LAWYERS and property specialists are warning landlords with small portfolios may quit the rental market because of increasing regulation and costs.
And this is likely to spark an increase in rents as demand continues to outstrip supply.
Landlord and tenant lawyer Alex Crabbe says owners are watching closely as new legislation makes its way through Parliament.
The Renters Rights Bill is at Report Stage in the House of Commons.
Its key points include the abolition of so-called ‘no fault’ Section 21 evictions, rental gazumping, a crackdown on unsafe rental properties, strengthened rights on pets and the prohibiting of discrimination against prospective tenants on the grounds of their children or benefits status.
It is widely expected to come into force no later than October next year, but there is a chance it could be enacted by next summer.
Alex of Rawlins Davy Reeves said: “In essence, the focus of the bill is on improving standards and rights for tenants, with some of the legislation aimed at rooting out poor landlords and homes.”
“Within the private rented sector, there is plenty of support for many of the proposals contained in the bill.”
“However, there are also concerns on the timing and implementation of some of the changes, with the government urged to make the sector more, rather than less, enticing to landlords in order to ensure tenants aren’t left with an even greater shortage of homes.”
He added: “This is certainly a more pro-tenant change than the previous effort, the Renters Reform Bill, which was lost when the July general election was called.”
He said a number of landlord clients with between one and three rental properties were concerned about too much regulation which may force them to consider selling up.
For many, with only a small number of properties, the margins can be very fine. Those with larger portfolios can absorb extra costs through economies of scale.
“Landlords selling up will clearly result in fewer rental properties on the market and this may have a knock-on effect of higher rents.”
Alex represents both landlords and tenants and said when both work together as in the vast majority of cases, “the relationship is a good one and mutually beneficial.”
Director of Bournemouth letting agents Martin and Co, Philip Skorochod said: “Landlord bashing seems to top of the agenda for consecutive Governments.”
He added: “The issue with the renter’s rights bill is simply that the majority of landlords care about their properties and their tenants and this bill stops owners controlling their properties.”
He said existing legislation (over 170 laws and regulations governing the rental market) gives tenants sufficient protection and many of them want longer term agreements, not shorter ones as they want security of tenure.
“There has been around 10% reduction in rental properties in the last year as result of landlord fears of what the new legislation represents to them and they are voting with their feet.”
Nick Baker of House and Son said: “The Renters Reform Bill poses the biggest change to the Lettings industry in almost 30 years, and as such will be a major challenge for agents and Landlords alike.
“The abolition of Section 21 notices, together with tougher rules surrounding rent increases, and the relaxing of rules surrounding pets, will all improve the lives of renters, and will largely be seen as positives in the industry. Where there is just cause, for example to sell, a Landlord can still regain possession of his property.
“The scrapping of Section 21 notices should prevent the more unscrupulous Landlords from exploiting the market and taking advantage of tenants. This can only be a good thing.
“Although I can see why something had to be done with regards to the rental industry, I believe the powers that be might be going too far, potentially forcing a number of decent Landlords out of the market as the uncertainty and costs involved in renting become too much for them.
“On the flip side of this, Landlords will become more reliant on the knowledge and expertise of agents, as keeping up with the legislation becomes unmanageable. As with anything, there are positives and negatives, but I’m sure the rental industry will come out of it stronger, as it did following the Tenant Fee Ban back in 2019.”
