The Renters’ Rights Bill, if you haven’t heard about it yet, is the Labour government’s take on shaking up the Private Rented Sector to ‘transform the experience of private renting’, with new legislation expected to take effect later this year. For landlords, it looks on the surface like a disaster waiting to happen. For tenants, it looks like things are about to get much better. As we’ll see for several reasons, both are wrong….
The Bill is fundamentally one-sided (there’s a clue in the name) and it doesn’t address the root causes of the structural issues facing the UK housing market. In our opinion, these are largely underpinned by a shortage of supply, that is, houses available to buy or rent.
Restricted supply is made worse by expensive build costs, a largely difficult planning system, and continued population growth. The result is that the imbalance between supply and demand continues to grow, and rents are forced upwards.
For a landlord to continue offering their property to the market, they need to be able to make a reasonable return by controlling costs and ensuring that they have sufficient income coming in to cover the mortgage and running costs – contrary to popular belief, most landlords do not have a surplus of money lying around, and changes to tax and interest rates in recent years have seen more and more landlords topping up the rent from their own pocket to cover costs and improvements to make sure that their tenant still has somewhere to live. Without the right help and advice to manage this correctly, clearly both the landlord and tenant are in trouble.
What happens if landlords leave the market? The market rates for rent will increase as supply falls – one of the very things the Bill is designed to alleviate. This is clearly even worse for tenants.
The vast majority of landlords are good people and want a good tenant – that is, someone who looks after the property and pays on time, for as long as possible – most landlords don’t want to increase the rent unnecessarily or serve notice for the tenant to move out, because every change in tenancy incurs costs, which leads us onto the removal of fixed term tenancies.
Under the proposed legislation, tenants will be able to give 2 months’ notice to leave at any time after moving in. The landlord in most cases will need to give 4 months’ notice to the tenant under specific grounds – this encapsulates the one-sided-ness, and in practice, the security of tenure will be lower for tenants as a result.
Of course, there will also be some really good things to come out of this. Things like the landlord database, making it known where landlords have a history of bad behaviour, this is brilliant. But there is so much which landlords need to be prepared for – with the right management, there’s no reason why this can’t be just another piece of legislation to adapt to and overcome.
For tenants, the short-term outlook may appear better, but there will be lasting implications on the rental market, making it much worse for renters in the medium to long term.
As a landlord, there are opportunities that come with the changes. We firmly believe that your properties can continue to perform, and now more than ever it’s important to have an agent who’s clued up on all of this – please don’t assume that your current agent is on top of things.
If you’d like to discuss anything in more detail or see how we can help, please get in touch and we’ll be happy to help ensure that you’re compliant and prepared. Call us on 0333 577 8123.
