Landlords and agents set to bear brunt of £33M cost of Renters’ Rights Bill

The impact of the Renters’ Rights Bill is expected to cost £33 million a year, but the government insists it will not trigger a mass exodus of landlords.

According to the government’s impact assessment, the estimated cost for landlords is £12 per rented property annually, while agents are expected to face an average cost of £1,700 per year.

The government admits most of the costs (excluding those related to Awaab’s Law and the Decent Homes Standard) will fall on landlords, with the majority impacting private landlords, and a smaller portion affecting social housing landlords.

Landlords will only benefit by £9 a year

The assessment also estimates tenants will benefit by just £28 per household per year. Landlords are expected to see a gross benefit of only £9 per property annually, largely from reduced letting agent fees due to fewer household moves and shorter void periods.

The government claims the Renters’ Rights Bill will only cause a small number of landlords to exit the market.

The assessment said: “There is a risk that costs from the legislation may result in some landlords leaving the sector. This is difficult to estimate precisely, though we would expect it to be substantially mitigated by the additional cost per rented property being a very small fraction of average annual rent and asset value.

“The available evidence to date does not suggest that similar reforms to abolish section 21 in Scotland have negatively impacted supply, nor changes introduced by the 2019 Tenant Fees Act, despite concerns they would.”

However, a study by the Scottish Association of Landlords shows a reduction of 22,000 rental properties in Scotland in just one year due to government policies and anti-landlord rhetoric.

A survey by the National Residential Landlords Association (NRLA) found that 41% of landlords plan to sell properties within the next 12 months, compared to only 6% who intend to buy.

Replaced by more professional landlords

The government claims that those most affected by the costs of the Renters’ Rights Bill will be the landlords providing the poorest service to their tenants.

The assessment said: “Landlords facing the greatest costs as a result of these measures will be the ones providing the poorest service to their tenants, we anticipate they are more likely to exit the sector as a result of these changes, which leaves the potential for them to be replaced by more professional landlords.”

The assessment also reveals that the government has turned down the idea of a specialist housing court, saying the costs would be too high. Instead, they plan to digitise the court process, which they say will make things simpler for landlords.

The full impact assessment can be seen here

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