Government admits Renters’ Rights Bill could drive rent increases

The government finally admits the Renters’ Rights Bill could force landlords to raise rents to cover costs of additional regulation.

However, the government claims, landlords with long-term tenants are less likely to raise rents.

The Renters’ Rights Bill will abolish Section 21 immediately, rather than waiting for the court backlog to clear, and will also apply Awaab’s Law to the private rented sector.

Likely that landlords will pass through some costs of new policies to tenants

In the Renters’ Rights Bill impact assessment, the government admits some landlords may leave the private rented sector if they are unable to recover additional costs.

The impact assessment says: “It is likely that landlords will pass through some costs of new policies to tenants in the form of higher rents – to offset those costs and maintain a degree of profit.

“Landlords will likely offset some of the costs of the regulation through rental price growth – though there is a chance that some may be inclined to leave the private rented sector if they are unable to recover some of the costs incurred through raising rents.”

This is despite the same impact assessment estimating the cost for landlords at just £12 per rented property annually and claiming that only a small number of landlords will exit the market.

Less likely to raise rents for sitting tenants

In response to the Telegraph, the Ministry of Housing, Communities and Local Government, claim landlords are less likely to raise rents if they have a long-term tenant.

A Ministry of Housing, Communities and Local Government spokesman told The Telegraph,: “The evidence shows that landlords value good tenants – and are therefore less likely to raise rents for sitting tenants.

“Landlords will also only be able to raise the rent once a year using the existing section 13 process and our reforms will empower tenants to challenge an unfair rent increase at the first-tier tribunal.”

Many landlords feel they have no choice but to raise rents to cover additional expenses. A report by Landbay reveals that 42% of landlords managing portfolios of 4-10 properties plan to increase rents due to rising interest rates and operational costs.

It is considered good practice in the property industry to increase rents annually to account for inflation and stay in line with market rates.