Gove implies Renters Reform Bill may go backwards

At the end of the Conservative conference, whilst speaking to the chief executive of Generation Rent, Housing Secretary, Michael Gove, said he “cannot guarantee” the second reading of the Renters Reform Bill will happen before the King’s speech on November 7th.

There has been much speculation about the controversial Renters Reform Bill (RRB). Given how strong and diverse the reaction to it has been, from landlords, tenants and the industry, there has been discussion as to whether the Conservatives would try and delay its progress, mindful of the upcoming election.

It had also been suggested that some backbench Conservative MPs are opposed the Bill, which might contribute to a delay.

Speaking in mid-September, in response to a question on the Bill from Conservative MP, Natalie Elphicke, Penny Mordaunt, Leader of the House of Commons, gave assurances that the RRB was a priority for the government, but she could not give specific dates on the second reading.

However, Michael Gove made various comments on the next stage for the Bill – its Second reading in the House of Commons is the next step – causing confusion on when it will go ahead, but implying it may fail to proceed when Parliament resumes.

Commentary on the Private Rental Sector at the conference

Gove spoke of the value of the Private Rental Sector (PRS) within the housing sector, during the conference saying:

[A] thriving private rented sector is vital to ensuring an effective housing market

He reiterated this point, and the need for a range of housing options:

You can’t have an effective housing market, or provision of the homes we need, without having a variety of different types of tenure. A route to homeownership, a private rented sector that facilitates labour mobility among other things, and socially rented homes in order to help people who are, for whatever reason, eligible for, and deserving of, that level of support.

Speaking on the relationships between landlords and tenants, and recognising the more flexible needs of student landlords and tenants, Gove went on to say:

Actually, the overwhelming majority of landlords want a relationship with their tenants where their tenants stay. Easily the best thing is to have a long-term relationship with someone who pays the rent, looks after the property and where there are those ties.

"Obviously in the rental market you need to take account of movement, particularly amongst students and so on.

What are the implications of a failed second reading?

Speaking to Ben Twomey the chief executive of Generation Rent, at the end of Conservative party conference, Gove said he “cannot guarantee” the Second reading will happen on return to parliament, and before the King’s speech.

The significance of the speech is that the King describes the priorities and plans for the upcoming session of parliament, and if the Bill does not receive its second reading ahead of this, it will go back a stage and have to repeat its first reading.

During the Tory conference, there was much attention on the Bill, as the sector looked for signals on this important topic. Debate arose on whether or not the party would get the Bill through, but now it has come to a close, this last comment from Gove feels telling.

Landlord reaction

Whilst within Michael Gove’s words there is, on face value, a number of observations that demonstrates support for the PRS, the removal of Section 21 remains of significant concern to many landlords.

There has been commentary from the government that the courts need to be able to effectively process evictions where tenants breach their tenancy agreements, once Section 21 evictions are halted, and that this will be a part of the changes made, but confidence that this will happen is not high at present.

Housing minister, Rachel Maclean, recognised that maintaining landlord confidence is critical:

Of the millions of landlords in the UK the vast majority are good operators who look after their tenants and provide a service to society, and what we don’t want to do is undermine their confidence in the market.

The detail on how this will be achieved is as yet unclear, but Maclean has said that there will not be a dedicated housing court for landlord and tenant disputes:

A lot of people have lobbied me and said we need a housing court for landlords and tenants,” she said.

I don’t think that’s the answer because if we introduced dedicated courts [for evictions and other property related disputes] then we’d have to divert resources from other areas of the existing justice system.

But I do agree that one of the major issues good landlords worry about is whether, should they have a terrible tenant, they are going to get rid of them through the courts.

Ben Beadle, chief executive for the National Residential Landlords Association spoke on this point and the need for tax reforms:

When Section 21 repossessions end, landlords need certainty that the courts will more swiftly process possession claims where there is good cause.

Alongside, this, we need to reform a tax system which is penalising the provision of the very homes renters are struggling to find.

Commercial Trust will be following news on the Bill closely and will update those subscribed to our newsletters as further information is released.