The eagerly anticipated Renters' Reform Act, designed to overhaul the private rental sector, could inadvertently lead to a more challenging environment for tenants deemed 'riskier', according to the National Residential Landlords Association (NRLA). The organisation suggests that new provisions within the Act might prompt landlords to adopt stricter vetting processes, potentially disadvantaging individuals with poor credit histories or less stable employment.
A core component of the proposed legislation is the abolition of Section 21 'no-fault' evictions, a move widely welcomed by tenant advocacy groups as a significant step towards greater housing security. However, landlords, represented by the NRLA, express apprehension that without robust and efficient alternative grounds for possession, they may struggle to regain properties in legitimate circumstances, such as antisocial behaviour or rent arrears. This concern could lead to a more risk-averse approach when selecting tenants.
The current rental market already presents significant hurdles for many, with demand often outstripping supply across various regions. Data from property portals like Rightmove and Zoopla consistently show rising rents across the UK. For instance, Rightmove recently reported average asking rents outside London were up 9.2% annually, reaching a new record of £1,280 per calendar month. In London, average rents hit £2,633 per calendar month, an increase of 5.3% year-on-year. Against this backdrop, any factor that further limits options for a subset of renters could exacerbate an already competitive landscape.
For first-time buyers, the rental market often serves as a stepping stone, but high rents can make saving for a deposit incredibly difficult. With average house prices remaining elevated, despite recent cooling in some areas – Halifax reported an average UK house price of £288,949 in April, a modest 0.1% increase on the previous month – the path to homeownership is already challenging. The potential for 'riskier' tenants to be shut out of the rental market could force some into less suitable or more expensive accommodation options, further impacting their financial stability and ability to save.
The government's intention with the Renters' Reform Act is to create a fairer, more secure private rented sector for all. While the focus on enhancing tenant rights is clear, the NRLA's warning highlights the delicate balance required to ensure the legislation achieves its aims without unintended negative consequences for specific groups of renters or for the overall supply of rental properties. The effectiveness of the new system will heavily depend on the speed and efficiency of the reformed court processes for possession.
Existing homeowners, particularly those who are also landlords, will need to adapt to the new legal framework. For landlords, understanding the revised grounds for possession and ensuring compliance with all new regulations will be paramount. The implications for the broader rental market could include a slight reduction in the number of available properties if some landlords choose to exit the sector due to perceived increased risks and administrative burdens.
Source: Property118, Rightmove, Halifax