Renter’s Reform Bill not fit-for-purpose when it comes to HMOs

Renter’s Reform Bill not fit-for-purpose when it comes to HMOs

8:33 AM, 25th August 2022, About 3 months ago 20

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As the government continues to work on the proposed Renters Reform Bill, we will be urging them to reconsider the impact of proposals in the white paper on multiple occupancy properties.

 Although the Bill specifically exempts purpose-built student accommodation, there is no clear mention of excluding professional or student Houses in Multiple Occupation (HMOs).

Some of the measures set out in it will have a significant detrimental impact on shared households, if implemented, potentially deterring HMO landlord investment and denting the supply of such affordable accommodation for tenants.

HMOs are different from single-dwelling lets

Among the changes, set to come into force in 2023, are the abolition of Section 21 ‘no fault’ evictions, a ban on fixed-term tenancies and giving tenants the right to request a pet.

Whilst we’re all for a fairer PRS, where tenants can be assured that their accommodation will be of a certain quality and they won’t be evicted for speaking up, for professional HMOs, where three or more unconnected people rent individual rooms and share communal spaces, none of these proposals makes sense.

Section 21

A key concern is removing the ability to serve a Section 21. This could cause tenant distress and discomfort, particularly in instances where one tenant’s behaviour is not classed as ‘anti-social’ but can be intimidating and offensive to the majority of the household.

There has been one instance, for example, where a male tenant made unwanted advances to a female tenant. She was frightened and told him to stop, but he persisted and went on to steal her underwear from the washing line. Under the proposed changes, even if there are grounds for a fault-based eviction, there are two major problems.

First, the offended tenant must give evidence in court against the offender and second, they have to continue to live under the same roof as the offender, perhaps for six to 12 months whilst the case is pending.

Periodic tenancies

When it comes to introducing periodic tenancies, this not only removes any security of medium to long-term income for landlords in any buy-to-let property but will discourage HMO landlords, in particular, to cater for tenant requests.

As all our professional HMOs are fully furnished, it’s not unusual to receive specific tenant requests, e.g for additional bike sheds. But if that tenant were able to leave on two months’ notice at any time, it’s unlikely our landlords will risk the additional investment.

Pets in shared houses

Finally, there’s no way HMO landlords could reasonably consent to tenants having pets in shared houses. As well as dramatically reducing the appeal of a property to many tenants, some of whom may have phobias or allergies, it’s also unfair to the animals themselves. More importantly, the Renters Reform Bill does not clarify a crucial point.

The proposals state that landlords may ask tenants to take out pet insurance and that this will not be a prohibited payment under the Tenant Fees Act 2019.  However, pet insurance only covers the health of the animal, so what the paper should actually state is pet liability insurance that may, or may not, cover wear and tear caused by pets.

For HMO landlords, having to scrutinize each insurance policy per tenant, then taking it in good faith that they will recoup costs that would be paid directly to the policy holder is not feasible.

HMOs are different from single-dwelling lets

Parliamentarians should realise that HMOs are different from single dwelling lets and that granting one tenant rights and taking away a valuable management tool from landlords is not risk free. The interests of other housemates should be balanced. Otherwise, in sensitive situations, the strong will oppress the weak and landlords will be almost powerless to help.

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Comments

John Adair

9:48 AM, 25th August 2022, About 3 months ago

Totally agree, I've managed shared houses since 2005 and seen all above problems in various forms. In particular, some male housemates can become very anti-social & bully others in the house. If you've passed the test to be a licensed HMO manager like me, they should trust your judgement on individuals.

Paul Essex

10:30 AM, 25th August 2022, About 3 months ago

From the comments above you seem convinced that ASB will need a criminal conviction before a landlord could take action post Section 21.

I am not aware that the small print is yet available but I would be very concerned if that was indeed the outcome.

Emma Hayes, MD - Platinum Property Partners

10:38 AM, 25th August 2022, About 3 months ago

Reply to the comment left by John Adair at 25/08/2022 - 09:48
Absolutely - its essential property owners have all the right tools in the box to run their business appropriately. Landlords don't want to feel powerless when challenges are raised, in the same way a corporate business owner would want to be able to address personnel issues in their company to ensure the wellbeing of all staff.

