renters’ Rights Act will force landlords to rethink

With the Renters’ Rights Act just around the corner, the UK’s largest professional membership body for letting agents warns new legislation will have two distinct effects.

In an exclusive video interview with Property118, Timothy Douglas, head of policy and campaigns at Propertymark, said many landlords will be considering whether to move to full management or continue self-managing their properties.

Mr Douglas also tells Property118 that the government and local councils must promote and support good landlords.

Watch the full video interview below

A competitive market

Mr Douglas explains, from an organisational perspective, Propertymark’s membership has grown year on year, but additional rules for landlords tend to have two distinct effects.

He says: “Ultimately, from our letting agent members, the feedback we get on legislative changes and additional rules and regulations is that landlords tend to do one of two things: they either sit back and wait and see, or they conclude it’s not for them and leave the sector.

“We are seeing that anecdotally, based on what our members say, but we do know that demand for property remains high, and there is a supply issue which fluctuates across the country.”

However, Mr Douglas adds that void periods are shortening.

He explains: “People are staying in properties longer, and demand for better-managed homes means they are quickly snapped up.

“We are in a competitive market, and there’s a range of factors, from landlords leaving or not wanting to expand their portfolio, to there simply not being enough supply in the first place.”

Bite the bullet

Looking ahead to the Renters’ Rights Act, Mr Douglas says many landlords are now considering a fully managed model rather than self-managing their properties.

He says: “It’s a decision for the landlord: do they use a letting agent or bite the bullet and manage it themselves? We know from a large member in Wales that when the Renting Homes (Wales) Act changes came through, their fully managed portfolio went up by 10%.”

Propertymark campaigned for a longer lead-in time for the Renters’ Rights Act to help letting agents prepare.

Mr Douglas says: “On a good day, the government tends to give six months, and on a bad day, a bit less than that. We needed a clear timeline and, to give the government credit, they did outline their phases relatively early and gave the private rented sector six months to get organised and prepare for those changes.”

Propertymark has been supporting its members with factsheets, FAQs and webinars to help them get ready.

He says: “We’ve tried to put our arm around member agents, dissect the changes in detail and ensure they can understand them and apply them to their business.

“Our message to our letting agent members is: show your worth. With the potential challenges for landlords, there’s an opportunity to say, yes, there are changes, but letting agents can help and take on the management of the property.”

Largest professional membership body for property agents

Propertymark is the UK’s largest professional membership body for property agents, representing more than 19,000 members nationwide.

Mr Douglas explains that this places the organisation in a unique position, with members operating across a wide range of sectors.

He said, “We are uniquely placed and closely involved in many of the proposals and changes moving forward. Our members work across lettings, sales, commercial property and inventory services we cover the full spectrum of the property agency sector.”

Timothy leads the policy and campaigns function at Propertymark, a role he describes as wearing two hats, legislative and lobbying.

He said, “On the legislative side, we translate policy into clear, digestible formats for our members, such as factsheets, and work across the organisation to ensure key information is communicated effectively.

“On the other side, we focus on lobbying and representation, gathering the views of our members and presenting them to government.”

Councils need to play an active role

The government argues that stronger regulation is needed to tackle rogue landlords, including giving councils greater enforcement powers.

However, Propertymark says there are two sides to the issue, and that councils need to play a more active role, with inspections leading to enforcement.

Mr Douglas says: “If you speak to anyone in the private rented sector, they’ll say there are already enough rules and regulations, with more legislation still to come.

“It’s about councils carrying out inspections, and those inspections leading to enforcement.

“We’ve said there should be inspection league tables so local authorities are held accountable for the work they are doing to tackle criminal landlords. Through the Renters’ Rights Act, they will also have to report on their enforcement activity going forward.”

Mr Douglas adds councils must do more to support good landlords.

He says: “We know councils are under strain and need more resources from central government, but they also need to use what they have effectively and target the bad operators in the sector.

“However, councils should also offer a helping hand and take a more solutions-based approach.

“While there are problems in the sector, there is also a lot of good. Policymakers need to champion that, highlight best practice and help change the narrative.

