It has been a busy couple of weeks of headlines for Michael Gove. The governments’ Secretary of State for Levelling Up, Housing and Communities has made a number of statements, both within the Commons and on TV interviews. Speaking to Laura Kuenssberg, Gove reiterated his intention to stop ‘unscrupulous landlords’ who are taking advantage of the current cost-of-living crisis to increase rents well beyond inflation.
Rents Seeing 20-30% Increases
Gove’s statement follows recent reports of landlords increasing their rents by 20 to 30 per cent. Such increases are coming at a time when many tenants are struggling to make ends meet, with historically high energy bills and soaring food inflation. Gove believes some landlords are exploiting the economic climate to profiteer:
“At the moment there’s a situation where tenants can be evicted without any fault on their part, and a tiny minority of unscrupulous landlords are using the threat of eviction to jack up rents and victimise tenants.”
This is not a problem which is only unique to the private rental sector, with Gove keen to highlight that:
“In every market there will always be actors who will attempt to exploit circumstances in their interests, not in the public interest.”
The Fairer Private Rented Sector Whitepaper Seeks to Introduce More Regulation
Last year the government released a white paper, titled A Fairer Private Rented Sector, which set out a series of legislative proposals to better regulate the private rental sector. Such proposals included banning Section 21 Notices – termed ‘no-fault’ evictions – and introducing rent review clauses which could be used to limit excessive rent hikes through the use of First Tier Tribunals. Alongside this, the white paper stressed the need to introduce a ‘decent homes standard’, legally enforcing the need for privately rented homes to meet a given standard of repair, space and cleanliness. The Housing Secretary highlighted his desire to push through reforms in the coming months which: “look at how the private rental sector can be better regulated”, although he ruled out the idea of rent caps or freezes. “We do need to make sure that we protect tenants from unscrupulous landlords as we also give landlords the power to get rid of anti-social tenants as well,” he added.
Proposed Regulation has Been Criticised
The governments proposed reforms have come under heavy criticism from professionals within the industry. Gove was sent a letter by 330 landlords and letting agents strongly urging him to re-look at measures which could negatively impact the letting industry. The signatories argue that the governments policy in the rental sector – accounting for 35 per cent of UK homes – is stoking housing inflation, the largest single component to the cost of living. It is entirely credible and commendable that the government should seek to improve the quality of housing available to tenants, but this needs to be provided whilst also ensuring that tenants have access to affordable housing premises.
The current situation is symptomatic of the past decade of housing policy in the UK. Increased legislation attempting to improve standards has forced landlords out of the market, restricting supply in a time when tenant demand is at an all time high. It is only understandable that, alongside spiralling mortgage costs and rising maintenance costs, landlords would seek to increase rents inline with inflation. But equally, with the current supply imbalance, are the government right to speak out against free market pricing being applied to rents when it has been their own legislation which has caused the imbalance in the first place?
Gove May Consider Tax Concessions
With all of this in mind, it does appear that Michael Gove is conscious of the need to serve both tenants and landlords. Speaking in the Commons during a Budget debate, Gove hinted that he would be willing to consider tax concessions for landlords in return for shouldering the burden of more legislation. The Housing Secretary told the Commons that the government needed to ensure that there is fairness in the manner in which landlords are taxed before legislative changes can be made to the sector, including the abolition of Section 21. If there is to be a pipeline of affordable rented homes for tenants, the supply of such homes must improve, especially in locations such as London.
Holiday Lets Will See Reform
One area for supply reform which has caught Gove’s eye is the burgeoning holiday let market. He announced plans to restrict the number of holiday lets as part of new legislation, acknowledging: “there is a problem in the private rental sector […] where homes are being turned into Airbnbs and holiday lets in a way that impedes the capacity of young workers to find a place where they can stay in the locale that they love and contribute to the economy that they wish to be part of. We will be bringing forward some planning changes to the Levelling Up and Regeneration Bill, which are intended to ensure that we have restrictions “over the way that homes can be turned into Airbnbs.”