PROPERTY JOURNAL

Consumer rights in the private rented sector

How do the rights of renters compare to those of consumers of other services? A new report from a public-policy think tank the Smith Institute says improvements are needed

Author: Paul Hackett

02 October 2020

The private rented sector (PRS) in England has nearly doubled in size over the past 20 years, and is now the second largest tenure after homeownership, housing 11m people – including many more low-income families and older tenants than in the past.  

The expansion of the private rented sector has helped meet housing need, but the increase has come at a price. Rents are higher than the social sector and rising, while housing conditions are generally much poorer.  

The pace of change has also favoured landlords and eroded tenants’ rights. Indeed, today we have more consumer rights when we rent a car, buy a fridge-freezer or take out a loan than we do as private renters. This is not to say all of England’s 1.5m investor landlords – most of whom are renting just one or two properties on short-term tenancies – are not providing a decent home. The majority are not exploiting their tenants. The problem is standards vary and there is a long tail of poor performing landlords.  

The pandemic has placed the spotlight on conditions in the PRS, highlighting not only long-standing concerns over affordability and insecurity but also the health risks of non-decent private rented housing. According to the Affordable Housing Commission, conditions in the PRS are particularly problematic for a significant minority of poorer tenants who have nowhere else to go. This group of vulnerable tenants are most in need of protection.

A new report from the Smith Institute, Consumer rights in the PRS, argues that renting must change after COVID-19. The regulations put in place when the PRS was much smaller are no longer fit for purpose and overly favour the ‘amateur landlord’. The report’s lead author, former chief Ombudsman Lewis Shand Smith, claims that consumer protection for private renters is inadequate and compares poorly with other sectors, such as energy, telecoms and financial services. His analysis shows that against established consumer outcomes measures – such as choice, competition, voice, advocacy, complaints mechanisms, and rights to redress – the PRS scores badly.  

Private renters – and renters on low incomes in particular – are often constrained in their consumer choice. Furthermore, private tenants are not always provided with basic information, not least on important safety issues. There is no accessible public register which renters can check to see if they are dealing with a landlord who has a good track record and no clear, widespread means for tenants to exercise voice and influence in the sector. This contrasts with other consumer industries, which have dedicated regulators and better protection, such as Ofgem, Ofwat and Ofcom.

"Today we have more consumer rights when we rent a car, buy a fridge-freezer or take out a loan than we do as private renters"
A new approach

The report calls for a fresh approach, with new rights and protections for private renters under the auspices of a dedicated private rented sector regulator. Tenants should be able to identify bad landlords who flout the rule and have access to homes that they can be confident will be safe, secure and affordable. Meanwhile, private landlords  must have greater clarity about their obligations.

Rather than tinkering with the regulations, the report advocates a package of joined-up reforms, including: open-ended private residential tenancies, removing no-fault evictions, increasing notice periods for longer-term tenants, reforms to redress and dispute resolution by introducing mandatory membership of the Housing Ombudsman Service for PRS landlords and lettings agents, and an independent private renters panel to represent interests of renters and engage with government

Elsewhere customers have access to advice, support, advocacy and protection – the same is not true for those who rent their homes in the PRS.  It is time to level the playing field by protecting landlords who are working hard to comply with their obligations and making it easier to take enforcement action against those who are not.

paul.hackett@smith-institute.org.uk

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