Has Michael Gove gone too far in his war on landlords? His Renters’ Reform Bill has caused Conservatives to fear an exodus of buy to let landlords, a shortage of student rentals and a consequent serious housing crisis.
The bill prevents landlords from banning pets or people on benefits, while introducing rolling tenancies and abolishing no fault evictions.
Although there is an exemption for purpose-built student accommodation, which can remain on twelve month contracts, those renting from private landlords are not covered. Landlords have recognised that banning fixed-term tenancies will potentially lead to students remaining in rented property, even after they have graduated. Unless landlords are able to secure tenants for the new term in advance, they will potentially lose months of rental income and new students may fail to secure the rooms they need before the start of their course.
It is hoped that the bill will be amended to recognise the issue of student tenancies, so that vacant possession can be guaranteed for the new cohort of students. However, compared to pre-pandemic figures, at the beginning of 2023 there were around 31% fewer five bedroom-plus properties available – those typically used by house sharing students.
As private landlords continue to leave the market, tenants are more likely to suffer vast rent increases due to lack of supply. London’s monthly rentals have already gone over £1,000 for the first time.
The government has targeted landlords since 2016, when it introduced a stamp duty surcharge of 3% and cut tax relief on buy to let mortgages, and landlords anticipate needing to spend thousands of pounds on energy improvements to meet net zero targets.
Abolishing Section 21 ‘no fault’ evictions would still enable landlords to serve Section 8 evictions, which they can use against a tenant who fails to pay the rent or causes anti-social behaviour. However, county courts are taking on average up to a year to process evictions.
The National Residential Landlords Associates estimates that a third of landlords in England and Wales have already planned to leave the market or reduce the number of properties they currently let.
The Department for Levelling up, Housing and Communities said its war on landlords aimed to introduce: “a ban on ‘no fault’ evictions, so that all tenants have greater security in their homes and are empowered to challenge poor conditions. We are also introducing a Decent Homes Standard for the Private Rented Sector for the first time ever which will make sure privately rented homes are safe and decent.”
However, there are concerns that the reforms will result in a rental market some distance from what the government describes as delivering a fairer deal for renters.