The U.K.’s Housing, Communities and Local Government Committee has recommended that the United Kingdom. Government goes further in its proposed changes to the private rented sector in order to make the market fairer and more transparent.
In news that should encourage institutional investors in the fledging U.K. private rented market, the Committee has said that the proposed legislation drafted by the U.K. Government in the Tenant Fees Bill does not go far enough in protecting renters. The bill has been introduced in the United Kingdom in an attempt to make renting easier and more accessible for the country’s working population.
The Committee has concluded that the bill should include lowering the requirements of a security deposit for renters by one week, from six to five, and preventing landlords from being able to retain the full holding deposit if a tenant fails a reference check, despite providing accurate information. It also said that default fees are open to abuse, so their type and amount need to be better regulated and that additional funding should be made available to local authorities to enforce the legislation.
Clive Betts MP, the chair of the Committee, said: “With more and more people living in the private rented sector, this legislation has the potential to make a difference to millions of people by cracking down on unfair fees and saving tenants hundreds of pounds.
“We believe however that there are clear improvements that could be made to the Bill that would ensure it has a much better chance of delivering on its aim of making renting fairer and easier.
“Moving home is already an expensive time and many people struggle to find large sums of money at the start of their tenancies to put down as a deposit.
Lowering the cap from six weeks’ worth of rent to five will help make the private rented sector much more affordable, while also keeping protection for landlords from rogue tenants.”
Neil Young, CEO of Get Living London, a rental property developer born out of a joint partnership with the Qatar Investment Authority, and clients of asset management advisory firm Delancey, welcomed the recommendations from the Committee, but said that tenant deposits were “outdated” and that reducing this burden to five weeks’ rent didn’t “go far enough”.
“We have great relationships with our residents and, given they are taking such good care of our homes, why should we hold six weeks’ rent?” he added.
“This isn’t just for new residents and, since last summer, we have returned millions of pounds to our residents at East Village, the former London 2012 [Olympics] Athletes’ Village.”
Research released by the Investment Property Forum earlier this year found that institutional allocations to residential property in the United Kingdom continues to increase, with residential investments accounting, on average, for 8.6 percent of all U.K. real estate assets. It also found that investment into PRS now accounts for half of total residential investment in the U.K. and that 80 percent of residential investors intend to increase their exposure to U.K. residential over the next 12 months.
