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0:01 AM, 11th July 2023, About 10 months ago 11
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The Government’s plan to reform the rental sector may have unintended consequences for tenants, the Daily Telegraph reports.
The Renters (Reform) Bill, championed by the housing secretary Michael Gove, aims to protect renters from unfair evictions and improve standards in rented properties.
However, a government net assessment analysis warns that the Bill will also increase the costs and risks for landlords, who may decide to exit the market or raise rents to cover the expenses.
The report, by the Department for Levelling Up, Housing and Communities (DLUHC) estimates that the Bill will add £17 per year to the average landlord’s costs per property.
That’s equivalent to 0.2% of the mean annual rent in England.
However, the report acknowledges that some or all of these costs may be passed on to tenants, resulting in higher rents – but landlords leaving the PRS is ‘unlikely’.
It also suggests that the benefits of the Bill for tenants, such as greater security and quality of housing, may be worth up to £17 per year.
Though landlords could be ‘discouraged’ from investing in the sector as a result.
The Bill will abolish section 21 ‘no-fault’ evictions, introduce lifetime deposits and strengthen the regulation of letting agents.
The Government says the Bill will create a fairer and more balanced rental market, where tenants have more rights and landlords have more confidence.
The Bill has also faced opposition from some Conservative MPs, who accuse the Government of being ‘anti-landlord’ and neglecting the needs of homeowners.
They say the Bill will undermine property rights and create more red tape and lawsuits.
Instead, the MPs say the Government should focus on building more homes and supporting home ownership instead of hampering the rental market.
The Telegraph says the impact assessment states: “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 PRS (private rented sector) if they are unable to recover some of the costs incurred through raising rents.
“The extent to which this occurs is dependent on tenant incomes and overall demand in the sector.”
The impact assessment also claims that landlords will only remain in the PRS ‘dependent on the relative attractiveness (financial returns) of residential letting compared to other investment opportunities such as government bonds, bank deposits and pension annuities.”
The report goes on to say that the small rise in costs will not be substantial but warns that tax changes and interest rate rises “would likely have a far greater impact on the supply of properties given the financial implications of these.”
The Bill is needed, the report states, because tenants face ‘a lack of housing security and quality’ that damages ‘health, wellbeing, educational attainment, productivity, and families’ ability to put down roots’.
It also states that ‘no-fault’ evictions are ‘expensive … exacerbating affordability challenges for private tenants’.
A spokesperson for the DLUHC said the Bill will deliver “a better deal for renters and landlords”.
They also said that banning section 21 ‘no-fault’ evictions would bring greater security for tenants and make it easier for landlords to get rid of anti-social tenants.
The spokesperson added: “The impact assessment estimates the net cost of our reforms on landlords are minimal.
“The assessment is also clear this is unlikely to lead to landlords leaving the sector and will improve housing quality overall.”
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Elisabeth Beckett
10:06 AM, 11th July 2023, About 10 months ago
I’m going to sell now. 9 properties 40 tenants and £4400 profit for the year in total. Definitely not a sustainable income and next year it looks like it’ll be -£36,000 due to my mortgage interest going from £25,000 a year in March22 to £91,000 a year now. Not offsettable - so unfair to change the rules after someone has planned their business strategy when they bought. Good luck in finding rooms for all my tenants whichever government runs the country and well done shelter and generation rent etc.
moneymanager
10:08 AM, 11th July 2023, About 10 months ago
We have had numerous occassions where the ability to agree the shape of the tenancy term and payment has been CRUCIAL to our being able to let to that particular tenant, those with a poor credit history or none, such as Hong Kong refugees or even returning Brit expats have often had no income, the ability agree a fixed term of say a year and prepayment has given those people that "home", six months and universal rolling introduces instability and could cssue portfolio wide cashflow disruption.
