Housing Minister denies Renters’ Rights Bill will harm supply

Despite Housing Minister Matthew Pennycook claiming the Renters’ Rights Bill is “fit for purpose”, a report by an influential committee tells a different story.

In answer to a written question about the impact the Renters’ Rights Bill will have on the supply of private rental properties, Mr Pennycook denied the bill would have a harmful impact on future supply.

However, as previously reported by Property118, the Renters’ Rights Bill is fforcing many landlords to leave the market, in turn hurting supply.

Renters’ Rights Bill is fit for purpose

Responding to the written question, Mr Pennycook claimed good landlords will have nothing to fear and will continue to invest and operate in the private rented sector.

He said: “The government published an Impact Assessment for the Renters’ Rights Bill on 22 November 2024. It received a ‘Green’ rating from the Regulatory Policy Committee, indicating that it is ‘fit for purpose’.

“While we acknowledge that it will take time for the sector to adjust to a significant change in regulation, we do not believe that our Renters’ Rights Bill will have a harmful impact on future rental supply.”

He adds: “Although landlords have been aware of successive governments’ plans to reform the private rented sector since 2019, the size of the sector as a whole has remained broadly stable since 2013-14.

“The bill will make sure good landlords have the confidence they need to continue to invest and operate in the sector. We will continue to work with good landlords and their representative associations throughout implementation.”

The impact assessment has not adequately considered the potential costs for landlords

However, a closer look at the Regulatory Policy Committee’s (RPC) assessment reveals a more mixed picture. While the Renters’ Rights Bill was rated overall as “fit for purpose,” several sections, including those on wider impacts and the cost-benefit analysis, were given only a “weak” rating.

In its report, the RPC criticised the government for failing to properly consider the costs the bill will impose on landlords.

It warned: “The impact assessment has not adequately considered the potential costs, as well as impact upon the quality of private rental housing, of making the PRS market more illiquid.

“For example, if landlords are less able to evict tenants (as a result of the abolishment of section 21 evictions), as well as less able to invest in the quality of the property to compete in the market and attract higher rents, then it is likely that these landlords would only invest to the minimum regulatory standard and quality of the rental housing stock could fall, which must be considered alongside the growing need for new, in particular affordable, housing.”

Ombudsman fee will proportionate and good value

The committee also said the government’s Impact Assessment (IA) needed to look more closely at the cost-benefit implications of the Ombudsman scheme.

The document says: “The impact assessment would also benefit from clarifying some parts of the cost-benefit analysis for the Ombudsman measure.

“For instance, it is not clear why the annual registration fee has been divided by 10 and the department could provide some clarity on why staff costs to run the Ombudsman have not been included in the analysis, and whether these are funded by the fees paid by landlords.”

As previously reported by Property118, Mr Pennycook claims the Private Rented Sector (PRS) Ombudsman will not be able to make a profit and the fee will be “proportionate and good value”.

The government has hinted at combining the registration process for the PRS database and Ombudsman, but stopped short of confirming whether landlords will be required to pay separate fees for each scheme.