Landlords could be hit with £14k bills and red tape in Tory 'Levelling Up' plans

Landlords could be hit with £14k bills and red tape in Tory 'Levelling Up' plans

• Some landlords face bills of between £11,000 to £14,000 as Michael Gove, the Housing Minister, declared an attack on poor quality private rental homes.

• 164 rental properties in Maghull will require upgrading. The Government announced in their ‘Levelling Up’ White Paper last week that they plan to introduce a new minimum standard for private rental properties.

• The White Paper wants every landlord in Maghull – there are 705 - to go on a Landlord Register and proposes the removal of Section 21 no-fault evictions. This could make it more difficult for landlords to regain possession of their rental property.

At North Wall we wholeheartedly support proposals to improve the standard of living – one of our core beliefs is that houses are not just assets but homes, thet they’re a fundamental right…but nothing is ever as simple or easy to implement as a headline would lead you to believe, so let’s have a look in more detail.

Are these proposed changes another nail in the buy-to-let coffin for landlords?

On the face of it, yes, it could be seen as another attack on landlords, having to spend money on their properties and get tangled up with red tape on a register and then having no-fault evictions removed. Let’s not forget that landlords come in many shapes and sizes, and not all are just focused on profits over people. Quite the opposite.

This ‘Levelling Up Bill’ is a White Paper. White Papers are policy documents created by the existing Government that set out their future proposals for legislation. Many White Papers don’t even make it to the House of Commons to be debated on, and even then, it needs to be voted on by both Houses of Parliament before becoming law. Any changes are at least two or three years away, and that’s assuming it gets debated and subsequently approved.

Many have said the White Paper is supposed to lay out how to resolve the problem of rebalancing the UK economy that is suffering from the highest level of regional inequality than any G8 country. This is a very real problem and a gargantuan challenge…

But - the Levelling Up White Paper reads very much like a shopping list of great ideas without the means to pay for it.

Tory point scoring exercise at a time when they’re going through a huge crisis of confidence? The timing and headline grabbing nature would suggest…maybe.

One of the 12 points in the White Paper was focusing on housing, with a plan to introduce a new minimum standard for rental properties, a landlord register and the removal of no-fault evictions (as an aside, there was also a mention of a possible reintroduction of Home Information Packs - remember those from 2009!).

So, what does this mean for the landlords of the 705 private rental properties in Maghull?

Sub Standard Rental Properties

The proposed changes will mean rental homes in the private sector will have to meet two specific standards that the existing 480 social housing homes in Maghull currently need to meet.

The first being called the ‘Decent Homes Standard’ (DHS) and the second, the Housing, Health and Safety Rating System (HHSRS) evaluation.

Looking at data from the Government, there are 164 private rental properties in Maghull that are considered substandard under these two measures and each one would cost between £11,000 and £14,000 to bring up to the prescribed standard. That means…

the estimated total cost to improve those 164 properties, that are considered substandard, could be as high as £2,299,710.

And all of that would have to come out of the pockets of the landlords. From a tenants perspective, and honestly from a managing agent’s perspective, this would likely be a good thing – better quality homes, better standards of living, and lower ongoing maintenance concerns.

Yet both systems of standards (DHS & HHSRS) have been slated by many (even by the Government itself).

The DHS criteria for the standard are as follows:

1. It must meet the current statutory minimum standard for housing
2. It must be in a reasonable state of repair
3. It must have reasonably modern facilities and services
4. It must provide a reasonable degree of thermal comfort

Note how the word ‘reasonable’ is used in three of the four points of the DHS. Reasonable is an arbitrary and a very much subjective point of view. It screams loopholes and get out clauses to me.

Looking at the HHSRS, the Government announced just before the pandemic in June 2019 that the HHSRS would be revamped after it was found to be ‘complicated and inefficient to use’.

Putting aside how we measure the standards, it is a simple fact that there are many rental properties in Maghull area that would be viewed as substandard. I believe it right the Government have an ambition to halve the number of sub-standard private rentals by 2030. However, would it surprise you that…

in 2006, 46.7% of private rented homes in the UK were classed as substandard and today that has reduced, without any legislation, to 23.3%. One must ask if new legislation is now required?

This is a result of a few things – old school landlords unwilling to meet modern living standards exiting the market being the over-arching theme

Also, if you recall in an article I wrote recently (drop me line if you would like me to send it to you), Maghull landlords will be faced with bringing their properties up to an energy rating (EPC) of C between 2026 and 2028 in legislation already announced.

Most of the works to meet that EPC rating requirement will be the same works to meet this new DHS and HHSRS. Also, in that article, I discussed how the Government have suggested that certain allowances will be made for landlords on rental properties that can’t be improved.

So, I think Maghull landlords should sit tight and let the Government shine more light on this in the coming months before any knee jerk reactions are made.

Landlord Register

To be honest, there are several city / borough registers around the UK for landlords. Experience has shown they seem to add an extra level of bureaucracy and red tape. Depsite that, LCC are re-intriducing their scheme this Spring (let’s hope they have the manpower to manage it).

Sefton have a selective scheme in place to protect certain tenant profiles and neighbourhoods, but the new register would be for every Maghull buy-to-let landlord, with rogue landlords being struck off and allowing tenants new redress rights. Another reason to employ the services of a letting agent to sort!

End of No-fault Evictions

Again, I wrote about this a few weeks ago - the proposed removal of Section 21 to evict a tenant. No-fault evictions were removed in Scotland over four years ago and the apocalyptic suggestions it would kill the rental market for Scottish landlords was not forthcoming. They did strengthen the other grounds to evict a tenant, and if the Government strengthen the Section 8 legislation then I cannot see this being an issue south of the border either.

Time will tell once the Government put more meat on the bones of the White Paper.

Conclusion

Many of the announcements made in the Levelling Up White Paper are re-hashed proposed legislation that has been on the books for the last couple of years.

Draw your own conclusions for the motivations behind the announcement, maybe at a party with cheese and wine…

Bottom line - this White Paper is not another nail in the coffin for rental properties.