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Laura Gittins
27/05/2021 09:31
Analysis - what could the Queen's Speech mean for the rental market?
Last week, the start of a new Parliament was launched with the Queen's Speech. During the formal address, the Queen set out details of the laws the government want Parliament to approve over the coming months.
The last Queen's Speech took place in December 2019, just a week after Boris Johnson won the General Election. This week's address set out details on a small number of key housing policies, such as increasing home ownership through a new planning bill.
On the lettings side, Her Majesty said the government would enhance 'the rights of those who rent'. It is thought this was a reference to the Renters' Reform Bill, which was first mooted during the previous Queen's Speech.
The controversial Bill intends to abolish Section 21 evictions, introduce lifetime deposits for renters and expand access to the database of rogue landlords and letting agents.
Below, we take a closer look at what was said this week and when the Renters' Reform Bill could be introduced...
'Enhancing the rights of those who rent'
Although the Renters' Reform Bill was not mentioned by name, it is thought that the Bill remains the government's key vehicle for rental sector reform.
A government White Paper is now expected in the autumn, before formal legislation starts its journey through Parliament later this year.
It is thought that the new focus for reform could in fact be centred around lifetime deposits and increased redress obligations for landlords.
According to leading property lawyer David Smith, partner at JMW Solicitors, the government has not committed to publish a bill to abolish Section 21 evictions.
"Given that bills were being promised in both the Spring and Autumn of 2021 that is very telling," he said.
Smith added that the government has instead committed to publish its response to the original consultation on scrapping Section 21, which he described as 'a much weaker offer'.
"There is talk of lifetime deposits and landlord redress schemes. There is also a statement that the government will ‘explore the merits of a landlord register’."
"This seems to me like a textbook example of kicking Section 21 reform into the long grass. It is clear nothing will be happening in that regard for at least a year, and possibly far longer," said Smith.
"I very much disagree with the suggestions that this means the government is still highly committed to reform."
At this stage, it is therefore unclear whether the government still intends to abolish Section 21 or whether its reform of the sector will extend only to other measures such as lifetime deposits and a landlord register.
How could lifetime deposits work?
The average tenant deposit is now more than £1,000, according to official figures. As well as the size of deposits, a common challenge for renters when moving home is finding the cash to pay for a new deposit before they receive their old one back from their previous landlord.
It is hoped that lifetime deposits - a transferable sum of money which follows tenants through their rental journey - will reduce the obstacles to moving home while improving tenants' financial circumstances.
The government is yet to release any details of how lifetime deposits might work. However, there are a range of potential issues that will need to be addressed.
The first is what would happen if the previous landlord wants to make deductions from the tenant's deposit when they move - would the new landlord receive a lower deposit or would the tenant be expected to top it up?
What's more, not all moves between rental properties are seamless. There are gaps and overlaps between contracts, so it needs to be made clear what happens to the deposit in these circumstances.
Not all deposits are equal, so there will also need to be a system in place which makes it easy for tenants to withdraw from and top up their lifetime deposit.
The launch of a White Paper in the autumn will hopefully shed some light on how lifetime deposits could be introduced effectively.
What happens next and what do landlords need to do?
It appears rental sector reform is very much on the agenda of the government, but what that reform will look like and when it will happen remains unclear.
The next milestone for landlords to watch out for will be the launch of a government White Paper which is expected in the autumn.
This could be followed by further consultations or the launch of a version of the Renters' Reform Bill to Parliament.
It's therefore important for landlords to keep an eye on the news while focusing on their existing compliance obligations.
Meanwhile, working with a proactive letting agent can help to ensure that your property is in the best hands and you're made aware of rental sector changes well in advance.
Here at Farrell Heyworth, our team are on hand to advise you on any part of the lettings process and can provide you with a virtual property appraisal. You can also kickstart the sales or rental process by requesting a free and instant online valuation.
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