Labour’s Private Rented Sector Commission Review – What Is It Proposing?
A report saying it is an ‘Independent Review of the UK’s Private Rented Housing Sector’ has just been published by Labour Party-linked organisation The Private Rented Sector Commission. It presents some proposals on how the private rented sector might be regulated in future. In this post we will summarise what it proposes and offer a few thoughts on what it might mean for the PRS.
About the report
The report, which can be downloaded in full here, has been prepared by an organisation called The Private Rented Sector Commission. This organisation says it is supported by the Labour Housing Group.
The report was commissioned by then Shadow Housing Secretary Lisa Nandy in early 2023 and has been led by Hammersmith and Fulham Council leader Stephen Cowan. At its inception Lisa Nandy suggested the report would drive forward the party’s plans for a new renters’ charter.
However, the report now points out that this is solely an independent report. It says: ‘The conclusions reached in it are solely ours and in no way reflect the views of the people we interviewed, the Labour Party, the Shadow Cabinet or any other individuals or organisation.’ It has been described as an evidence-based discussion document to provide food for thought for the party as it prepares for the next election.
Who prepared the report
The primary author and Commission Chair is Stephen Cowan. Stephen Cowan has been the leader of the London Borough of Hammersmith & Fulham Council since 2014.
Between 2002-2006 Stephen Cowan was deputy, then chair, of the Housing Committee for the Association of London Government (now London Councils) where he established a new housing policy unit. Between 2010-2013 he was vice chair of the London branch of the Labour Housing Group. He helped develop housing policies for the 2012 London Labour mayoral manifesto and came up with the concept of a London Living Rent. In 2020 he helped found the Labour Local Government Campaigns Cooperative and remains a member.
A number of other people have contributed to the report including retired barrister William Hunter, author and campaigner Rose Grayston and Jacky Peacock, Head of Policy at Advice for Renters. It quotes selectively from a range of other PRS research and took in views from a number of other organisations.
Key recommendations in the report
This report is a lengthy and detailed one. We will try to summarise some of the key recommendations made, in a concise way, here.
The report begins by giving some information on the PRS today. It talks about how and why it has grown in recent decades. It says that many people, and particularly those on lower incomes including those on housing benefit, are entirely dependant on the PRS for housing. It adds, however, that it is ‘the most expensive of all forms of housing tenure’.
The report asserts that the PRS is broken and does not work well for tenants. It places blame on Conservative Party policies (or lack of them) regarding the sector now and in the past.
In making suggestions for reform of the sector. It claims that, while these may cause some landlords to exit the PRS, these people will likely do so anyway.
The need for a holistic solution
The report says that a holistic approach is needed to the housing market. This should include reforms to planning and to compulsory purchase to increase housing supply. It suggests social rented housing should be brought back to being the second largest part of the housing market, behind home ownership. So that those on low incomes do not have to rely on the PRS.
The report appears to be in favour of private sector build to rent development. It suggests that ‘a way forward is to encourage and incentivise institutional investors and the emerging Build to Rent (BtR) sector to increase the supply of long term lets through new development’. It suggests this could replace stock that may be lost as a result of these policies.
A National Landlords Register is required
The report proposes a National Landlords Register or NLR. The aim of this is to enable government to manage and enforce standards efficiently. Landlords would need to register themselves and their properties. They would need to show compliance with all relevant rules and standards including gas and electrical safety and there would be a requirement to submit a surveyor’s report regularly. Landlords would have to pay an annual registration fee with fees and fines for non-compliance funding the register.
Letting and management agents would also need to be registered. It says there must be ‘higher standards of practice across these sectors’. Agents would also be responsible for the safety of a property.
The report suggests there should be regular compliance inspections, by an inspecting body, and fines for non-registration or non-compliance. It suggests the police could become involved, by allowing them to take action criminal action against unregistered landlords.
Additionally, if a landlord is not registered on the NLR tenants would be able to claim repayment of rent, or deduct it from any rent already paid.
There should be more security for tenants
The report asserts that tenants must have greater security. It says that all privately rented homes should be on open-ended periodic tenancies that can only be ended on defined grounds, mostly those involving tenant default. No fault evictions, include so-called ‘back door’ methods of doing this, should be banned.
It adds that, other than as above, landlords should only be able to repossess their properties if they have previously lived in them themselves.
The report says that while eviction should be possible for anti-social behaviour this should only be a discretionary ground.
It says that tenancy forms across England and Wales should follow the format already used in Wales.
Rent stabilization measures are needed
The report criticises what it calls ‘first generation’ rent controls, such as rent freezes, as detrimental to the sector. But it proposes there should be so-called ‘third generation rent stabilization measures’. Notably these would operate within tenancies but not between them. These would limit rent increases within tenancies to the lower of local wage growth and CPI on an annual basis only. There should be no rent review clauses.
