Where next for regulation of the private rented sector?

Tuesday, July 9th, 2024 - By Richard Tacagni, MD, London Property Licensing

With the general election now behind us, we have a new Labour government with a significant parliamentary majority and a strong mandate for change.

Within the Ministry of Housing, Communities and Local Government (the department has reverted to its old name), the Rt Hon Angela Rayner MP has been appointed Secretary of State with Jim McMahon OBE MP and Matthew Pennycook MP as Ministers.

The Labour Manifesto said “Labour will legislate where the Conservatives have failed, overhauling the regulation of the private rented sector. We will immediately abolish Section 21 ‘no fault’ evictions, prevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards, including extending ‘Awaab’s Law’ to the private sector.

When it comes to housing standards, exactly what this will mean in practice remains uncertain. Suffice to say, there are plenty of issues in the Ministerial red box waiting to be addressed.

Housing Health and Safety Rating System

A bedrock of housing standards is the Housing Health and Safety Rating System (HHSRS). Introduced by the Housing Act 2004, this risk-based system for tackling hazardous came into force in April 2006 and is showing its age. Local authority enforcement officers are still applying statutory guidance published over 18 years ago. 

Recognising the need for change, the previous government commissioned a comprehensive two year HHSRS review. Statutory operating and enforcement guidance was updated, new landlord and tenant guidance produced, a comprehensive set of case studies (worked examples) developed and changes proposed to simplify the complex risk assessment methodology. 

Unfortunately, despite completion in 2022, the review has sat on a shelf ever since and never implemented. Will the new government implement, bin or undertake their own supplementary HHSRS review?

Decent Homes Standard 

The previous government proposed a decent homes standard for the private rented sector, part of which included serious hazards identified under the HHSRS, creating significant overlap between the two regimes. 

The proposed decent homes standard was still at the developmental stage. No decisions had been made about precisely what the standard would contain and how it would be enforced. 

With the Renters Reform Bill shelved before the general election, it is for our new government to decide whether to implement this additional layer of regulation, decide what the baseline decent homes standard should be and how it will integrate with existing legislative provisions.

Fire, smoke, gas and electrical safety regulations

One thing is for sure, our housing standards are overly complex. We have the Gas Safety (Installation and Use) Regulations 1998, the Smoke and Carbon Monoxide Alarm Regulations 2015 (amended 2022), the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 and various other legislative provisions, each with their own enforcement regime.

If we are to implement a decent homes standard for the private rented sector, it provides the ideal opportunity to consolidate these disjointed statutory provisions, bringing clarity and consistency to what is expected in every private rented home.

Awaab’s Law

Awaab Ishak tragically passed away just after his second birthday. The coroner concluded he had died as a result of a severe respiratory condition due to prolonged exposure to mould in his home, and that action to treat and prevent the mould was not taken.

This tragic case put the spotlight on issues of damp and mould in our homes. Whilst this case related to the social housing sector, pressure has been mounting to roll out additional legislative provisions to all private rented homes.

This seems almost certain to happen given the clear commitment in the Labour manifesto. The question is how this is done to achieve meaningful change alongside existing regulatory requirements.

The HHSRS already covers damp and mould as one of 29 hazards in the home. Council officers can investigate a complaint, assess the severity of the hazard, determine the causative factors and decide on the most appropriate remedy. Property condition, heating and ventilation are also part of the proposed decent homes standard. 

Our new government has the opportunity to incorporate any additional measures within the existing regulatory framework, rather than adding yet more layers of regulation. 

Property licensing

In my opinion, the current framework of mandatory HMO, additional and selective licensing is past it’s sell-by date. 

We have a complex myriad of licensing schemes with no national directory to help landlords and agents understand what schemes have been implemented and where. There are currently over forty additional and selective licensing schemes operating in London and to my knowledge, London Property Licensing remains the only free to access directory of licensing schemes, albeit limited to the London area.

These licensing schemes are hugely complex and costly for councils to implement. Each new scheme requires a detailed evidence base and comprehensive consultation process repeated on a five yearly cycle. There is no standardisation. Each council develops their own licence application system, licence conditions, duration of licences, inspection methodologies, fees, etc. Whereas licences once cost a few hundred pounds, many now exceed £1,000 and some licence application fees are set far higher. Millions of pounds are being spent by councils on administrative systems to process licence applications, often without physical inspections. 

Our new government could review, refresh and streamline the current licensing framework or replace it with a consistent new national property licensing scheme. Whilst this won’t happen overnight, I believe significant changes are needed within the next 5 to 10 years. 

Landlord registration

A new property portal was proposed by the previous government. Effectively, it was a national landlord registration scheme where every landlord would be required to register their private rented properties and upload supporting documents (e.g. gas and electrical certificates) to demonstrate compliance.         

These provisions were discontinued with the demise of the Renters Reform Bill. The question for the new government is whether to implement a landlord registration scheme alongside the existing framework of property licensing schemes, or whether to replace both with a simple and streamlined national licensing scheme for all private rented homes. 

Energy Efficiency

As part of the drive to achieving net zero and tackle fuel poverty, the previous government consulted on plans to increase minimum energy efficiency standards in the private rented sector. The core proposal was to uplift the minimum Energy Performance Certificate (EPC) rating from band E to band C, with an indicative timeline commencing 2025.

After lengthy delays, and with no time for industry up uplift capacity for any meaningful retrofit programme, the proposal was abandoned in 2023.

Looking ahead, the first step needed is to review and update the EPC framework, making it fit for purpose and reflective of new net zero technologies such as air source heat pumps. 

Once that’s in place, government can set a strategic vision for new minimum EPC requirements and set a realistic lead in time so industry can invest, train the workforce and rise up to this retrofit challenge. At present, the lack of certainly causes confusion and delay.  

Developing competence and capacity within local government

Speaking as a Chartered Environmental Health Practitioner, there simply aren’t enough of us to tackle the challenges that lie ahead across all environmental health disciplines. We need long term funding commitments to train and develop the next generation of Environmental Health Officers with the knowledge, competency and experience to ensure our private rented sector is fit for purpose in the years to come.

Without investing in our workforce, the impact of current and proposed future legislative provisions will be significantly blunted.    

I do not underestimate the scale of the challenge facing our new government across all policy areas. As a Chartered EHP with over thirty years’ experience, I will follow their emerging housing policy with interest and provide constructive input where I can.  

The author of this blog, Richard Tacagni is MD at London Property Licensing and can be contacted here.

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