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Measures to clamp down on rogue landlords were introduced to parliament this week as the Labour Government unveiled its long-awaited Renters’ Rights Bill.
The legislation, which will introduce sweeping changes to the private rented sector (PRS), will ban on "no-fault" section 21 evictions and crack down on rental bidding wars; but how will all of this affect landlords and the buy-to-let sector if written into law? Let’s take a look…
What measures does the Renters’ Rights Bill include?
The UK Government Renters’ Rights Bill includes the following proposals:
- A blanket ban on “no-fault” evictions
- Compel landlords and letting agent to publish required rent for a property
- Apply a Decent Homes Standard to the PRS for the first time
- Ensure that landlords cannot “unreasonably refuse” tenants requests to keep a pet
- End the blanket ban on letting to benefit claimants and tenants with children
- Give councils more powers to tackle rogue landlords
- Limited rent increases to one per year in line with market rates
- Create a PRS database to clarify landlords’ obligations
First promised under former housing secretary Michael Gove, the reforms have been dusted off and revived by the Labour Government after being watered down and ultimately shelved by the previous regime, due to concerns about the wider impact on the PRS industry.
The proposals are being championed by Labour as a solution to “overhaul renting and rebalance the relationship between tenant and landlord”, but how will they affect the sector?
What impact will they have on buy-to-let landlords?
If the bill becomes law, landlords will no longer be able to evict tenants without a good reason. Even then, it won’t just be their decision, and will be referred to a court.
Deadlines will also be set for landlords to rectify dangerous conditions in their properties, such as the presence of black mould, in an extension of Awaab's Law to the PRS. They could be fined up to £7,000 if their properties fail to meet a Decent Homes Standard.
The other stand-out proposal is measures to put an end to rental bidding wars. By forcing landlords and letting agents to publish required rents in advance, tenants will not be forced into a bidding process, and offers above the advertised rate must be refused.
Our analysis
While unscrupulous landlords are the ones hit hardest by these measures (and rightly so), our resident buy-to-let expert Jane Colby, who is property investor herself, believes that honest, professional landlords are unlikely to be stung by the changes.
However, accidental and small-time investors might be deterred from remaining in the sector.
“The Renters’ Rights Bill will definitely start changing things, if it becomes law,” she said. “I think it will hit the smaller accidental or amateur landlord and could result in some selling up. I’ve had this discussion with a few of my clients who are already considering it.
“It will put off smaller landlords from getting into it for sure. But, ultimately, I do not think it will affect professional long-term landlords such as myself. You do need to keep up and stay ahead of the changes.
“Buy-to-lets in personal names are reducing anyway, as it’s just not worth it. Many people I speak to are unaware of the implications on income and just want one rental property for a pension fund.”
Although the Renters’ Rights Bill has been presented to parliament, it has a way to go before it becomes law. It must next pass through the House of Lords and MPs will have the chance to challenge, and force changes to, aspects of it along the way.
