The forthcoming Renters' Rights Act, designed to bolster protections for tenants across England, may prompt an unintended consequence: a significant increase in the stringency of tenant checks by landlords. Reports suggest that property owners are bracing for the new legislation by reviewing their vetting processes, potentially making it harder for some prospective renters to secure properties in the competitive private rental market.
While the exact details of the Renters' Rights Act are still being finalised, its overarching goal is to create a fairer and more secure rental environment. This includes measures such as potentially limiting or abolishing 'no-fault' evictions and enhancing tenants' ability to challenge poor property conditions. However, landlords, facing increased regulatory burdens and potential difficulties in regaining possession of their properties, are reportedly looking to mitigate risks by ensuring tenants are more thoroughly vetted from the outset.
This anticipated shift could manifest in several ways. Prospective tenants might face more rigorous credit checks, deeper dives into their rental history, and higher income requirements relative to rent. Landlords may also become more selective, favouring applicants with stable employment histories and strong references, potentially disadvantaging those with less conventional employment, a limited rental history, or lower incomes.
For first-time renters, students, or individuals with less established financial backgrounds, this could present a significant hurdle. The already challenging landscape of the private rental sector, characterised by high demand and rising rents, could become even more difficult to navigate. According to Rightmove data from April 2024, average asking rents outside London were up 8.5% year-on-year, reaching a new record of £1,291 per calendar month, exacerbating the pressure on renters.
The implications extend beyond just individual tenants. A reduction in the pool of eligible renters could also impact the broader housing market, potentially affecting property investment decisions and the availability of rental stock. While the Act aims to improve conditions for existing tenants, the concern is that it might inadvertently restrict access to housing for others, creating a two-tiered system where only the most 'desirable' tenants can secure properties.
Organisations representing landlords have previously voiced concerns about aspects of the proposed legislation, arguing that some measures could deter investment in the private rental sector and lead to a reduction in available rental properties. The reported move towards stricter tenant checks appears to be a direct response to these perceived risks, as landlords seek to protect their investments in an evolving regulatory landscape.
Source: Property118