Could This Really Be the End of the Private Rental Sector?

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I have worked with the private rental sector for 25 years, but I won’t be having a party. I have seen the how attitudes have changed over those 25 years and heard the threat more than once that private landlords would withdraw from the sector because of legislative changes. 

Housing benefit payments being made to the tenant, rather than the tenant having the option to say the rent should go to the landlord was one such change. The threats may have been acted upon by a few, but it was not the major flow away from the sector which had been expected.

Admittedly, landlords had to take more responsible action in managing their properties; they were expected to make thorough enquiries before they accepted a tenant, so that a tenant with a history of rent arrears would allow the landlord to ask for payments to them, for that tenant only. Though the tenants with a bad payment record were more than expected, at one stage a quarter needing the payment to be made to the landlord, landlords worked with the legislation and acknowledged they could make it work, provided they put some effort in.

The change to Universal Credit has created huge difficulties, which have indirectly affected landlords very badly. Tenants are not paid anything for the first week of the claim (in the mistaken belief that all workers will receive payment at the end of their employment – tell that to someone on a zero-hours contract) and then may have to wait 5 weeks before payments are made. 

How do they live, feed themselves and their families, during that 5 weeks? The rent will come a long way down the list in those circumstances. Landlords in the private rented sector, it seems, are expected to take the role of the social landlord and wait for the rent.  They shouldn’t have to, but so many landlords do, having sympathy for their tenants – a sympathy unmatched by Universal Credit. Under pressure, but still the landlords continue to house the struggling, the homeless and the poorest.

Has this made the Government complacent? Do they feel this means they can treat the sector as they want? That is the only conclusion that can be reached by their stated intention to end the section 21, no blame ground, for ending a tenancy. However appalling the ideas in circulation for the last few years of a minimum 3 years tenancy are, total abolition of section 21 is a step further and must have an impact on the private sector and on those landlords prepared to take a risk by accepting a not very promising tenant.

Research seems to be pointing to an emergency situation in the very near future. Landlords are now actively reducing their portfolios. The Royal Institute of Chartered Surveyors (RICS) warned that private rented sector rents (static in many areas for some time) would rise by 3 per cent per year for the next 5 years, because landlords would be less likely to rent because they could not recover the property if they needed to, though the demand for properties would increase.

In the past, in emergency situations, as in the late 1980’s when the Assured Shorthold Tenancy and section 21 were formulated to address demand, the private rented sector was expected to meet that demand. Will Government and Housing Associations meet the demand in the years to come? 

For advice on buy to let issues – Ask Sharon

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