Yvonne Francis

11:55 AM, 25th August 2022, About 3 months ago

Periodic tenancies do far more damage to the student accommodation than is mentioned by Emma. At the moment it is usual for student houses to be let in November/December time for the following academic year. I let on a Joint and Severally liable lease and have had no trouble getting vacant possession because of the nature of the agreement. Letting in advance would become impossible and landlords would have to wait until the present tenants give notice which could be in the vacation so no possibility of viewings. Landlords would have a void period so would have to increase their rents to compensate for this. Tenancies for students need to coincide with their university terms.

The uncertainty of this would make PRS landlords want to leave the student accommodation market. This will lead to shortages and hence price rises. I have let to students for forty years and find they like being in houses with their friends and having the independence. Often my houses are taken even though they have been offered university accommodation. One of my tenants told me the year in my house had been the best year of her life. University is an experience and living independently for a year is a good and valuable experience. 

The fact that university accommodation and the PBSA will be exempt shows there is a problem with periodic tenancies.

Student houses are cheaper than the PBSA so if the PRS diminishes students will be at the mercy of the highly priced PBSA's. How is this white paper helping students?

Emma, I know there are certain people who wish to destroy student houses in the PRS in residential areas. I really feel, although I think I offer something of value, I am being victimised. I do hope your support will help. 

Ian Garvey

12:37 PM, 25th August 2022, About 3 months ago

Well said Yvonne. I completely agree with the point about student lets. These should remain fixed term for the benefit of student tenants - students will want the security to know they have accommodation for the next student year and this will be difficult to guarantee if fixed term contracts aren't allowed.

In fact I am sure the change goes against best practice in contract law as rather than provide security to both parties (landlord and tenant) it provides the exact opposite.

This legislation has been in place in Scotland since 2019 and the Scottish Government are investigating changing it to cater for the student market as there is now a shortage of student houses in Glasgow and Edinburgh. A simple change would be to allow fixed term contracts for student houses. This could easily be monitored as the legislation is already there to do so as there is a clear definition of student houses for Council Tax purposes in the 1972 Local Government Finance Act

Grumpy Doug

13:49 PM, 25th August 2022, About 3 months ago

Reply to the comment left by Yvonne Francis at 25/08/2022 - 11:55
"The fact that university accommodation and the PBSA will be exempt shows there is a problem with periodic tenancies"

Sorry Yvonne, you're incorrect.

The fact that university accommodation and the PBSA will be exempt shows the PBSA corporate providers are significant donors to the Tory Party. Crony capitalism at it's worst!

Yvonne Francis

14:14 PM, 25th August 2022, About 3 months ago

Reply to the comment left by Grumpy Doug at 25/08/2022 - 13:49
Hi Grunpy

Yes I could not agree more. My point is that if university accommodation and the PBAS are exempt they must recognise the problem and they are victimising the PRS.

Emma Hayes, MD - Platinum Property Partners

14:46 PM, 25th August 2022, About 3 months ago

Reply to the comment left by Yvonne Francis at 25/08/2022 - 11:55
Hi Yvonne, wow it sounds like you provide an excellent level of service to your students!

We specialise in 'professional' lets but absolutely feel that this white paper is trying to treat all landlords the same way as single buy to lets.

The PRS needs a healthy mix of options for people in all walks of life (and at all ages) before they choose to become home owners (if that is what they want).

We hope the next PM listens to the concerns being raised by the sector and reconsiders some of the proposals in the paper.

Ian Narbeth

14:58 PM, 25th August 2022, About 3 months ago

Reply to the comment left by Yvonne Francis at 25/08/2022 - 11:55Yvonne
You are correct that there are potentially great problems with periodic tenancies and student lets. I fear the uncertainty will cause landlords to move out of that market. That said if students sign a single tenancy agreement with joint and several liability they will probably stay for the academic year unless there are serious problems with the landlord or the house. Unless all of them want to stay on, one overstayer will find himself having to pay the full rent.
The problems of harassment that Emma highlights are less of an issue with student lets where they will all know each other, be at the same college or university and be similar in age than in a professional HMO with a transient population where the tenants do not choose their housemates.

Yvonne Francis

15:16 PM, 25th August 2022, About 3 months ago

Reply to the comment left by Ian Narbeth at 25/08/2022 - 14:58
Yes Ian, they may stay for the whole academic year but in my case that ends the middle of June. Then what? Not only may we get void periods but we will lose the advantage of signing them up early as we will have to wait for them to give notice. Notice could be given at a time difficult to rent to students as they may be on vacation. I don't like the early letting but at least all houses are advertised about the same time and students know to look.

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