New Renters Rights legislation is big, but not clever - Alex Goldstein
It is big, but it’s not clever. That is my conclusion of the new Renters Rights legislation that has just come into force. For years there were campaigns from rental groups leading an agenda for the government to bring rental prices down and to push out rogue landlords from the sector.
Whilst those in the property industry warned that however well intended their wishes were and there were better ways to achieve this, it would end with unintended consequences. Sure enough, those with knowledge and experience in the market were overlooked and it has all backfired on the campaign groups and the government in spectacular style. The Government’s new legislation has been a crusade against landlords – the name of the Act itself should tell you all you need to know. By forcing landlords into a corner both from greater taxation and less legal rights, it doesn’t take a genius to figure out that the majority of landlords subsequently wished to sell up and exit the sector.
According to the ONS, rents over the last 12 months alone have increased by 3.5 per cent, with inner London increasing by over 6.5 per cent. Existing court backlogs of 18 months with limited capacity to take more on has caused widespread unease and unsurprisingly the result was a tidal wave of Section 21 evictions just before the Act came in.
All of this came to the front on a recent rental search I was conducting for a client in the North Yorkshire golden triangle. He had a healthy budget and was over from Australia on a two year contract. From the first phone call to my letting agent connections, I realised that I had an uphill battle on my hands. There was genuinely an alarming lack of available properties and towards the end of the search we were saying that ‘beggars couldn’t be choosers’, with eventually only two properties to choose from. We did find a suitable property to rent, however the saga under the new legislation continued. My tenant client wanted the reassurance that he could rent the property for two years whilst he was in the UK. Equally the landlord wanted to have a long term tenant. A simple request you may have thought, however under the new Act both sides lost as neither were legally allowed to do this.
What is already happening is that far greater scrutiny will be placed on potential tenants. If a tenant has any form of minor blemish on their application or less than exceptional background and financial checks, no landlord will enter into any form of rental agreement with them, as the risks are too high.
What is beyond comprehension is that the very people the Act was supposedly there to help, has made it significantly worse for them. There was even a brief mooting by the government of bringing in rent controls, to slow down the issues they had created. However yet again the lack of foresight is remarkable and the fact they even mentioned this has spooked even more of the good landlords to sell up, with both sides losing out.
Whilst the campaign groups brought about an agenda, the poorly thought through approach and clumsy implementation has caused far reaching problems that will now hit tenants and landlords for many years to come. So when it comes to the property market, be careful what you wish for.
Alex Goldstein is an independent bespoke property consultant in Yorkshire and London. Visit alexgoldstein.co.uk or call 01423 788377