Happy Renters’ Rights Act Day! Here are 4 reasons why it’s a disaster

Happy Renters’ Rights Act Day everyone, a law that will bring sunshine and positivity into every tenant’s life should be celebrated because no politician or media outlet has come close to discussing its real impact.

Leaving aside my initial claim when the Renters’ Reform Bill first made its appearance that landlords will lose control of their homes, we now have the potential for a full-scale housing disaster on our hands.

Don’t believe me? Want to call me a scaremonger? Then read the four reasons below why the Renters’ Rights Act will have the opposite effect to what the Labour clowns are claiming.

Biggest PRS shake-up

The Act is the biggest shake-up to the PRS in nearly 40 years and for tenants, the Act looks like a liberation manifesto.

The terror of the Section 21 ‘no-fault’ eviction is finally dead.

No longer can a family be uprooted with two months’ notice for no reason; the home is now truly theirs unless they break the rules.

Furthermore, the Act ends the humiliating spectacle of ‘rent bidding wars’.

And with the extension of Awaab’s Law to the private sector, the days of living in damp, mouldy ‘slum’ conditions are numbered, with landlords now legally required to fix hazards within strict, mandatory timeframes.

On the surface, it is a victory for dignity, security and fairness. For tenants, obviously, for landlords this is a nightmare.

But while the government celebrates this ‘victory’, they have ignored the fundamental law of economics: supply follows stability.

Why the Act is wrong

Here are my four reasons that politicians and the media MUST understand as to why things went wrong so quickly.

• Court chaos: With Section 21 gone, every contested eviction will now go through a court system that is already on its knees. Recent data shows the average time to repossess a property ranging from six months outside of the capital, to 15 months in London and the South East. For a landlord facing a ‘professional non-payer’ who intentionally stops paying rent, this is a financial death sentence.
• The arrears trap: The Act has raised the ‘mandatory’ eviction threshold from two months of arrears to three months. When you combine this with a 15-month court delay, a landlord could easily lose 18 to 24 months of income before they can legally reclaim their property. For a retiree relying on one rental property as a pension, this isn’t ‘regulation’, it’s a mugging.
• The end of fixed terms: By forcing all tenancies onto rolling monthly contracts, the Act has killed investor certainty. Mortgage lenders also loathe unpredictability so we could see fewer buy to let mortgage deals to reflect the new ‘risky’ nature of the sector.
• The landlord exodus: The government refuses to believe that landlords are selling up, and an estimated 220,000 properties are projected to leave the rental market by the end of 2026. Mostly, they aren’t selling to other landlords but to owner-occupiers, so the pool of available rental homes will shrink. That means the tenants the Act ‘saved’ from bidding wars will now find themselves in a market where 50 people are fighting for a home, not because of price, but because of a catastrophic lack of supply.

Landlord risks rocket

What the Renters’ Rights Act delivers is a classic case of burning down the village to save it.

By attempting to legislate away the risks of being a tenant, the government has made the risks of being a landlord much more difficult.

We aren’t creating a fairer market; we are creating a smaller, more expensive and more litigious one.

But even worse than all of what I’ve detailed above is something much more serious.

And that’s giving councils tougher powers to impose £40,000 fines on errant landlords.

Put simply, councils don’t chase criminal landlords now because it’s too difficult, so they’ll focus on decent landlords trying to do their best.

Here’s my prediction: Most landlords will try to live with the Act and its onerous imperfections but just wait until the first £40,000 fine lands for a minor compliance slip and watch the entire PRS go bang overnight as landlords take fright and sell up.

We aren’t objecting to decent standards, we never have, but we do object to being treated as unpaid social housing providers, court-system gamblers and compliance clerks, while still being expected to supply homes at scale for little or no reward.

Is the well-worn mantra that everyone has a ‘right to a home’ worth anything if there are no homes left to rent?

Until next time,

The Landlord Crusader