Warning Signs: Major Changes Loom for Britain’s Rental Market
Landlords brace for significant reforms as the government shifts focus to tenant rights, raising concerns about the future of rental properties.
Britain, Rental Market, Landlords, Tenants, Reforms, Housing
Brighton: Sajjad Ahmad has been a landlord since he was 18. Now at 61, he’s a qualified lawyer who helps other landlords deal with the constant changes in the rental market. It’s been a tough decade for buy-to-let owners.
Landlords are facing a lot of new challenges. The Labour Government is planning a bunch of reforms that will make things tougher for them and easier for tenants.
One big change is the plan to scrap assured shorthold tenancies, which have been around since Margaret Thatcher’s time. These allowed landlords to set an end date for rentals and evict tenants with just two months’ notice.
Mr. Ahmad recalls how Thatcher understood that landlords needed security. Now, he feels the opposite is happening. He says getting your property back is becoming a real struggle, especially with all the new laws coming in.
The Renters’ Rights Bill is expected to pass in the spring. This will mean landlords can only reclaim their properties through a Section 8 notice, which is usually for serious rent arrears.
Landlords often let small arrears slide to avoid hefty legal fees, which can be a nightmare. In one case, Mr. Ahmad saw legal costs hit £80,000.
Now, landlords will also have to give an extra month’s notice, which many are calling “another month’s free rent” for tenants who don’t pay. A survey found that 58% of landlords are really worried about this change.
Additionally, landlords can’t charge more than a month’s rent upfront anymore. The government says this is to help tenants, but experts think it might actually hurt those with bad credit or who are new to the country.
There’s also Awaab’s Law, which will now apply to private rentals. It sets strict time limits for landlords to fix hazards in homes, or they could face fines.
On top of that, Labour is bringing back energy performance targets, requiring all rental properties to hit a C rating by 2030. They haven’t said if there will be a cap on how much landlords can spend to meet this.
These changes, along with high mortgage rates, are likely to slow down property transactions. Experts predict that buy-to-let purchases will stay flat, which could limit rental options and push rents even higher.
Lucian Cook from Savills mentioned that this will reduce the number of available rentals, making it harder for tenants to find places and driving rents up further.
Interestingly, these reforms are just a continuation of what previous Conservative governments started. They had already planned to abolish Section 21 notices and make changes to the rental market.
In 2015, former chancellor George Osborne introduced a higher stamp duty for landlords and cut mortgage relief, which has really hurt the market.
Since then, the number of landlords buying properties in the southeast has dropped significantly. Landlord instructions are also down, and rents have skyrocketed, with average costs rising by over £3,000 since 2021.
While rental inflation has slowed, it still varies by region, with some areas seeing increases of over 10% in the past year.
Mr. Ahmad feels frustrated. He believes that years of warnings to the government have fallen on deaf ears, and now it’s the renters who are suffering.
He shared a story about a landlord in Brighton who wanted their property back. The family living there was struggling to find a new place because estate agents said landlords preferred single tenants.
Mr. Ahmad warns that these new laws will push landlords out of the market, reducing options for tenants and making it easier for those who remain to be picky.
He’s also worried about the lack of confidence in the rental sector, which has led to rising rents and bidding wars among tenants. His own son has had to bid for a place, which he finds shocking.
In Scotland, the situation is even worse, with stricter rent controls in place. They banned no-fault evictions and froze rent increases, but this has led to higher costs for tenants.
John Blackwood from the Scottish Landlord Association is particularly concerned about new restrictions on how much landlords can raise rents between tenancies. This could make it hard for them to keep up with rising costs.
In Wales, the government has also increased stamp duty for second properties, making it tougher for landlords there too. One former landlord in Powys feels the Welsh government is waging a war against private landlords.
Craig Sullivan, a 36-year-old landlord in Kent, sees the market as under constant attack. He started out fixing up properties while he was a student and now runs an agency.
He believes that good landlords are being squeezed and that the government’s changes are actually reducing the supply of rental properties.
He’s worried about the impact of the new rules on student housing, especially since the government hasn’t clarified if student lets will be exempt from the new tenancy rules.
Tom Walker, who runs a student accommodation portal, says the bill could lead to more student arrears if private rentals shrink and students have to rely on purpose-built accommodations.
As private landlords exit the market, developers are stepping in with “Build to Rent” projects, but campaign groups warn that these could lead to even higher rents.