Legal expert warns of looming chaos from the Renters (Reform) Bill

Legal expert warns of looming chaos from the Renters (Reform) Bill

10:03 AM, 17th May 2024, About a month ago 31

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The impending passing of the Renters (Reform) Bill spells trouble for tenants and landlords, warns a legal expert.

Ian Narbeth, a commercial property lawyer and BTL and HMO landlord, tells Property118 in a video interview that can be seen below that some Tory MPs have “woken up too late” to the damaging effects the Bill will bring.

Mr Narbeth also explains the big problem that councils are causing by telling tenants threatened with eviction to stay put until the bailiffs arrive.

If a Labour government passes the Renters (Reform) Bill, it may be even worse

The Renters (Reform) Bill has passed its final stage in the House of Commons and is now heading to the Lords.

However, Mr Narbeth warns that damage has already been done. Landlords have been frightened by the prospect of the Bill. He emphasises that the Bill is being brought in because of a few bad landlords in the private rental sector.

He explains: “The small minority of bad landlords who behave badly are the ones causing the problem which is why we are getting this legislation.

“Most landlords don’t want to evict their tenants for no good reason but there are a minority that do. Their tenants justifiably complain and go to people like Shelter and the politicians have been listening to them.”

He says: “The abolition of Section 21 is coming, and landlords need to realise that Labour will not hold off this legislation.

“If the Tories get this Bill passed before the Election, then it’s done, and Labour should leave it alone. If they don’t pass it, then just think about what Labour might do? They will embellish it and may add in provisions that will not be landlord-friendly. It will be a worse Bill than it is already which is my big fear.”

MPs should just get on and make the best out of a bad job

Mr Narbeth says several Conservative MPs have been slow to grasp the potential pitfalls of the Bill.

He said: “A number of Tory MPs have woken up rather too late to realise the problems the Bill will bring and are trying to delay it.

“Saying that ‘until the courts are reformed, we won’t abolish Section 21’ isn’t going to work. The MPs should just get on and make the best of a bad job. It is a bad job, but the Bill has been promised by the Tories, and they should deliver on it.

“I think Michael Gove thought he would get votes from renters but he’s not going to get any extra due to the delay in passing the Bill and now tenants are finding their rents are going up and there is a shortage of housing.

“The Tories have achieved the worst of all worlds: they have a Bill they shouldn’t have been promoting, it’s not winning them any votes and it will harm tenants and landlords.”

Councils are swamped

Property118 has previously highlighted that there is a common practice for councils to tell tenants to remain in their rented home when facing eviction and after receiving a court order to leave – causing stress not just for the tenant but also for the landlord as they deal with the legal costs and complications.

Mr Narbeth comments: “The issue for landlords is having a tenant who’s not paying rent, making the landlord an involuntary creditor. Each day that passes, the debt grows, and the longer it goes on, the harder it is to get the money back, especially if the tenant disappears.”

The Homelessness Code of Guidance says where applicants are threatened with homelessness, councils must take reasonable steps to help prevent it from occurring.

The first step the guidance says: “Housing authorities should not consider it reasonable for an applicant to remain in occupation until eviction by a bailiff.”

Mr Narbeth explains councils are facing a huge strain in trying to re-house people due to shortages.

He said: “Councils are hoping they don’t have to re-house these tenants, and that something will turn up. Councils are swamped already. They are having to pay for people to live in B&Bs and other short-term accommodation.”  By rejecting those who are “voluntarily homeless” (meaning those who actually obey a court order to leave) councils can wash their hands of a problem.

Furthermore, a lot of landlords are now not willing to rent to the council to house tenants because they end up with the worst tenants going into those properties.

Completely unacceptable

The Housing Minister, Jacob Young recently told NRLA members that councils telling tenants to stay put until the bailiffs arrive is ‘completely unacceptable’.

However, Mr Narbeth says this intervention is ineffective.

He said: “The housing minister saying this is completely unacceptable is too little, too late. It’s a shame it’s taken years for the government even to realise that this has been going on, but we’ve had a revolving door of housing ministers so by the time they’ve got their feet under the table they are out doing another job.

“It is a big problem and Parliament needs to impose sanctions on councils, but I don’t see that happening.”

Long process to evict a tenant

Mr Narbeth says the reality for many landlords is that evicting a tenant takes months or even a year or more.

