Given its focus on the future of social housing, the bulk of Shelter’s new report, “Building for our future: A vision for social housing” understandably centres on the social sector, but in Chapter 8 the report sets out Shelter’s vision from private renting.
Given the depth of the problems faced by private renters, says Shelter, [it] “necessitates urgent action. Improvements to the private rented sector now will make a major difference for the increasing numbers who rent privately, including more and more families and older people.”
Shelter is calling for permanent tenancies to become the legal minimum norm for all private renters.
Presumably these would be similar to those introduced in Scotland, where on the 1 December 2017 a new type of tenancy – the private residential tenancy – came into force, replacing the assured and short assured tenancy agreements for all new tenancies.
Shelter also advocates some form of rent control, plus a new consumer regulator, similar to the Financial Conduct Authority, which would be to register, monitor and enforce social and all those private landlords who are owners of more than 25 homes.
“Other countries have introduced regulation to make the market for private renting work better, but in England, the regulation governing private renting has not kept up with the breakneck expansion of the sector. Our current regulations are relics from a time when private renting was normally only a short-term option and for a small minority. They exacerbate the weak bargaining position that private renters are put in by the overheated market, and they put private renters at risk of exploitation. They need to be reformed,” says Shelter.
Shelter calls for a strengthening of private renters’ bargaining powers to place them in a better position to negotiate a deal for themselves. The biggest opportunity for change is, as Shelter sees it, the removal of the no-fault or ‘Section 21’ eviction – a reference to this section of the 1988 Housing Act that gives landlords the power to evict without a reason.
In most of our neighbouring countries, Shelter says, stronger legal protection against eviction puts private tenants in a much stronger position to push for a good rental deal. “There are legal protections against no-fault eviction and across mainland Europe.” And since December 2017, private renters in Scotland have been legally entitled to a permanent tenancy, where they can leave at any point with 28 days’ notice, but they can only be evicted if landlords have a legitimate ground for doing so.
Giving private renters in England a similar legal protection, Shelter advocates, would strengthen their bargaining power and make it easier for them to complain or challenge, without fear that it will result in them being asked to leave.
Shelter says that the government acknowledges that longer tenancies can provide a form of consumer protection, “ensuring that tenants can confidently make a complaint”.
A recent government consultation included new proposals for how to deliver longer tenancies to more private tenants, the result of which is yet to be announced. It is not yet clear whether the government’s proposal for a model longer tenancy would be voluntary or mandatory, but the broad terms would be:
three years in length, during which time tenants would be protected from no-fault eviction
landlords would only be able to regain possession where they are able to demonstrate grounds (like serious rent arrears)
the tenant would be able to leave at any time by giving two months’ notice
it would be subject to a break clause after the initial six months at which point either party would be able to break the tenancy
rent increases would be limited to one each year. How rent increases would be calculated would also need to be set out when the property was advertised
With a longer tenancy, families would have much greater certainty that they would be able to stay in their home for at least a while and reduce the risk of multiple moves impacting on their child’s education, says Shelter.
However, Shelter argues, while three-year tenancies would clearly be an improvement on the existing rental framework, any fixed duration will create a “cliff edge” and limit the potential benefit it will have.
Hence Shelter’s argument that a permanent tenancy similar to the Scottish model would remove a fixed end date when tenants could fear recrimination if they raise a complaint.
The report goes on to suggest that to ensure that landlords have confidence in their capacity to legitimately regain possession (such as if their tenant goes into serious rent arrears), these legal changes could coincide with a review of court processes and resourcing.