Prince Charles outlined the government's agenda for the year ahead. Two key housing issues were addressed which will directly affect current and prospective investors in the private rental sector.
Since the Levelling Up White Paper was published in February, we have been expecting to see legislation covering rental reform and social housing. Both make it into the agenda for this year.
Renters Reform Bill
Reform of the Rent Acts has been promised every year since Theresa May was Prime Minister. It has finally made its way into the Queen’s Speech and will be the most significant change affecting private landlords. Section 21 evictions, also known as ‘no fault’ evictions, have been widely seen as a major problem in the housing sector. Under section 21, landlords are able to evict a tenant without giving a reason.
It is in the interest of a property owner to have long term good quality tenants. However, the current system is open to abuse and charities have long drawn attention to many such instances.
It has been widely trailed that the new Bill will look to achieve a better balance between the rights of tenants and landlords with stronger possession grounds required. We are yet to see what form this will take.
The Bill will also apply the Decent Homes Standard to the private rental sector and introduce a new ombudsman for tenants and landlords to resolve issues without going to court.
The Leasehold Reform (Ground Rent) Act comes into force in June. This will put an end to ground rent payments for new residential properties in England and Wales. The speech said that this will be just the first step in leasehold reform during the course of this parliament, though nothing more is promised for this year.
Forthcoming changes may include making it easier for leaseholders to extend their leases or buy the freeholds. The may also be the option for leaseholders to have more transparency in service costs and greater control over building management.
There will be greater effort to identify past mis-selling of leasehold houses after the Competition and Markets Authority penalised a number of household name builders over possible unfair contract terms.
While the abolition of ground rents on new properties is welcomed, it is undoubtedly rental reform which will be of greatest interest to current and future property investors. Details are not expected to be seen until the autumn.