He tells Property118: “It’s one thing trying to get a tenant out after giving them two months’ notice and then dealing with the prolonged court proceedings.

“It’s a long process. It’s two months for the notice, and then if the tenant doesn’t go, you have to apply to get a court date, which could be in six to eight months’ time.

“If the tenant doesn’t leave after the court order, it might be another six to eight weeks before you can get a bailiff.

“You are looking at nine months to a year, and sometimes a lot longer, to get a tenant out.”

Regarding the current massive backlog of cases in the courts, Mr Narbeth emphasises the urgent need for increased funding.

He said: “If I could wave a magic wand, I would sort out the courts! The courts need more judges, and a lot of court buildings are in disrepair and can’t be used which is a huge problem, so we need to have more courts.

Dealing with Anti-social behaviour will be a lot harder

When it comes to evictions and dealing with problem tenants, Mr Narbeth explains that anti-social behaviour is a major issue.

He tells Property118: “Anti-social behaviour is a big problem, and landlords are in the firing line to try and sort it out. One of the main reasons for introducing selective licensing was to deal with anti-social behaviour. By abolishing section 21 evictions, Parliament will take away the most effective tool landlords have for dealing with it.

“If you have to prove anti-social behaviour in court, you need to provide evidence.

“The person giving evidence will be the one on the receiving end of the anti-social behaviour. This could be the neighbour who’s very frightened because the tenant is abusive.

“Can you expect the victim to wait six to nine months and then turn up in court in the hope that the anti-social tenant will be evicted?

“The answer is no as a lot of people will not put themselves through that. If the person on the receiving end of the anti-social behaviour is a tenant, they will likely move out to escape a nasty situation.”

Mr Narbeth explains the Renters (Reform) Bill changes the criteria for proving anti-social behaviour, but it does little to help.  “MPs have just not thought this through at all. They claim they will make it easier to evict for anti-social behaviour but it’s a tiny, tiny change.

“Instead of having to prove conduct likely to cause nuisance or annoyance, it will be conduct capable of causing nuisance or annoyance.

“I can’t imagine people are going to be arguing about the subtle difference. By the time a case gets to court, there will actually be anti-social behaviour.

“I fear this is going to be a problem and the weak and the vulnerable neighbours and other tenants who are affected are going to be the ones that suffer.”

Mr Narbeth says that when s21 goes, there will be no easy way to deal with problem tenants. Approaching a guarantor may help but it’s only a partial solution to the problem. The guarantor may persuade the tenant to moderate their behaviour or to leave.

“However, some guarantors will not want to get involved in the situation.”

EPC targets scrapped

Prime Minister Rishi Sunak scrapped EPC targets last Autumn which would have required landlords to ensure their properties had a minimum EPC rating of C.

The mooted deadline was 2025 for new tenancies and by 2028 for all tenancies.

Landlords would have had to spend thousands of pounds to try to upgrade their properties.

Mr Narbeth says: “Given that upgrading EPC ratings has not been and probably will never be required for owner-occupied properties, a fair solution is that landlords must declare what the EPC rating is. Tenants can then decide whether to pay the asking rent.

“Many properties are difficult, and some all but impossible, to upgrade at reasonable cost. Without vacant possession, it is even harder and more expensive. The suggested figures in EPC certificates vastly under-estimate the true cost and don’t take rental voids into account.

“The clumsy hand of government proposed Draconian fines for landlords and the requirement to spend substantial sums every five years, regardless of the location or value of the property or whether such expenditure would achieve a C rating.

Fortunately, the Civil Service appears to have realised that rendering hundreds of thousands of properties unlettable would not be good for tenants or landlords.

“Whether Labour has the brains to work this out remains to be seen. Furthermore, once section 21 goes, landlords may be stuck with a tenant but unable to upgrade the EPC rating.”

Tenant charities lumps all landlords in the same boat

Mr Narbeth points out a common frustration among landlords that pro-tenant groups tend to paint all landlords with the same brush.

He criticises the current imbalance, noting the lack of support and understanding for responsible landlords.

He says: “There doesn’t seem to be any kind of slacking off and giving landlords a break. It is all stick and very little carrot.

“We do need housing charities to help tenants who are living in substandard accommodation or have abusive landlords, but Shelter and others tend to lump all landlords together.

“The tenant lobby groups don’t seem to realise that what they are asking for often makes things worse overall.

