Some landlords with small property portfolios may exit the market as a result 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 Second Reading stage in the House of Commons today (October 9).
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 his 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.”