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 5 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

Gerry Orbell

19:30 PM, 25th August 2022, About 5 months ago

Reply to the comment left by Yvonne Francis at 25/08/2022 - 15:16
I have let to students in the HMO market for 25 years and I think I know more about the sector than our MPs or civil servants. I wrote to my local MP to point out that there will be two classes of students in the future - a big group who are assured of accommodation in the new term in their academic institute (Oxbridge Colleges?) or purpose-built student accommodation because the current residents could be removed at short notice to make way for the new intake. The other equally big group will be uncertain of a future tenancy because the present occupants could choose to stay put at the end of the academic year - possibly because their studies are over and they are now employed. Rather than leveling up, the White Paper is divisive.

I received a long letter, via my MP, from Eddie Hughes MP, the Minister responsible. He wrote: "I understand that Mr Orbell is concerned about the impact these reforms will have on the
student accommodation market. However, while we expect most students will continue to
move in line with the academic year, they may equally face circumstances beyond their
control and need to vacate a property early or be locked into contracts for poor quality
housing. Responses to our consultation also showed that the student population is diverse –
some students have families, local roots, live with non-students, or have other reasons why
they may wish to remain in the property.
We do not think it would be fair to apply different rules to students who often require the
same level of security as other tenants or face poor standards within the private rented
sector. All students who are renting a private home will have periodic tenancies, providing the
same certainty as all other tenants will enjoy".

Although I appreciate the time my MP and Mr Hughes took over my query, it does not move the issue forward. The White Paper and Mr Hughes' response ignores the fact that one big group of students will be disadvantaged and may worry where they will live in their next year. Obviously the White Paper expects all students to do the right thing and move out on time. If they do not, landlords will have no right to evict them and the new intake will be forced to live elsewhere at short notice.

The present situation gives all students reassurance about future tenancies. White Paper provides provides a solution to a problem that does not exist.

I suggest anyone who feels motivated to write to their MP and/or Eddie Hughes MP. There will be a change of Government in the Autumn and if enough people point out the inadequacies of the proposals it might cause a rethink.

Ian Narbeth

10:18 AM, 26th August 2022, About 5 months ago

Gerry, interesting points. The Minister is disingenuous: "Responses to our consultation also showed that the student population is diverse –
some students have families, local roots, live with non-students, or have other reasons why
they may wish to remain in the property. May be true but that also applies to students in university owned accommodation
We do not think it would be fair to apply different rules to students who often require the same level of security as other tenants. But of course they do apply different rules - see my first point. or face poor standards within the private rented sector. It's not about poor standards. It is about tenure and being able to assure the next cohort that they will be able to move in at the start of the term. All students who are renting a private home will have periodic tenancies, providing the same certainty as all other tenants will enjoy. But students in university-owned accommodation will not enjoy that certainty. Anyway, talk of "certainty" is misleading. A student taking accommodation for an academic year does not need certainty that they can stay on indefinitely. For the system to work fairly, in fact, they need the certainty that they cannot stay on. That means they will make arrangements in advance to find alternative accommodation. Under the new rules the landlord will not know until he receives the notice whether he can let the property to the students he has lined up for the next academic year and those students will not know either."

Yvonne Francis

12:40 PM, 26th August 2022, About 5 months ago

Reply to the comment left by Gerry Orbell at 25/08/2022 - 19:30
Hi Gerry
Thanks for your comment. Just a few answers to Mr Huges MP.

If a tenant wishes to leave a replacement is found and a new lease is signed. I have had students who have had to leave and had no trouble with this. As for being 'locked into contracts for poor quality' then students do view the property before signing a lease. Standards of accommodation have improved beyond belief, partly because of the HMO licence but mainly due to market forces with so many landlords entering the student accommodation market.

Some HMO houses are large. One of mine is eight and the other is seven. Do you really think all eight or seven will want to stay on and get jobs? If one tenant decides to leave and the landlord does not accept a replacement the whole tenancy could come to an end. If one tenant gets a job and remains in the property then the tenants even though they are students are liable for council tax which in my case is almost £4000. I'm from Oxford and I find students are offered accommodation in their first and third years. They are often offered accommodation in the second year but prefer to live out. Postgraduates tend to live out too. I find that my tenants are rarely local and have no reason to put down roots in Oxford. They go, when they go, to wherever the good jobs are, mainly London. That's exactly what my children did, and one studied at Edinburgh. As much as she liked the city there was no chance of her putting down roots there.