Old Mrs Landlord
12:37 PM, 11th July 2023, About 10 months ago
"Landlords unlikely to leave the sector" once the Bill is enacted - probably not as many have already left and others are gradually reducing their portfolios. It would appear that the authors of the government assessment report have not read any newspapers recently and definitely haven't consulted any letting agents or they would not come out with this rubbish. At the same time the report acknowledges that landlords will only remain in the sector if the relative rewards are greater than other forms of investment, but only in respect of financial returns. For many landlords the financial rewards are not the only or even the main consideration and the risk/reward ratio doesn't seem to have been considered at all. I can't be the only landlord thinking "Whatever will the government do next?" The rules are constantly changing, often with retrospective effect, making it impossible to plan and invalidating what were at the time sensible decisions in the prevailing circumstances. .
Tony Johnson
13:16 PM, 11th July 2023, About 10 months ago
Well Doh 🤦♂️
Surely the author of this piece hasn't just come to this obvious conclusion.?
Shelter & Gen Rent don't care two hoots about the homeless or tenants, they are just Marxist fronts whose sole aim is to stick it to private landlords and property owners because they hate capitalism and asset ownership.
The fact that they want to ban landlords from letting their properties again, for at least 12 months after a valid eviction, just proves that they really don't care about the lack of supply that would cause for an increasing demand from desperate tenants.
Tony Johnson
13:23 PM, 11th July 2023, About 10 months ago
Reply to the comment left by moneymanager at 11/07/2023 - 10:08
Indeed.
Its a business contract and all other businesses are allowed to draft and shape whatever contract they like with other parties and the government doesn't get to stipulate what the minimum terms are for business contracts.
That's how it should be in a free market.
Nobody forces any party to sign a business contract if they're happy with the terms.
Its just a selective attack on private landlords.
Once they've squeezed out all private landlords then they will start giving the big parties like BlackRock and the Banks who come in and sweep up all these properties, complete carte blanche to shape their rental contracts as flexible as they like.
Nick Van Hoogstraten
14:35 PM, 11th July 2023, About 10 months ago
Everything is a against landlords. Giving notice without having to prove anything is just the only way a landlord can win anything. Courts= 1)long waits, 2) lots of direct legal costs, 3) indirect costs such as loss of rent from tenant, 4) risks of endless counterclaims (often made up). We need to keep S21 or else.
Katey Major
19:19 PM, 11th July 2023, About 10 months ago
Why would a lifetime deposit be a bad thing though? Since deposits have to be in a registered scheme, and most people use the same one, why can't the money just stay in that account as you move between properties?
Old Mrs Landlord
7:26 AM, 13th July 2023, About 10 months ago
Reply to the comment left by Katey Major at 11/07/2023 - 19:19As far as I can see one major reason a lifetime deposit would cause difficulties is that it would require the same deposit to cover two properties at the time tenants move to another rental. The new landlord expects a deposit to secure the tenancy in advance of tenant moving in but part or all of the deposit may well later be claimed for damage to the place the tenant is leaving. Actual moving out of tenants' furniture can cause considerable damage which does not show up if final inspection is before the move.
A second reason is that deposit amounts are related to rent and rents increase over tenant 'lifetimes'. We have known long-stay tenants who have been very surprised when reminded the actual amount of deposit they put down. It is bad enough for the landlord that costs of remediation have increased out of all proportion to the restricted sum of initial deposits, but to think that the deposit the tenant paid on a one-bed flat at the start of his tenancy lifetime will cover the deposit on the three-bed house he moves into after ten or even twenty years of renting is wishful thinking.
I am sure others can think of other reasons that a lifetime deposit is not the answer to a tenant's prayer, but these two come immediately to my mind.
anthony altman
12:07 PM, 6th August 2023, About 9 months ago
TWO MAJOR UNIVERSITIES Support a new regulation from our local council ,a landlord accused of anything is immediately banned from letting their properties ,they are not told what they are accused of they have no right of reply they have no right to a hearing they are banned from letting until the council has time to look at their case
(will be at least nine months could be two years)
Then their guilt will be decided by a kangaroo court of council members in secret with no right of representation
Welcome to the fourth reich
Grumpy Doug
13:01 PM, 6th August 2023, About 9 months ago
Reply to the comment left by anthony altman at 06/08/2023 - 12:07
Anthony, are you at liberty to elaborate further? What council are you referring to, for instance?