Automated payment specialists PayProp have commented on the projected £278m cost of the Renters (Reform) Bill to letting agents.
The recently revealed estimate in the Renters (Reform) Bill Impact Assessment, published by the Department for Levelling Up, Housing & Communities, represents “costs to letting agents of reduced use by landlords” due to changes from assured shorthold tenancies to periodic tenancies and the removal of Section 21 resulting in fewer tenants moving.
The costs, estimated over 10 years, do not take into account the time agents will have to spend familiarising themselves with the new measures contained within the Bill. However, according to the document, the Government states agents will benefit from the Property Portal, as they will be able to register on behalf of landlords and charge for this service.
The Impact Assessment goes on to conclude that the main costs of the Renters (Reform) Bill will be borne by landlords and that “the estimated net cost to landlords is £10 per rented property annually”.
However, at a recent Levelling Up, Housing and Communities Committee oral evidence session, Rachel Maclean MP, Minister of State for Housing and Planning, admitted that it is the department’s intention to introduce measures currently missing from the Bill, including the Decent Homes Standard, as an amendment in the House of Commons. While MPs will have time to scrutinise any amendments, it is unclear if the Government will publish a revised Impact Assessment to truly reflect the costs of any measures added in this way.
Independent review
When introducing a Bill to parliament, the Government has to publish an impact assessment outlining the measures in the Bill, their estimated effects and any associated costs. This report is then scrutinised by the independent regulatory scrutiny body for the UK Government, the Regulatory Policy Committee.
While this committee has rated the Renter’s (Reform) Bill Impact Assessment “Fit for purpose”, it judged the reasoning behind the measures as “Weak” and the cost-benefit analysis “Very weak”. The committee also questioned whether “the reforms will introduce additional barriers to entry for new landlords and whether they will restrict investment into the PRS (and if this will impact on future supply)”.
Opportunities for agents, but details needed from government
“Let-only agencies will rightly be concerned about potentially losing £278.7m because of the Renter’s (Reform) Bill,” says Neil Cobbold, Managing Director, PayProp UK. “But savvy agents will have already spotted the opportunity in the proposed regulatory changes.”
“It will be key to convert your existing let-only landlords into fully-managed clients. Charging landlords a fee for services including rent collection, maintenance and compliance with the Renters (Reform) Bill and the hundreds of other rules that govern the private rented sector, will boost your agency’s bottom line.
“However, for agents and landlords to properly assess the impact of the Renter’s (Reform) Bill on their businesses, we need more information from the government on how some of the measures will work and when they will take effect. Details on court reforms to speed up evictions, the Property Portal and the new ombudsman will be essential.
“We also want to see the Department for Levelling Up, Housing & Communities publish a revised Impact Assessment if new measures are introduced as amendments. This will allow all involved in the industry to judge the potential costs and benefits of any changes to the proposed Bill.”