The Renters (Reform) Bill that government introduced to parliament last month could transform the private rental market. Not only that, but it could even affect the very thing that Middle England voters arguably care the most about: how much their house is worth. Depending on how landlords react to the reforms, its effects could feasibly ripple out beyond the rental sector and into the mainstream property market.
This might explain why, despite the central plank of the bill – the abolition of ‘no fault’ eviction – being added to the Conservative party manifesto back in 2019, it has taken this long for the government to find the parliamentary time – or the political courage – to actually table a bill to bring that change into effect.
So why is abolishing ‘no fault’ eviction such a big deal? Right now, under the Housing Act 1988, landlords can serve tenants with a Section 21 notice giving them two months to leave the property, without needing to give any reason. If the tenant fails to vacate, the landlord can then apply to court for a possession order so that the tenant can be evicted by court bailiffs.
This ability to get rid of tenants for no reason creates a huge power imbalance in favour of landlords. In my report on housing law for the Gazette last year, lawyers told me how this power dynamic plays out in practice. It leads to tenants putting up with broken boilers and mouldy walls because they dare not ask for repairs; families constantly having to move from place to place and indeed school to school with no security over where they live; and rent rises throughout the year that tenants feel unable to argue with.
In theory, this bill will put an end to all that, because it gives security to tenants. But crucially for landlords, they can still end tenancies in certain circumstances – all of which seem very reasonable from the landlord’s perspective. These include where they are selling the property, where a close family member is moving in, or where the tenant has not been paying rent. And to protect landlords worried about being stuck with antisocial tenants, it also includes where a tenant engages in conduct that is ‘capable of causing’ nuisance or annoyance to the landlord – which is very widely construed.
The bill will also abolish fixed-term tenancies, to be replaced by rolling contracts. This is already causing trouble for the government, however. While the bill contains an exception for purpose-built student blocks, at the moment it still includes the private student letting market. Cue a backlash from student landlords and also students, worried that if landlords can no longer rent to students for a fixed one-year term, student houses will not be vacated ready for next year’s intake. Levelling Up secretary Michael Gove has already hinted that the government may be up for some backpeddling here, to facilitate 12-month student lets.
Further measures in the bill include preventing landlords from rejecting tenants outright simply because they are on benefits or have children; and ensuring that landlord and tenant disputes can be dealt with cheaply and effectively by an ombudsman.
So why might the bill end up affecting house prices? It all depends on how landlords react (or perhaps overreact) to it. One strand of thought is that the Housing Act 1988, with its controversial ‘no fault’ eviction provisions, actually benefited tenants by increasing the number of rental properties available. It fuelled a thriving buy-to-let market in which the law was favourable towards landlords, and banks were happy to supply buy-to-let mortgages.
So the question is, will the renters’ reforms cause that tide to turn again? Will landlords, many of whom are already feeling the pinch of rising mortgage interest rates and falling property prices, decide to pull out of the rental market? An exodus of landlords could have a knock-on effect on the mainstream housing market, with lots more properties becoming available, driving prices down overall. Good news for first-time buyers, but bad news for the older generations – many of whom might be statistically more likely to vote Conservative.
My own hope is that landlords will look carefully at these reforms and see that in reality, there is nothing to be afraid of. It is still perfectly possible to remove tenants where there are legitimate reasons to do so. But in any event, the bill has a long way to go before it reaches the statute books. According to online newspaper The i, a rebellion is already brewing among 30 Tory MPs opposed to the bill, many of whom are understood to be residential landlords. There is certainly no shortage of landlords in parliament, with research from Transparency International UK last July revealing that 17% of MPs earn annual rental income of £10,000 or more.
Let us hope that the bill’s passage through parliament does not see its key provisions chipped away until it no longer offers meaningful security for tenants. Families who have been living under the shadow of ‘no fault’ eviction for far too long deserve much better than that.
Rachel Rothwell is editor of Gazette sister magazine Litigation Funding, the essential guide to finance and costs.
For subscription details, tel: 020 8049 3890, or click here