Landlord bills to rise and Section 21 evictions to end due to ‘levelling up’ plans

Today (2nd February 2022), Michael Gove is set to unveil the government’s ‘Levelling Up’ White Paper. The aim is to ‘transform the UK by spreading opportunity and prosperity to all parts of it.’ Housing is very much part of the agenda, with plans to increase the number of first-time buyers and reduce the number of ‘non-decent’ rented homes. There are implications, however, for buy-to-let owners. Landlord bills will rise as some will need to upgrade their rental properties. In addition, ‘no-fault’ Section 21 evictions will end and the government will consult on creating a landlords’ register.

What are the ‘levelling up’ plans?

You can read about the full levelling up plans here. They cover everything from pay and employment to gigabit broadband, skills training and narrowing the gap between healthy life expectancy in different areas of the country.

The government has released 12 levelling up pledges, which will be enshrined in law. Of relevance to landlords is Pledge 10:

By 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and the government’s ambition is for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest performing areas.

Why will landlord bills rise?

Landlord bills will rise if they have to invest in improving the quality of their rental homes. Currently, local authority housing must meet the ‘Decent Homes Standard’. For the first time, private rented homes must also meet this standard.

In brief, a ‘decent’ home must:

• Meet the statutory minimum standard for housing (must not have any category 1 hazards according to the Housing Health & Safety Rating System (HHSRS))
• Be in a reasonable state of repair
• Have reasonably modern facilities (such as a kitchen less than 20 years old or a bathroom less than 30 years old)
• Provide a reasonable degree of thermal comfort

However, it’s worth noting that the government launched a review of the Decent Homes Standard. Therefore, it is quite possible that its requirements will become more stringent. The HHSRS is also being reviewed.

If you are a landlord, therefore, you may have to invest in bringing your properties up to the standards defined by the Decent Homes Standard and HHSRS. However, as both are likely to change, landlord bills may rise once again. According to the Daily Telegraph, Chris Norris of the National Residential Landlords Association estimates upgrade costs to be between £10,000 and £15,000 for an extremely substandard home.

What are the other changes relevant to landlords?

Government has said that ‘Section 21 ‘no fault’ evictions will further be abolished, ending the unfair situation where renters can be kicked out of their homes for no reason.’ However, this has been on the radar for some time. This report from December 2021 outlines the Government’s commitment to ending Section 21.

The ‘levelling up’ plans also state that the government will ‘consult on introducing a landlords register’ and will ‘set out plans for a crackdown on rogue landlords – making sure fines and bans stop repeat offenders leaving renters in terrible conditions’.

In brief, the levelling up agenda has poor quality rented housing in its sights. It also wants to find ways of giving renters longer, more secure tenure. Landlord bills will be highest for those with the properties in the worst state of repair and with the oldest facilities.

Keeping landlord bills low

There’s no denying that there has been a concerted squeeze on landlords in recent years. The loss of mortgage relief in particular has eaten into the profits of many. However, with the right planning and structures, you may be able to lower your bills. As The Accountants for Landlords, THP may be able to help you. If you’d like to learn how to benefit from our advice for buy-to-let portfolios, get in touch today.