The Government is facing a barrage of criticism after deciding not to extend the eviction ban which expires at the end of this month. It has pointed to a range of mitigations to help soften the blow - but how new are they, and will they work?
First refusal policy
The flagship reform announced by the Government on Tuesday will, it says, mandate property owners who are selling up to offer their tenants the chance to purchase their home on a “first refusal” basis, at a price established by an independent valuation.
This is modelled after approaches elsewhere in Europe, such as in France and Denmark. However, there is still a lot of work to be done on this policy. It will need legislation to be put in place, with a race against time (and a heavy legislative agenda) before the summer. The terms of the shared equity ‘First Home’ scheme need to be tweaked so buyers can use it in this context. All that will certainly not be ready before evictions begin at the end of this month.
Government sources say that the Attorney General has not flagged any concerns, but it remains to be seen how the policy might accommodate a landlord who wants to engineer a bidding war or sell via auction. A landlord can sell to another landlord at a higher price without a tenant in place as it allows the new landlord to set a market rent, rather than one enjoyed by the current tenant. The degree to which landlords voluntarily subscribe to this, or can be forced to do so, is a key question. As for tenants, many will not have the financial means to purchase their home, meaning an alternative is needed.
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[ Attorney General warned ‘substantial evidence’ needed to extend eviction banOpens in new window ]
Backstop
That alternative is a “backstop” whereby if a tenant can’t muster the necessary funds, a local authority or Approved Housing Body (AHB) will step in and purchase the property, with the tenant having their lease extended in line with cost rental terms, where the rate is set without reference to the overriding market but instead in line with the cost of purchasing and maintaining the property to the AHB or local authority.
The backstop will apply to those who aren’t eligible for already-existing “tenant in situ” purchase schemes, which provide for people on social housing waiting lists. However, it will function broadly similarly, raising the question of whether local authorities or AHBs have sufficient resources to work through all the purchases.
The Government has said people earning above social housing income limits will be eligible, but that it will apply to those “at risk of homelessness”. Exactly how this is defined, and whether there will be a cut-off point or how eligibility will be determined is another open question.
[ Renters sought advice on 1,460 notices of termination since start of eviction banOpens in new window ]
More social housing
Separate from the main policy, the Government announced plans to give local authorities individual targets to increase social housing acquisitions by 1,500 this year, it aims to bring another 1,000 homes on-stream through a targeted leasing initiative - 600 coming this year. There will also be changes to the Capital Advance Leasing Facility (CALF), a financing scheme for Approved Housing Bodies that deliver social homes.
Social Democrats housing spokesman Cian O’Callaghan has pointed out that the 1,500 social housing acquisitions had already been announced, so it’s debatable to what extent these are measures to directly mitigate the ending of the ban.
[ Q&A: The rental eviction ban ends - what happens next?Opens in new window ]
Boosting supply
The coalition’s entire housing policy hinges on getting more homes built. Part of the rationale for the ban was to allow more homes to be built.
According to statistics given to the Cabinet, just under 5,000 new homes were built in the last quarter of last year, along with between 430 and 530 acquisitions of social homes and 600 newly leased homes, followed by another 2,300 new builds or leases in the first quarter of the year.
Another 1,500 local authority units were remediated and around 650 emergency homeless beds were added.
However, much if not all of this is the product of schemes or plans already in place, so like the measures to increase social housing, it wasn’t strictly linked directly to the ban.
Tax measures
When it looked like the ban would be extended, myriad tax measures were trialled in the media but none have come to pass - partially because of opposition to introducing new tax breaks halfway through the budget cycle, which is strongly resisted by the Department of Finance. Ministers were told on Tuesday that there is an ongoing review of the private rental sector underway, which will inform a “meaningful Budget 2023 package for the rental sector including both landlords and tenants”. However, it will be months before these are published and put in place.
Verdict
The mitigation measures are a combination of things already announced, or add-ons to existing policies - accompanied by the first refusal/backstop scheme. There is a prospect that homelessness is going to go up, and that much of that will be driven by people leaving private rental accommodation being unable to find new homes. That will heap the pressure on all schemes - new or existing - to work, and quickly.
