“Enforce the laws we have before creating new ones”: why landlords object to plans for longer tenancies

Residential letting signs in Selly Oak, Birmingham. Image: Getty.

The policy director of the Residential Landlords Association writes.

Growing numbers of families and older people are now living in private rented housing – groups which want to be able to put down roots in the communities in which they live.

The challenge is to ensure the sector can offer longer tenancies to those that want them while retaining the flexibility that others need to access new work and educational opportunities, and also continuing to attract the investment needed to provide these homes.

The English Housing Survey shows that private sector tenants are, on average, living in their homes for almost four years, increasing to 17 years for those aged 75 and above. So the longer tenancies demanded are a reality for many.

Some 10 per cent of tenants in private rented housing have moved because their landlord provided a notice to regain possession of a property, while 3.5 per cent said it was because their property was in poor condition. This is distressing for those tenants – but this does not suggest that many landlords are looking for reasons to get rid of their tenants.

The opposite is true, as landlords prefer stable tenancies than having to be constantly looking for new tenants. Just 1.2 per cent of those in the sector who had moved home in the last three years said it was because they could not afford the rent.

In spite of these statistics, we recognise that tenants have to live from tenancy to tenancy and have a perception of insecurity which we need to tackle. The question is how best to achieve this in a way that works for both tenants and landlords.

As a start, we need to ensure the law works better. Some argue that tenants cannot complain about property conditions because of the threat of eviction using Section 21 powers, the so-called no fault eviction. Councils already have the powers to ensure that this does not happen. What they lack are the resources to properly use them to protect tenants from the minority of landlords who should be rooted out altogether.


Simply getting rid of Section 21 notices would still leave councils under resourced and will not improve property standards. We need to enforce the laws we have before we create new ones which we then fail to enforce.

Longer term tenancies also require much swifter access to justice when something goes wrong. Landlords should rightly have the ability to repossess a property if a tenant is failing to pay their rent or committing anti-social behaviour. The process for doing so is long and difficult and needs to be speeded up if landlords are to have the confidence to grant longer tenancies.

That is why the discussion about longer tenancies need to be linked to the establishment of a new housing court. Tenants and landlords should rightly expect a system that is able to swiftly and effectively respond in the minority of cases where things go wrong. The attention devoted to the removal of Scotland’s equivalent of the Section 21 notice ignores the fact that this came well after the introduction of a new housing court.

We need also to decide how to implement longer tenancies. The government proposes a number of models. One makes a three-year tenancy the default position by law. This would be complex as it requires trying to establish every possible scenario in which a tenant might not want such an agreement, such as students, and how that would work.

The alternative, which we support, is the use of financial incentives. In much the same way as the Treasury taxes sugar and some cars to change behaviour, why not do the same with the private rented sector? Indeed, 63 per cent of landlords have told the RLA that tax relief would encourage them to offer a longer tenancy.

The rental market is changing: it’s still made up largely of young people, but it is becoming more diverse. These groups have different needs and the rental sector needs to retain flexibility in order to meet them. A one size fits all model will not work.

David Smith is policy director for the Residential Landlords Association. It tweets @RLA_News.

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.