Renters’ Rights Bill raises ‘significant questions’ for tenants, industry leaders warn
Industry leaders have expressed concerns about the knock-on effects of the Renters’ Rights Bill, which entered the committee stage on 21 April.
The bill, which aims to give renters greater security and stability, will abolish Section 21 ‘no-fault’ evictions, as well as ban landlords accepting offers above the advertised rent and prohibit pre-tenancy rent payments.
“This Bill is ostensibly an attempt to make life easier and more secure for ordinary renters,” Oli Sherlock, letting platform Goodlord’s managing director of insurance, said.
“However, with concerns mounting over the impact these changes could have on tenants, significant questions remain about the potential harm this legislation could do to the very people it’s intended to protect.”
Sherlock said that a ban on bidding wars, as well as a ban on accepting higher-than-advertised rent, may unintentionally cause a rapid increase in average rent prices as landlords raise their prices from the start.
He also suggested that banning Section 21 ‘no-fault’ evictions may lead to more rental disputes going to court, clogging up an already-stretched service and causing thousands more tenants to receive County Court Judgements (CCJs) for issues such as rent arrears.
“The extension of the notice period in the event of arrears… may seem favorable for tenants but the reality is that by the time tenants are in two months arrears it is often hard to reverse their position.
“Adding a further month to this process will inevitably lead to larger personal debt. Such measures should be focusing on speedy resolutions for both parties, not extensions,” Sherlock added.
Landlord exodus?
Many in the industry have suggested the bill will cause landlords, who have already seen their margins dwindle over the past decade due to the end of tax-deductible mortgage payments, to leave the sector.
The effect would be to push up average rents as the same amount of tenants compete for fewer rooms.
“Increased regulation, high mortgage rates and high maintenance costs mean more landlords are unfortunately being squeezed out of the market,” Jon Cooper, director of mortgages at Aldermore, said.
“This in turn is impacting renters who are dealing with increased competition for properties in addition to higher rents,” he added.
However, there hasn’t yet been signs of an exodus in the sector, with a third of UK landlords planning to expand their portfolios this year.
Managing Director of FCC Paragon, Bekki Leaves, said that the bill isn’t actually expected to heap any more costs onto the sector – although it won’t bring down bills for tenants, either.
“Landlords in London can now fairly insist on increasing their rents by up to 9.9 per cent for tenants who moved in at the start of 2024… they are going to be no worse off with the RRB in place than they would be without it,” Leaves said.
“The government is determined to avoid implementing any kind of rent control on the British market, so this is an attempt to thwart the unfair practices of a few landlords and ensure people can afford a good home without having to stem the profit potential of enterprising landlords.”