The Government has recently launched a consultation on reforming the Decent Homes Standard (DHS) for social and privately rented homes.

Last updated in 2006, the Ministry of Housing, Communities and Local Government (MHCLG) say that the DHS ‘no longer works for our aging housing stock or the modern expectations of tenants’, so an update is necessary and will help to drive further positive change in the private rented sector (PRS).

So, it goes without saying that it’s something we’re fully supportive of, as well as the plans to apply the DHS to the PRS as part of the Renter’s Rights Bill (RRB). However, as we’ve said previously, it is vital that well-intentioned policies are well implemented to avoid unintended consequences that have the potential to negatively impact those they seek to help.

One important aspect of this is the timing. With the RRB making its way through parliament and changes to the Minimum Energy Efficiency Standards (MEES) likely to follow shortly after, landlords will have a lot to get their heads around.

It’s encouraging to see policymakers at the MHCLG seek comments from a range of interested parties, but the proposals have largely flown under the radar.

It is important then that engagement with the sector increases. Most importantly, landlords need to have certainty so they can plan how to meet any future changes and how this will influence their business behaviour.

For example, uncertainty around proposed changes to EPC metrics has left landlords reluctant to commit to spending time and money upgrading properties that may not align with future MEES regulations.

There’s an opportunity to strengthen relationships with landlords by acting as a resource to help them better understand what the changes may mean to them and how the sector can support with finance where necessary.

Reading through the proposals in more detail, I don’t foresee many of the sector’s responsible landlords having an issue meeting the new grade.

This is particularly true of mortgaged homes because stringent underwriting exists to weed out homes that don’t meet the standard currently required by law. Financing sub-par homes doesn’t make sense for most lenders.

Lending on a poor-quality property presents increased risk for lenders, in terms of the asset itself and from a reputational perspective. This is because, most importantly, the practice helps to facilitate unsafe and unpleasant living conditions for tenants, so lenders have a moral responsibility here too.

Considering this, it’s our belief that a large proportion of the tenure’s homes that don’t meet the standard aren’t mortgaged and lack this element of quality control.

This is supported by research for our Standards and Sustainability in the PRS report where we revealed that Paragon landlords actively target properties in need of refurbishment or renovation and spend an average of £8,500 doing so.

In addition to newer, higher quality properties being brought into the sector by landlords, this investment has helped to improve the quality of PRS stock.  In 2005, 41% of PRS properties were classed as ‘non-decent’. The 2023 English Housing Survey shows this had halved to 21%, corresponding with the increase in buy-to-let lending that surged in the 2000s.

While there’s more work to do to ensure all tenants have a choice of high-quality homes to live in, this suggests that the majority of landlords take pride in their properties and are proactive in investing to improve their portfolios.

As part of our research, we also asked landlords to identify which aspects of the RRB, if any, most concern them. The abolishing of Section 21 evictions and an extension of the time landlords have to wait to issue a Section 8 notice for rent arrears were head and shoulders above the rest, both causing unease amongst 71% of landlords.

Compare this to the 3% that said the application of the of DHS, the aspect of least concern, the application of Awaab’s law and the introduction of a PRS ombudsman, selected by 8% and 9% respectively.

This shows that landlords are largely focused on aspects of the regulation that relate to protecting their rights when things go wrong, more so than the standard of the homes they provide tenants.

Failing to implement regulatory change that protects landlords as well as renters could exacerbate the supply demand imbalance, further fuelling rent inflation and reducing choice for tenants.

Louisa Sedgwick is managing director of mortgages, Paragon Bank