Why the private rented sector isn’t a zero-sum game and landlords could hold the balance of power
Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA)
With media outlets competing for attention, it’s hardly surprising that stories about the private rented sector (PRS) are reduced to “landlords versus tenants”.
Yet, as so often with the sector, the issues involved are far more nuanced than many commentators would have you believe.
The National Residential Landlords Association is determined that political parties reflect this reality in their plans for the sector in this year’s Senedd elections.
Following a series of new laws passed in quick succession over the past decade, landlords and tenants need time to adjust to the significant changes which have occurred in recent years. It’s a matter of good law-making to give these changes a chance to bed in and assess their success.
With a revised licensing regime in place, possession reform on the horizon, and new tenancy agreements and property standards awaiting implementation, there is plenty in place to protect tenants from the rogue landlords that blight the sector.
Efforts must now go into ensuring that enforcement of those laws is firmly and effectively in place. Taking this step will result in an improved private rented sector and will drive out criminal operators across Wales. Moreover, it will increase landlords’ faith in the ability of the existing compliance model to deliver long-lasting, useful change.
There are two messages that need to be understood by all policymakers. First, that improving life for both landlords and tenants need not be a trade-off. There are plenty of reforms which can act in the interests of both parties.
Second, that private landlords have an important role to play, providing safe, legal and secure homes for those who cannot buy but do not require valuable social sector resources.
A failure to recognise this leads to an unbalanced, inefficient, and unstable private rented sector, with negative consequences for all parties.
‘Shrink the sector’
Any desire to shrink the sector will lead to more overcrowding as young people live with parents for longer, moving into substandard accommodation through a lack of choice. It will increase pressure on local authorities as social housing becomes further oversubscribed and could also have wider implications for homelessness.
This does not mean we are calling for landlords to get an easy ride and for regulations to be watered down.
Ahead of the sixth Senedd election, our chief manifesto proposal is to streamline licensing.
Rent Smart Wales (RSW), created by the Welsh Labour Government through the Housing (Wales) Act 2014 is nominally the “single licensing authority” for Wales. All landlords must be registered and licensed if they undertake management activity with RSW, lest they fall foul of the law.
However, councils have discretionary licensing schemes for homes of multiple occupation (HMOs) that replicate many of the hurdles RSW has, with prohibitively high fees.
Instead of this complicated and bureaucratic system, we can streamline licensing without compromising on standards. One way of doing this is to eliminate local schemes and incorporate extra requirements for homes of multiple occupation into the structure of Rent Smart Wales and the incoming Fitness for Human Habitation standards, to protect tenants across Wales.
This is a win-win for landlords and tenants and presents the Welsh Labour Party with the opportunity to maximise the potential of two of its own creations. We recently produced a comprehensive report on how Rent Smart Wales can improve even further, and in the process demonstrate the Parliament’s pivotal role in delivering positive change in this area.
It may be surprising to some but there are many things that landlords and Labour agree on. Both Labour and the NRLA oppose the UK Government’s Right-to-Rent scheme and its extension into the devolved nations.
As Labour increasingly favours the devolution of justice, the Welsh Government have already agreed to explore the our suggestion of a housing court for Wales in a way that uses the existing housing tribunal to test cheaper, quicker, and more conciliatory access to justice for landlords and tenants.
Additionally, we hope the Minister for Housing and Local Government, Julie James takes heed of our warning that Wales is in danger of falling behind England in its collection of data on the private rented rector.
Adopting a Welsh Housing Survey is surely something we can all agree will only do good for everybody with an interest in housing policy being evidence-led, using accurate, impartial information?
Many perceive landlords to be being property tycoons. This is simply not true. The majority of private landlords do not have large reserves to fall back on as some suggest.
According to the English Housing Survey, 94 per cent of buy-to-let properties are owned by individuals. Of these 45 per cent own just one rental property, around a third are retired, and nearly half of them bought their property to contribute to their pension.
The same survey reveals that the median gross income for such investors is £15,000 a year (more accurate to say £10,000 after costs), which is around 42 per cent of the landlord’s total income. Do these people sound like the rich, landed gentry of old or a new, diverse group that numbers over 2m in the UK and 100,000 in Wales?
The private rented sector is not a zero-sum game where one group can only benefit at the expense of the other. Both the NRLA and Welsh Labour Party take a strong stance against rogue landlords and tenants that push landlords into a precarious financial position.
We can create a fairer and more harmonious private rented sector by empowering both tenants and landlords. We hope our proposals give insight into how this can be achieved.
Building productive relationships with landlords will result in better outcomes for the sector as well as for this election.
More to the point, the landlord population could hold the balance of power in 14 constituencies. Ultimately, working with landlords to achieve mutually beneficial goals without detriment to tenants is not only possible, but common sense.