Lords blast Renters’ Rights Bill: ‘The government is not listening’
Peers in the House of Lords have clashed with the goverment’s Renters Right Bill, arguing that the Commons hasn’t listened to their concerns about fixed-term contracts, student housing or holiday lets.
The bill, which aims to rebalance the relationship between landlords and tenants, began its third reading in the House of Lords on July 1.
The bill is one of Labour’s flagship policies, and contains measures to abolish “no-fault” evictions, improve property standards, and regulate rent increases.
During its third reading in the Lords, however, Lord Hacking blasted the government for having rejected more than 300 amendments from the House.
“I want the government to succeed, which they would do much better if they were able to do more listening,” he said.
Speakers argued that the bill risked doing damage to tenants by pushing landlords out of the sector and towards short-term lets, and suggested number of amendments including allowing fixed-term tenancies to continue rather than banning them (as is the case in Scotland).
Private landlords account for about 84 per cent of all tenancies in the UK, while just under a fifth of UK homes are privately rented.
‘If we get this wrong, the renters will pay the price’
Lady Bybrook argued that the bill puts investment in the sector at risk, rather than encouraging landlords to boost supply.
“It threatens to drive landlords out of the market, reducing the number of available homes, and pushing up rents even higher,” Bybrook said.
“Balance is essential, and on these benches, we do not believe this bill strikes the right balance… [the] bill that risks driving out good landlords while allowing the rogue ones to continue operating completely,” she added.
It’s a concern shared by those in the industry: Bybrook added that . Propertymark has warned that abolishing fixed terms could “destabilise the position of tenants with lower incomes or poor credit histories”.
Hollie Jordan-Wright, real estate solicitor at Howard Kennedy, said: “In the long term, [the bill’s] onerous provisions could result in the exodus of landlords from an unviable market. This will ultimately drive-up rental costs – the exact outcome the bill sought to avoid.”
“The government appears to be trying to silence a noisy minority of bad landlords, while ignoring a compliant majority that serves the growing number of renters in a market that is desperately needed,” Jordan-Wright added.
Private vs professional landlords
If landlords are thinking of selling up, they haven’t made moves yet: there has been a 17 per cent uptick in the number of homes for rent in the least year, and average prices have dropped 16 per cent, according to Zoopla.
But that doesn’t mean the sector has suddenly found balance: the stock of homes remains 20 per cent below the 2019 figure.
The figure also masks differences between private and professional landlords: other studies have shown that while 16 per cent plan of professional investors plan to withdraw from houses and 17 per cent plan to withdraw from flats, a third of private landlords plan to withdraw in the next year.
In addition to the current regulatory changes, private landlords have had to grapple with significant tax changes in the last decade. They’re only able to deduct 20 per cent of their mortgage interest from their rental income when calculating their tax bill, down from between 40 and 45 per cent in 2017.
This became a particularly acute issue after the outbreak of war in Ukraine, when interest rates and mortgages rocketed.
The UK’s biggest landlord Grainger pointed out that while the bill will “professionalise the rental market and raise standards”, smaller landlords will “find the new regime challenging and will therefore accelerate their exit from the market, further constraining supply”.
The most likely outcome for the bill – as it stands, barring significant amendments from the Lords – is for the trickle of private landlords away from the sector to continue and perhaps worsen. The question is: Who will replace them?