The Renters’ Rights Act is a political victory and a disaster for tenants

This isn’t the article I had planned but I couldn’t decide after waking up today whether I was caught in some weird fever dream now that we know when the Renters’ Rights Act will come in.

I might be shooting from the lip here but don’t believe anyone who says the Act is a triumph for fairness.

It’s not even a rebalancing of power or ‘levelling the playing field’ between landlords and tenants.

Beneath the government and tenant campaign groups slapping themselves on the back there’s an unavoidable truth that’s about to slap them in the face.

This legislation will end up punishing the very people it claims to protect.

And, in the unlikely possibility that tenant campaigners or Labour ministers are reading this, you have caused the biggest disaster to tenants for years.

Landlords are ordinary people

Let’s get one thing straight: most landlords are not ideologues. We don’t do lobbying though others say they do on our behalf.

We are just ordinary people trying to run a business in an increasingly hostile environment.

Many landlords will be looking at the new implementation date for the rules and wondering whether it’s still worth the effort.

I imagine that examination will be more urgent when we hear what’s in the Autumn Budget.

Because strip away the Labour Party rhetoric and you’re left with something far more volatile than a tenants’ charter.

The government and tenants will be left with a system that risks throttling supply, putting up rents and creating a rental market where only the most financially stable applicants stand a chance of finding a home.

Landlords will sell

This isn’t me scaremongering; it’s basic economics. When rules make it harder to manage risk, the providers of housing will retreat.

I’ve mentioned before that bringing in an annual restriction on rent rises and offering tenants a way to challenge a rise is effectively a rent cap.

And then there’s the ban on Section 21 which removes the only straightforward, predictable route for regaining possession at the end of a tenancy.

The government insists the new grounds will be ‘stronger’, but every landlord knows how clogged, slow and costly the court process already is.

I’m looking forward to the data that shows the real reasons why many tenants are being evicted.

Then there’s the elephant in the room, which is landlords don’t have to be landlords.

We aren’t offering a home with a sense of social justice because we don’t want to see families on the streets.

We want to do this because we see this as an effective way to prepare for retirement or build generational wealth.

But with this implementation date in place, I can predict lots of landlords will throw in the towel.

And when they sell, that’s a home lost to the PRS, unless another landlord steps in.

Higher rents are coming

Yet this is the part politicians never seem to grasp because landlords leaving means fewer homes, and that means higher rents.

We will be looking at cautious landlords moving towards extreme selectivity.

If it becomes difficult or near impossible to recover possession from a problematic tenancy, landlords will tighten their criteria.

They will favour older tenants with stable incomes, spotless references and the deposit.

Younger renters, those with irregular earnings, students, single parents, migrant workers, the self-employed, people on benefits or anyone with a credit wobble, risk being filtered out long before they even reach a viewing.

Tenant groups will call this discrimination.

They can call it what they want, but landlords will call it self-preservation.

Reasons for homelessness

What makes the situation even more troubling and the reason that attracts most publicity is the government’s claim that Section 21 is the engine of homelessness.

It isn’t because the main causes of homelessness, according to councils themselves, are family breakdowns, domestic abuse, evictions from asylum accommodation and the ending of informal living arrangements.

Private rented sector evictions are a fraction of the picture.

But I guess we are politically easy to target, so we get branded as the enemy.

Meanwhile, councils are now expected to enforce tougher rules with heavier fines, more investigatory duties and a new regulatory landscape they can barely afford to police.

That will mean inconsistent enforcement, frustrated tenants and bewildered landlords. It will certainly not mean a healthier, more functional market.

RRA is a government mismanagement masterpiece

I’m sorry to say that if the intention was to terrify every good landlord out of the sector, the government may have delivered a masterpiece.

Which brings us to the real irony of Labour ministers saying tenants deserve more choice, more stability and more affordability.

It is they who have introduced a system likely to achieve the opposite.

If the goal was to help renters, the starting point should have been more housing supply.

That’s how you improve conditions and competition to deliver lower rents and better homes.

Not by shrinking the pool of available properties and hoping regulation fills the gap.

The most tragic part is that tenants have been promised protection, but they’ll get scarcity.

The government wanted to hand tenants more power, but it’s actually giving them fewer options and higher rents.

If this is the victory for tenants, I can’t imagine what defeat looks like.

Until next time,

The Landlord Crusader