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Nationwide Buy To Let Review Of The Year

The private rental sector nationwide has remained robust through 2018, despite dour predictions as last year drew to a close. The theme of 2018 has been regulatory impact, ranging from the imminent implementation of the Tenant Fees Bill to the persistent teething problems with the notorious Right to Rent.

Criminal landlords have found it increasingly hard to operate; a London landlord checker and a £2 million rogue landlord fund have vowed to clean up the sector. While Brexit has been a looming spectre over the year, ‘uncertainty’ remains the key descriptor and its likely that ascertaining its true impact will be a job for next year’s review.

A quieter housing market was seen throughout the year. House price rises have slowed, according to Nationwide, dropping to their slowest pace since May 2013 in October. Economic uncertainty, stemming largely from Brexit but also a nationwide tightening of the purse strings, encouraged a slump in house prices.

The Tenant Fees Bill has been a cause of controversy nationwide throughout the year.

June 5th saw the first sitting of the bill. It was at this point that the issue of the deposit requirement was first raised. MP Sarah Jones argued that currently, the majority of landlords require a 4-week deposit. However, should a 6-week cap be imposed, it is likely that the majority of landlords would raise their deposits to match this figure.

In contrast, the National Landlords Association (NLA) argued that a limit of just one month limits flexibility in tenancy requirements. They took the unlikely angle of defending the nation’s pets – suggesting that properties who permit furry friends should be entitled to demand a larger deposit to cover potential damage.

The bill was generally met with discern by landlord bodies, with ARLA Propertymark citing its own research as saying tenants nationwide will end up worse off with a fee ban due to raised rents, rather than seeing a more affordable private rented sector. The RLA complained that by taking months to become law, the bill is inefficient and suggested that far quicker changes could have been made.

In spite of criticism, the bill pressed on and towards the end of November, the second reading for the tenant fees bill saw it pass through the House of Lords without amendment. The third and final reading will come after the report stage, although the deposit cap remains a contentious issue.

While the Tenant Fees Bill has been a steady presence throughout the year, it has been all but overshadowed by the constant controversy surrounding Right to Rent, an issue amplified by the Windrush Scandal which saw a number of British subjects who originated from Caribbean countries as part of the ‘Windrush Generation’ wrongly deported and denied citizenship rights such as medical care. The issue arose as a direct result of Theresa May’s ‘Hostile Environment’ policy, the same policy which saw the implementation of Right to Rent.

Right to Rent requires that landlords determine whether their tenants have the right to remain in the UK, facing criminal charges if they fail to do so. As a result, research from the Joint Council for the Welfare of Immigrants (JCWI) found that 51 per cent of landlords are now less likely to let to foreign nationals. 2018 saw over 400 fines issued to landlords, amounting to £265,000 by the end of March, although this figure included fines from the previous year.

The policy has seen two separate legal challenges launched against it in 2018, following claims that the legislation forces landlords to ‘act as border guards’.

The first case was launched by the JCWI. Legal policy director at JCWI, Chai Patel, said: ‘The right to rent policy is designed to encourage irregular migrants to leave the country by making them homeless. The problem with it, apart from the inhumanity of that proposition, is that there’s no evidence it works. The Home Office hasn’t shown that the scheme will do anything to increase voluntary departures, which have actually reduced since the scheme came into force. Worse, the scheme causes discrimination against foreign nationals even if they have immigration status.’

He continued: ‘It also causes discrimination against British citizens who don’t have passports. Faced with our evidence, the Home Office has buried its head in the sand and refuses to review the scheme before forcing it onto Scotland, Wales and Northern Ireland. We have no choice now but to challenge this pernicious and ineffective policy through the courts.’

This was met with support from landlords, who have condemned the policy. The RLA supported a judicial review of Right to Rent, arguing that landlords nationwide should not shoulder these responsibilities.

A second challenge comes from a woman who faced eviction after her landlord was told she did not have permission to reside in the UK after the Home Office lost her passport when she applied to extend her visa. The woman’s lawyers are in the process of arguing that the ‘right to rent’ policy is not compatible with the Human Rights Act.

Finally, independent chief inspector of Borders and Immigration David Bolt has condemned the scheme, writing in a foreword to his report that the policy has ‘yet to demonstrate its worth as a tool to encourage immigration compliance’.

However, while it appears universally accepted that the policy has brought little good to the sector, it served its creator James Brokenshire well when he was promoted to Secretary of State for Housing following Amber Rudd’s resignation during the Windrush Scandal and Sajid Javid’s promotion to Home Secretary.

While the Tenant Fees Bill and Right to Rent might have dominated the headlines during 2018, there has been plenty of lower profile legislation adding to the regulatory landscape for landlords.

Councils have been granted new powers to crackdown on rogue landlords while a new fund has been launched to combat bad practice in the sector. The second part of this review in the New Year will focus on those regulations that were introduced to protect tenant rights, as well as investigating predictions for the coming year.

Source: Residential Landlord