Right to Rent: When Government policy blurs the lines between state and citizen

by | Dec 15, 2017 | Blog post, Regulation & Enforcement

The current top two political issues on the agenda are Brexit and Housing, with increasing attention being directed to policy changes in the private rented sector (PRS). A key part of Prime Minister Theresa May Conservative Party Conference speech was a promise to fix the housing crisis.

The Government has diverted significant attention to different housing matters, and the Government is currently running 15 consultations that affect some issue across the private rented sector. At the same time, there are a number of changes that have already been announced, including the proposed cap on deposits, the ban on letting agent fees, and the already introduced ‘Right to Rent’ checks. Very little is currently known about how these changes will impact the sector.

Our latest research provides an opportunity to address this, and to develop an understanding of how these different policies may affect landlords. Our latest report presents the findings from our second quarterly survey of 2017 and with the responses from 2,792 landlords.

The survey findings suggest that the ‘Right-to-Rent’ checks are fueling divisions in society. Previous research has identified that the Immigration Act 2015 has essentially turn landlords into state agents to enforce border controls[1]. Our research provides further evidence to support these claims.

Our findings highlight that 42% of landlords were now less likely to consider letting to someone without a British Passport. This is a concerning figure, and this policy could be having an unintended consequence of reducing the availability of homes to rent for those without a UK passport. At the last census in 2011, 17% of the UK population reported that they did not have a passport.

Our research has further implications, we found that 49% of landlords are now less likely to consider letting to someone who has permission to stay in the UK for a limited time-period. The Migration Observatory at the University of Oxford recently reported that “the foreign-born population are almost three times as likely to be in the PRS.” This could mean significant difficulties are being created for people to find a home.

Based on this evidence, we believe that the Right to Rent schemes are making it difficult for many to access housing they need. The Government and the Home Office should suspend the scheme, review the impact on the whole sector and identify a different approach.

This research has also provided an opportunity to examine the impact of implementation of regulative changes and new policy proposals.

A key regulative measure has been the use of selective and additional licensing schemes by local authorities, these require landlords to apply for a license, to meet certain conditions, as a key method for local authorities to improve standards, tackle anti-social behaviour and support their community. From the findings, we have identified that the majority of landlords do not believe that the licensing schemes are having any effect on their community and only 4% believed anti-social behaviour was being improved under the scheme. Licensing schemes are a flawed principle, with good landlords signing up, and rogue landlords operating outside the schemes.

A much better approach to improving standards across the sector would be work with the good landlords and to focus the resources of councils on tackling rogue landlords. We propose that the government should work with us to set up a co-regulation scheme, where landlords who sign up are exempt from local licensing in the first instance but provides Alternative Dispute Resolution (ADR). We believe this would help both tenants and landlords, help to provide greater confidence for tenants if they have a problem with their home and to help raise awareness for inexperienced landlords on best practices and their responsibilities in providing safe and secure homes.

Our research also continues to show that landlords (39%) are lacking confidence in the sector. On a whole, most landlords are battering down the hatches and preparing for the storm from the uncertainty caused by regulative, political and economic changes. The majority of landlords are planning to keep their portfolios the same size and this has remained flat over our past quarterly surveys. However, there are more landlords who plan to sell properties than those that plan to invest further, indicating that there is a serious possibility for a net reduction in homes to rent.

At a time when it is one of the main priorities for the government to fix the ‘housing crisis’, reducing private investment into homes for rent is not going to improve the situation. When the sector needs more homes to rent, reducing incentives to providing these homes is counter-productive. Rather, the government should be using positive taxation measures and looking at innovative ways to approach issues, there is the opportunity for tax relief as an incentive for longer-term tenancies and for capital gains tax relief for selling to a long-term sitting tenant. These policies would help both tenants and landlords, promoting longer-term tenancies for those who want them across the sector.

[1] Crawford, J., Leahy, S., & McKee, K., (2016). ‘The Immigration Act and the ‘Right to Rent’: exploring governing tensions within and beyond the state’. People Place and Policy Online, 10(2),114-125. DOI: 10.3351/ppp.0010.0002.0001