“There are now so many additional risks in being a landlord and obstacles put in a landlord’s way to get their property back that it increases costs, discourages investors and does not increase the supply of houses. Indeed, the opposite which puts upward pressure on rents.”

He laments: “I don’t see the government doing much to change that situation.”


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Comments

Paul Essex

16:39 PM, 16th May 2024, About a month ago

Great commentary, but nobody listening is actually going to do anything about it - I fear the only outcome will be legislation preventing landlords leaving.

Cider Drinker

16:49 PM, 16th May 2024, About a month ago

The problem is mass migration.

Everything else is just noise.

Paul Connors

10:44 AM, 17th May 2024, About a month ago

I am one of those landlords selling up, interest rates rising, reform bill, no tax benefits, bad press, shall I go on!
It will be interesting when the government have made it so hard for private landlords to make a buck to see how they are going to fill the massive void. Good luck with that one!

John Nyari

10:51 AM, 17th May 2024, About a month ago

The first thing to understand is that the government do not want small landlords, they want large corporations. This message has been below the radar but has popped up from time to time. First, discourage being a landlord by increasing taxes and regulations. Then force them to do home office tasks such as right to rent and make it punitive if you don't (latest is fine hike from £1000 to £10,000 for non-compliance). Create licence schemes that cost money but benefits nobody. Even section 21 has become a list of hurdles to ensure it is served correctly. The list is longer than this but my message is that this should not be a surprise. One can wail about the status quo and how worse it will get but to every comment and complaint I would answer: "yes but they don't want landlords".

Reluctant Landlord

10:55 AM, 17th May 2024, About a month ago

Reply to the comment left by Cider Drinker at 16/05/2024 - 16:49
and what if migrations stopped overnight? Problem not solved. The call for stopping migration will be ongoing, the call for changes required to the RRB are immediate - this effects things right here and now!

Worrying about housing a further influx is pointless at this stage, there is inevitably going to be no accommodation going forward regardless if its 10 or 10,000 that come in.

Sally Robinson

10:56 AM, 17th May 2024, About a month ago

Having lost so many social housing properties to right to buy , governments now want to control us and use as a social housing and are taking over our properties by stealth step by step. Yet we are supposed to be 'running a business' says HMRC!

It's a takeover of our assets and the results of our hard work by any other route except nationalisation using our money to fund it!

The councils and government together are driving us under and the UK has become a haven for immigrants invited to prop up our social care system, or who just like living here on benefits with free education and health supplies.

If the Labour party's idea of making us wait for 2 years to sell ever comes to pass, there's won't be a private landlord in sight!

Reluctant Landlord

11:15 AM, 17th May 2024, About a month ago

Reply to the comment left by Sally Robinson at 17/05/2024 - 10:56
on the flip side of the coin the good tenants will be begging LL's to keep their properties on - where will they go otherwise?

Sheer madness....

Jimmy Smith

13:37 PM, 17th May 2024, About a month ago

A right bloody mess.
MP's should keep out of private business and take a holiday to the moon.

Stella

14:41 PM, 17th May 2024, About a month ago

Reply to the comment left by John Nyari at 17/05/2024 - 10:51Their agenda is to obliterate the PRS
Mr Gove and the current bunch of dimwits have inflicted us with excessive costs, red tape and have taken away the control of our assets and they will not be around to deal with the consequences.
Tenants will have little choice when they are at the mercy of BTR who are only interested in satisfying their shareholders.

Grumpy Doug

15:15 PM, 17th May 2024, About a month ago

As of Q4 2023:
"There are now 263,694 Build-to-Rent homes in the UK, including both London and the regions, of which 92,140 are complete, 59,043 under construction and 112,511 in planning
In London, there are a total of 104,205 units
Outside London, there are 159,498 units"
So John, yes I agree with you. However the politicians are going to be disappointed for a long time if they can do basic maths - that figure of 263,594 represents only 5% of the size of the PRS (and let's not forget, nearly half of it is still in planning). BTR in Scotland has stalled since the Green loonies had their stint briefly in power (let's face it, Green loonies in charge of housing was always going to end badly).
So they can bash me till the cows come home. I can do basic maths so my properties will remain in high demand, with subsequent high rents, for a long time yet. Section 24 was my killer but I've consolidated to accommodate it and I'll sweat what's left for what it's worth.

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