I don't quite know what 'the same level of security' means because there is nothing more secure than a fixed term? I do know from experience students are greatly relieved after signing up and go away to have a nice Christmas!

There may be problems with student letting as they exist, especially the early signing up, but you don't take a sledge hammer to crack a nut.

Periodic tenancies will not work in PRS student accommodation. Tenancies need to coincide with university terms. A fixed term is necessary to ensure the property is occupied, and the landlord can take on new tenants in November/December time for the next academic year. It is important in the PRS that the houses are continually occupied but with periodic tenancies there will be void periods, possibly lengthy periods. A landlord will not know when the present tenants will leave and if they give notice whether this will be good timing to get tenants who could just be too busy taking exams or on vacation. If this bill goes through in its present form and does not exempt student houses from periodic tenancies and allow fixed terms as in the PBAS, then many landlords will leave this market and there will be shortages. In a city like Oxford students are the lifeblood of the city, and their needs should be catered for. It makes no sense to seriously damage this valuable market.

Rerktyne

7:24 AM, 27th August 2022, About 5 months ago

Once section 21 is abolished the criminal landlords with huge portfolios and a string of thugs on their payrolls will thrive even more. They will buy out the decent and hapless small landlords and get even bigger. I have seen this happen. I used to be a great small landlord but once an evil tenant got in I sold up to the big “nasty.”.
Within a week the evil tenant left. You didn’t see him for dust!
I wonder why?

SM

11:51 AM, 27th August 2022, About 5 months ago

Totally agree with your points. All the points you raise also apply to any property with any shared facilities, such as a flat.

Peter G

14:40 PM, 1st September 2022, About 5 months ago

Why do MPs feel they know better than people who actually run a business for many years? Their policy is flawed and it is disappointing that MPs are unwilling to adapt their policies to reflect the REAL world.

Emma Hayes, MD - Platinum Property Partners

15:32 PM, 1st September 2022, About 5 months ago

Reply to the comment left by Peter G at 01/09/2022 - 14:40
Hi Peter,

As you can probably see on some of the other feeds on Property118 today there is a fair bit of discontent felt within the landlord community for governments current treatment of the housing market.

We're hopeful that the next PM will show greater understanding of there PRS and give the sector some room to breath, innovate and grow organically.

Richard Smyth

21:37 PM, 6th September 2022, About 5 months ago

The earlier points made regarding low level anti social behavior( possibly difficult to prove in court) together with the adverse effect on student lettings means that the logical step is for all HMOs to be excluded from the Periodic Tenancies proposals, and not just student properties This sub sector of the PRS is already heavily regulated and supplies an important need in society. HMOs have never been intended to be homes for life!

Ian Narbeth

10:32 AM, 7th September 2022, About 5 months ago

Reply to the comment left by Richard Smyth at 06/09/2022 - 21:37I agree Richard but our politicians want to treat everyone "equally" and not to "discriminate". Well, you should treat equal things equally and unequal things unequally.
A family with children in local schools in a house is not the same as a young person at an early stage of their working life in an HMO.
Discrimination means choosing between alternatives. We do it all the time although we may not call it that because of the pejorative connotations the word has. It means exercising judgment. The only occasions we have used s21 notices in our HMOs are for "anti-social behaviour" which did not reach a criminal standard and because the tenant, at the instigation of the Council's housing department, asked us to serve a notice!
In most cases there is little hardship in having to leave an HMO and move a few hundred yards to another house.

Rerktyne

12:28 PM, 7th September 2022, About 5 months ago

The only way you got the Americans to agree to join WWII WAS Pearl Harbour. For us it was the attack on Poland. For the renewed attempt to get clean energy it is the crisis we now face. For a woman to leave her scum husband it is the biggest bashing so far.
So for the government to wake up re, the treatment of landlords as if we were villains it will take a serious crisis. I would love it if thousands of landlords just went on strike, left houses empty except for their own use, like a den and let the councils scramble to B&B thousands of nasty tenants! The b&bs could then chuck out anyone they couldn’t stand and those could then camp under the porticos of Belgravia!I bet those people wouldn’t need an eviction process to make them go: there would be 50 armed cops there in seconds!!
Justice!!!!!

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