“There’s a perception that tenants are always good and landlords are always bad, which isn’t helpful. We need to promote the good, outlaw the bad, and for policymakers to take a more balanced and neutral position in that debate.”

Court backlog frustration

Propertymark says there is real frustration among letting agents over the court backlog and has lobbied the government on the issue during the passage of the Renters’ Rights Act.

Mr Douglas said: “The previous Conservative government seemed to recognise the problem and put a trigger in place so reforms wouldn’t come into force until the courts were ready.

“We are campaigning on the role of bailiffs and the enforcement of possession procedures.

“We worked with the High Court Enforcement Officers Association to compare the time it takes using a High Court enforcement officer versus a county court bailiff, and there are significant benefits and time savings.

“If a district judge at a county court transfers a case from a county court bailiff to a High Court enforcement officer, the process can be much quicker.

“We put forward proposals to the government that if there is a delay of three months, that transfer should happen automatically.”

Scottish landlords being hit

The Scottish government announced in last year’s Budget that the Additional Dwelling Supplement (ADS) would rise from 6% to 8%.

The ADS, introduced in April 2016, applies to transactions involving the purchase of an additional residential dwelling over £40,000, including buy-to-let investments and second homes.

Mr Douglas says with the Scottish elections coming up in May, the changing tax regime is one of the biggest frustrations in the Scottish private rented sector.

He said: “Scottish landlords are being hit by decisions made at UK government level, as well as higher rates of Additional Dwelling Supplement, which is now 8% in Scotland for those buying a buy-to-let property. We don’t think that’s helpful for the private rented sector in Scotland or for delivering affordable housing.

“At the same time, policymakers in Scotland are pushing for the introduction of rent controls, and we would argue that this has, to some extent, given a reason for rents to rise.”

As previously reported by Property118, Scotland has recorded the highest percentage increase in rents compared with any other part of the UK. Hamptons data shows that 67% of Scottish landlords with the option to raise rents have done so this year.

That’s the highest proportion of any region and well above the Great Britain average of 58%.

With the Senedd elections in Wales also on the horizon, the industry body is also calling for greater scrutiny of Rent Smart Wales, a mandatory scheme launched in 2015 to improve standards in the private rented sector. The scheme requires landlords to register themselves and their properties, while those who self-manage, along with letting agents, must be licensed and complete training.

He said: “At the moment, Rent Smart Wales is not required to appear consistently before the housing committee each year, and we believe it needs greater scrutiny to assess how effectively it is working and regulating the sector in Wales.

“With the upcoming elections, we also hope policymakers avoid introducing rent controls in Wales. However, given the current polling and the parties likely to gain power, we expect this issue to come up again.”

Different EPC targets

The government has announced that all private rented properties in England will need to meet EPC C targets by 2030.

However, Propertymark has held a number of meetings with government ministers, arguing that a one-size-fits-all approach is not the way forward.

Mr Douglas said: “The government is trying to take a one-size-fits-all approach with EPC targets, but there are many different property types with varying ages, and it’s simply not feasible.

“Our position is that properties should be made as energy-efficient as possible, which inevitably means different targets depending on the age and type of property.”

Propertymark has welcomed the government’s decision to push back the previous 2028 deadline for the private rented sector.

He said: “We welcome the longer lead time to 2030 as a positive step, particularly in light of the Renters’ Rights Act.

“From an agent’s perspective, there needs to be a focus on working with landlords to assess both current and future portfolios, taking into account upcoming changes and identifying any quick wins to improve energy efficiency.

“There will inevitably be frustration around costs, but the government has listened to some extent. The original consultation proposed a £15,000 cap, which has now been reduced to £10,000. We will continue to lobby for that cap to be lowered further, alongside increased access to grants, loans and wider financial support for landlords.”

Thriving private rented sector

With new legislation and elections on the horizon in Scotland and Wales, attention is turning to the future of the private rented sector.

He said: “There will inevitably be changes to rules and regulations, but we’ve continued to see growth in our membership, which points to a healthy sector. There is still strong interest from agents entering the market, and demand for private rented property remains high.

“Looking ahead, the priority is to ensure we have good landlords, professional agents and a thriving private rented sector for the future.”