Finally, after six weeks of campaigning, the anticipated Labour landslide has happened – and not just in England, but also in Scotland, where housing policies for the Private Rented Sector have been quite controversial.
The Kings Speech on 17th July has confirmed that housing will be high on the new government’s list of priorities including changes to speed up planning, the Renters Reform Bill, further Leasehold and Commonhold changes and a Digital Information and Smart Data Bill, the latter potentially introducing digital identity which could help improve how we buy and sell a home.
So, let’s take a look at the policies in more detail that landlords are likely to see enacted over the coming weeks, months and within this parliament.
Passing the Renters (Reform) Bill, or something similar
One of the first changes we are likely to see is the resurrection of the Renters (Reform) Bill (RRB) – or replacing it with something similar.
The Bill had made it all the way through to the 2nd reading stage in the House of Lords, before it was abandoned when Parliament was dissolved ahead of the election.
Given that Angela Raynor had promised to abolish section 21 on Labour’s first day in office if they won the election, and she is now Secretary of State for Levelling up, Housing and Communities (now called Ministry of Housing, Communities and Local Government) we expect the new government to move forward quickly with this.
That said, because of the wide-ranging knock-on effects of scrapping ‘no grounds’ evictions, it’s hard to see how this can happen at speed, and it could cause huge problems for the courts, which still haven’t recovered from the backlogs that built up during the pandemic.
Labour’s proposed rental reforms come under what they have called a ‘renters’ charter’, which has several differences to the Conservative Government’s Renter's Reform Bill (RRB). Here is a summary, comparing the two:
- Abolishing section 21: While the Conservatives said they would not move ahead with this until the court system had been suitably reformed to ensure it could cope with the workload, Labour wants to scrap it as soon as possible.
- Ending automatic eviction for rent arrears: Labour wants to remove serious rent arrears as a mandatory ground, to ensure that tenants could challenge such possession claims in court. This was not a proposal within the RRB.
- Scrapping rent review clauses: Although both parties’ proposals seek to ensure that rents can only be increased once a year in line with the market, the RRB states tenants must be given two months’ notice, while Labour plans to double this to four months.
- Introducing a mandatory national landlord register: The RRB proposes a Privately Rented Property Portal that would serve as a landlord/property register and also an information hub to help landlords understand and comply with their legal obligations. Labour is proposing a National Landlord Register, with landlords required to provide evidence of property and management compliance, and to submit a surveyor’s report regularly – however, there is not currently any mention of it also being an information resource for landlords.
- Introducing a Decent Homes Standard for the Private Rented Sector (PRS): In addition to extending this standard that currently applies in the social housing sector, the Labour manifesto stated it would also apply ‘Awaab’s Law’ to the private sector. This law was introduced following the death of toddler Awaabs Ishak, who died as a result of his landlord failing to deal properly with extensive mould in the flat where he lived, and requires social housing landlords to adhere to strict time limits to address dangerous hazards such as damp and mould.
The two parties have similar plans to:
- Give tenants the right to keep pets - unless landlords have a specific valid reason for refusing, such as the property being too small or a lease prohibiting pets.
- Permit tenants to make reasonable alterations to their rented home, e.g. put up shelves or redecorate.
- Give tenants the right to challenge unreasonable rent increases.
The RRB also proposed ensuring that tenants wouldn’t be able to give two months’ notice within the first four months of a tenancy, essentially requiring a minimum six-month commitment, however we are not sure yet Labours views on this.
Raising the minimum Energy Performance Certificate (EPC) rating for rented properties
In September 2023, as part of a wider overhaul of the Conservatives’ plans to achieve Net Zero by 2050, Rishi Sunak announced the raising of the minimum Energy Performance Certificate rating for rented properties from E to C – and proposed to phase it in from the end of 2025 – was being scrapped, taking the immediate pressure off landlords in England.
However, Labour has stated it will move faster than the Tories on energy efficiency, promising an injection of £6.6 billion into its Warm Homes Plan.
We therefore expect this new government to reintroduce a higher minimum rating for the PRS within the next few years and suspect it may follow Scotland’s lead by requiring all rented homes have a minimum C rating by the end of 2028.
So, if your rented property is currently rated D or E, it’s well worth considering taking steps now to get that up to C or higher.
Whatever rules are imposed by the government, post the increased costs of utility bills, some tenants are tending to look for a home that is as energy efficient as possible and therefore cheaper and easier for them to heat.
And for some landlords, making improvements could increase the property’s value and potentially give access to better mortgage products and rates.
Planning reform and New Towns
At their party conference last Autumn, Labour promised to deliver, “a blitz of planning reform to quickly boost housebuilding to buy and rent and deliver the biggest boost to affordable housing in a generation… with fast-track approval and delivery of high-density housing on urban brownfield sites”.
As well as brownfield sites, Labour also intends to push for development of what’s becoming known as ‘grey belt’ land – that’s things like disused car parks or wasteland. It intends to give more power to local communities over how housing can be built in their area and has pledged to work with local authorities to ensure all local infrastructure and construction plans are quickly drawn up and agreed.
Labour has also announced that it plans to build the next generation of ‘new towns’ - “new communities with beautiful homes, green spaces, reliable transport links and bustling high streets.” Of course, these developments will take some time to come to fruition, but it’s something that landlords can keep an eye on within their own area and start to factor into future investment plans.
Building 1.5m homes and increasing the supply of affordable and social housing
Since the Millenium, governments have tried to deliver affordable homes by imposing requirements, including more taxes on landlords, on the private sector.
The problem is that this policy hasn’t worked and we now have in excess of a million households in receipt of benefits renting in the private sector.
A great many of these are likely to be eligible for social housing which has either been sold off or not built at the scale required.
Labour has said it will continue with the same new homes target as the Conservatives had, of 300,000 a year, promising to deliver 1.5m by the end of its first five-year term.
It is keen to ensure private developers take on their responsibilities to contribute to affordable homes and help reinvigorate the social rented housing sector, and has pledged that 40% of all ‘new town’ housing will be affordable.
All this could be great news for the PRS. With Labour clearly stating how keen it is to support social housing and public and private funding initiatives, this should help take the pressure off the PRS and could even offer opportunities for landords to invest in – or even build themselves - more homes that could, for example, be leased to the social sector.
“It’s crucial there is transparency on how Labour intends to meet its ambitious target of building 1.5 million new homes by the end of its term in government, which in reality would mean having a large housing estate built every day before the next general election. Whilst we support more homes being constructed, there needs to be careful consideration on background infrastructure to ensure we are making the best use of available land, ideally prioritising a brownfield-first approach.”
If you would like to find out more about planning and development in your particular area, or you have any questions about how the new Labour government’s policies might affect you, we’re always here to help. You can find the contact details for your local lettings team here.
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