Tenant reform bill could ‘shrink’ property market

Industry members have raised concerns about the shrinking buy-to-let market following the government’s tenant reform white paper.

In an oral statement today (16 June) in the House of Commons, Minister Eddie Hughes outlined the Government’s plans to give more rights and protections to tenants while providing more clarity and support for 2 .3 million UK private owners.

The Government today published its White Paper on the fairer private rented sector, in which the measures will form part of the Tenant Reform Bill announced in the Queen’s Speech, which will be introduced in this session of Parliament.

In addition to banning “no-fault” evictions under Section 21 – which currently allow landlords to terminate leases without giving a reason – the bill will double notice periods for rent increases and give tenants more power to challenge them if they are unjustified.

Upgrading and Housing Secretary Michael Gove said the new contract for tenants will meet people’s priorities and benefit millions of people in the UK.

He said: ‘For too long, many private tenants have been at the mercy of unscrupulous landlords who fail to repair homes and leave families to live in damp, unsafe and cold properties, with the threat of injunctions. unfair “no-fault” evictions hanging over them. ”

However, some in the buy-to-let industry have raised concerns about the bill, saying it could inadvertently raise rents and shrink the rental property market.

Stephen Small, a partner in Russell-Cooke’s real estate and property litigation team, said the immediate consequence of today’s announcement could be a substantial increase in Section 21 notices, as owners seek to exit the market while they can still do so easily.

“Fewer landlords and no reduction in the number of tenants will exacerbate supply and demand bottlenecks and, combined with a high inflation economy, will fuel further rent increases,” he said.

Small also said there has been an acceleration in the professionalization of the private rental sector, as large business owners are able to manage the new regulatory environment better than smaller owners.

He pointed out that for many corporate owners, Section 21 is already a thing of the past.

“In the long term, the rise of large corporate landlords at the expense of the buy-to-let market should help improve the country’s housing stock, but the journey could be a painful one.

More levels needed

The Department for Leveling, Housing and Communities document highlighted that provisions will be introduced to ensure responsible landlords can take possession of their properties effectively from anti-social tenants and can sell their properties when needed.

Still, Karen Noye, mortgage expert at Quilter, said the bill could benefit from more nuance.

She pointed out that the buy-to-let market has already suffered significantly and that a careful balance is needed to ensure the market works for both tenants and private owners.

Penny D. Jackson