While many rational voices warn that implementing a Tenant Bill of Rights could have unintended consequences — including forcing landlords out of the market, pushing rents to record levels, increasing the number of vacant homes and potentially creating more homelessness — But the government does not appear to be in listening mode.
Indeed, when the bill had its third reading in the House of Commons last week, ministers confirmed a proposed amendment that could also result in fewer properties being available for overseas students and undercut the $400 they contribute to the UK economy. billions of pounds per year.
The latest amendments to the bill will prohibit landlords from receiving more than one month’s rent before a tenant moves into the property. On the surface this sounds perfectly reasonable, but in certain areas such as the student rental market it can actually be quite disruptive.
Although numbers have fallen recently due to rule changes introduced by the previous government, 25% of UK student numbers are overseas. The vast majority live in rented accommodation, usually paid for by parents or other family members. By definition, because these parents or family members live overseas, they have no credit history in the UK and so potential landlords cannot check them.
It is therefore common (and reasonable) business practice for landlords to require overseas students to pay three to six months’ rent in advance.
Banning landlords from charging rent before students move in could severely hamper overseas students’ chances of finding suitable/affordable accommodation close to their study location, which could further discourage them from studying in the UK.
The rules do not apply to purpose-built student accommodation buildings, which are typically owned by institutional investors rather than individuals or small businesses, tend to be much more expensive than standard accommodation and often require a year’s rent upfront. The introduction of the Bill will make the playing field for student accommodation smaller, even for small and large investors, and more expensive for overseas tenants.
This latest provision simply adds to the list of elements in the Tenants’ Bill of Rights that could upset the delicate balance between tenants’ and landlords’ rights, ultimately to the detriment of tenants.
Perhaps the most controversial headline changes are the elimination of fixed-term guaranteed tenancies and assured short-term tenancies (AST) and the abolition of so-called “no-fault” evictions. Under the new bill, landlords will not be able to refuse to renew a disruptive tenant’s contract because the lease has no end date, while the tenant will have the right to stay indefinitely. They can only be removed if the landlord wants to sell or move into the property, or if there is rent arrears or evidence of anti-social behavior. However, enforcing these grounds can require lengthy court proceedings, which will only add to the backlog of cases that have clogged the legal system since the pandemic (county courts took an average of 51.6 weeks to process small claims cases last year, while the crown courts had a backlog of 52,000 cases ).
The demolition of AST may also lead to an increase in the number of empty homes in the UK. Currently, homeowners who have to leave their property for a year or two because their job takes them to a different city or country can rent out their home for a designated period, knowing they can move back to their original place of residence. . If the bill passes without amendments, many people in this situation may be reluctant to rent out their homes for fear that it may require a lengthy legal process to repossess their homes. This was one of the purposes for which guaranteed short-term tenancies were introduced in the Housing Act 1988. There are over a million empty homes in the UK. Increasing this number is entirely a goal of its own.
But the bigger risk posed by the bill is landlords withdrawing from the PRS, which is an integral part of the UK housing landscape. Private landlords now house less than 20% of the country’s households, and tenant “types” include not only the traditional transient groups of students, peripatetic professionals, and young people who have yet to put down roots (and the not-so-young); There are increasing numbers of households with children (34% of private renters in 2023/24) and older people (9% aged over 65).
According to the Office for National Statistics, rents in England have reached record highs, rising 9.2% last year to average £1,362 a month. £706 per month in the North East and £2,220 per month in London. If more landlords lose their nerve and sell their properties, the supply of rental properties will decrease and rental costs will increase further. This is a fundamental economic issue, but it also reflects a lack of faith in government that landlords have had for more than a decade. Landlords may raise rents not only because the laws of supply and demand dictate that they can, but also to protect themselves from further attacks by the state, whether further taxes or legislative changes.
The last Conservative government failed to enact a Tenant Reform Bill before losing the election, and cynical observers might say the current government is determined to prove it can achieve what its rivals cannot. But using the country’s tenants as a political football would be a mistake. The UK is suffering from a severe housing crisis. It is vital that the Government recognizes the dangers of further damaging the PRS and the potentially catastrophic impact the Tenants Reform Bill could have on renters themselves.
*The Tenant Reform Bill will have its second reading in the House of Lords on February 4.
Kate Davies is executive director of IMLA
