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Fairer Private Rented Sector White Paper reviewed

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The publishing of the Government’s White Paper outlining its plans for private rented sector (PRS) reform, titled A fairer private rented sector, has resulted in some pretty outlandish media coverage.

Our Mortgages Managing Director, Richard Rowntree, reflects on the details and shares his thoughts.

With another article predicting a mass exodus of landlords published almost every day since the White Paper was published, you’d be forgiven for thinking that this is the end of the PRS. I’m not looking for a new job just yet, however, and I don’t imagine that many brokers are either.

Despite the clear anti-landlord sentiment of the press release that heralded the arrival of the White Paper, many of the measures detailed actually seem sensible. 

One example is the strengthening of Section 8 through the introduction of mandatory grounds for repossession. This will be accompanied by additional resource to enable courts to address the speed and efficiency issues experienced with repossession cases currently, a common complaint amongst landlords.   

This positive change has been largely absent from the furore that has arisen from the abolishing of ‘no-fault’ evictions, as has the fact that Section 21 use has been in long-term decline, but these improvements to Section 8 should mitigate many of the issues that could result.

For me, this shows why it is important to cut through the noise and educate landlords on what the proposals mean for them in reality. In doing so we can hopefully provide some assurance that private property investors have the protection they need to continue letting.

And while it may seem a little unfair for the responsibility of providing an antidote to click-bait journalism to fall to the mortgage industry, it is important that balance is provided by the people who understand the nuances of the market.

Having regular client contact and in-depth knowledge of the property market, gained through day-to-day experience and learning, means that brokers are well placed for this.

As part of our recently published Mortgage Intermediary Insight Report (MIIR), we asked mortgage intermediaries how they feel about the future of different aspects of the sector.

Intermediaries were most confident about the prospects for their own firm, followed by the mortgage industry and intermediary sector.

With the majority of firms reporting making a profit and being at or near capacity in managing the business levels they receive, it is likely that the confidence in the future of the sector is influenced by the demand we’ve seen for property over the past two years.

The same levels of confidence were not recorded when brokers were asked about the prospects of the buy-to-let business that they are involved in, however. In addition to recent and anticipated interest rate rises, the burden of legislation and tax were reasons given for this.  

This suggests that mortgage intermediaries recognise the challenges that landlords face as a result of Government policy while understanding that the health of the sector is largely influenced by demand for homes.

This demand has been unusually high since the onset of the pandemic but we also see that it exists, albeit at a more modest level, over a longer-term, driven by societal changes such as increases in households and the population more broadly.

When doing our research for the report, we spoke to an independent financial adviser who summed it up perfectly, saying: “Regardless of whether we’re in boom times or recession times, there will always be movement in the mortgage market. Because underpinning everything, there’s a shortage of housing in the UK. And whatever else is happening, people get married, people get divorced, people die, people move after university. So, there’s always some demand there in the background.”

This article first appeared in Mortgage Solutions.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551