There should be restrictions to stop landlords moving to other types of letting
The report proposes that there should be measures to stop PRS landlords moving to other letting sectors. For example, the short term and holiday let sector or the nightly-paid temporary accommodation and supported housing sector, which it describes as ‘more profitable’. The aim of this is to preserve the stock of homes for long term let.
There should be an annually updated PRS Decent Homes Standard
The report proposes that a new PRS Decent Homes Standard should be produced and that this should be updated annually. It says that demonstrating compliance with this should be a requirement for maintaining a landlord’s registration with the proposed National Landlords Register. As well as having to comply with a range of property standards relating to gas and electrical safety, warmth, ventilation, accessibility and Internet connectivity the new standard would require landlords and agents to take the most recent training course and pass a test.
Interestingly, it adds that the new PRS Decent Homes Standard ‘should be a mechanism for targeting high decarbonisation standards in homes.’ It recommends raising the minimum EPC rating for rental property to C ‘at the earliest opportunity’.
There should be a new renters’ charter and landlords’ code of conduct
The proposals include the creation of The Renters’ Charter and Landlords’ Code of Conduct. This sets down a range of rules and standards which both parties will have to abide by.
The issue of pets is one which frequently raises its head when the PRS is discussed. On pets it says that ‘a renter’s right to have pets cannot be absolute and unlimited.’ But, notably, it says that the default position should be that the tenant may have pets unless the landlord can prove that they are ‘dangerous or savage’.
Enforcement and adjudication
The proposals suggest that enforcement of new laws could be allocated to organisations including local authorities, the police, Crown Prosecution Service, a PRS Housing Ombudsman, and the tribunals and courts. In some cases these organisations will have a legal duty to act.
It adds that enforcement needs to be properly resourced.
Intermediate landlords
The proposals say that there should be measures to prevent the use of intermediate landlords in the PRS insofar as it is done to circumvent legal responsibilities.
The courts and tribunal system
Lastly the report says that while reforms of the court and tribunal system lie outside this
commission’s terms of reference a general review should quickly be instigated in government. It says that a review of legal aid is also urgently needed.
Some thoughts on the report
Firstly, it has to be said that this is a very, very long and detailed report. Anyone who has the time to read and digest it all should be commended on their stamina.
Secondly it should be stressed that the recommendations of the report are not Labour Party policy …. as yet. It will be interesting to see if any of them make their way into their next election manifesto. If they do, then given the size and scope of these proposals, a future Labour government would be well advised to pencil in several years of parliamentary time for discussing and introducing them.
It should be borne in mind that the report may be independent of the Labour Party, but it is not independent as in impartial. It has been prepared by partisan sources. It took in views from a number of organisations. But, with a few exceptions, a large number of these were ones that are concerned with tenants’ issues. The report is disparaging about PRS landlords alleging that a large part of the sector is made up of ‘amateur landlords’.
There are some proposals in the report that would benefit tenants, but would not unduly trouble landlords. Some of the proposals are things that will likely happen anyway, no matter what party is in government in the future, and so many landlords will already have factored them into their plans.
Some of the proposals, though worthy, are probably never achievable in the real word within any reasonable time frame.
Some of the other proposals, however, will be of great concern to many landlords. In particular the stringent requirements involved in registering with, and staying compliant with, the National Landlords Register would challenge even the most conscientious of landlords. As likely would the proposed ‘rent stabilization’ measures.
Should some of these proposals ever make their way into a government white paper they would probably spur an even larger landlord exit from the market than we have seen already. This could potentially create a really serious situation in the PRS, with a severe shortage of accommodation and escalating rents for any properties that remained available. And all that long, long before anything could be done, as the report proposes, to increase the numbers of homes for sale or social rent.
Most people would agree that the PRS as it stands right now is far from ideal for all parties. Something ought to be done to improve it. So any study which puts forward thoughts on how this could be achieved ought to be welcomed. But the property market needs clear and pragmatic ideas that could be introduced swiftly and which would show benefits in a short time frame. It is really difficult to see how this lengthy and intricate package of heavy-touch measures would do that.
Lastly, it’s also very difficult to see how local authorities (or indeed other parties) could enforce all these new rules given that most already struggle with the existing ones. The report draws parallels with VAT, Food Hygiene Rating and HMO licensing compliance and says these can offer ‘workable precedents’ for a new system of PRS compliance. Most people will find it difficult to see any parallels between VAT, food hygiene and the PRS. Whether the current HMO licensing compliance system is an exemplar is also open to debate.
