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The side effects of well-meant legislation

How setting minimum room sizes pushed up prices and increased homelessness

There was a time when rental accommodation was not as high quality as it is today. Not that all properties are excellent, even today. But generally, the standards are high.

Successive governments of all colours have introduced various legislation aimed to lift standards. The intention is good. Some of the changes have brought about improved standards. Some have created problems of their own.

One piece of well-intentioned legislation is The Licensing of Houses in Multiple Occupation Regulations 2018. This came into force on 1st October 2018. Prior to this, there were no minimum room sizes for shared housing. Many local authorities issued guidance on room sizes but it was merely advisory. Clearly, having a large enough room is desirable. But the effect of this legislation has been to increase housing costs, decrease choice and increase homelessness.

Many properties built in England prior to the war were constructed with three upstairs bedrooms and two downstairs reception rooms. These are ideal for converting into a Shared Living Project for four people utilising one of the downstairs rooms as a bedroom. Invariably, one bedroom is quite small. This smaller bedroom has a lower rental price than the other rooms. Of course, everyone would like a bigger room, but not everyone can afford one.

Many of these smaller rooms are below the required 6.51 square meters. Prior to 2018, people on a low budget were happy to rent this space, especially if they got on well with the other housemates and spent time in the communal areas.

Since 2018, it has been illegal to rent out these smaller rooms. The obvious consequence was those innocent people needed to be evicted from their homes. Beyond that, the landlords had fewer rooms so needed to increase rents for the remaining rooms. Therefore, the poor person who cannot stay in the small room has to pay for a room that has increased in price, struggling to afford it, putting themselves at risk of rent arrears!

This reduction in available rooms and increase in prices is in nobody's interest. Not the tenant who has to pay more; not the landlord who has lower margins and less income spread; not the government who has to pay increased housing benefits.

Generally, markets work quite well. When legislation is introduced, it always has unintended consequences. We believe that the less regulation the better. Landlords need tax incentives and other nudges that make it worthwhile providing good quality accommodation. That ensures that there is plenty of choice for tenants. Plenty of choice means that people can simply refuse to move into any property that is below standard as they know there are other options. More choice naturally drives up standards and keeps prices from spiralling out of control.

Everyone wants a nice place to live that is comfortable and spacious. Promoting more availability of properties is the way to achieve this. Not through well-intended, but misguided legislation.

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