Renters’ Rights Act brings big changes to UK property market
New rules aim to provide safety and security for tenants, but landlords are anxious
On TikTok, property influencers lament the end of the buy-to-let landlord. “What used to work back in the day is now not just dead but a complete catastrophe,” says Samuel Leeds, a TikTok content creator who focuses on property and tax issues. “This is terrible for most hard-working British landlords.”
The Renters’ Rights Act, set to come into force in May, is one of the most significant changes the residential property market has seen in decades, and many are anxious about its impact.
Since the early days of the legislation, landlords have warned it would lead to an exodus of small-scale property owners, who make up 83 per cent of the UK private rental sector.
While there are some signs of fewer landlords entering the market, the sell-off among landlords appears to have been tempered by falling residential property prices, particularly in London.
“I think the people that were going to exit have already exited,” said Chris Norris, chief policy officer at the National Residential Landlords Association.
Many in the property sector suggest the act will force the buy-to-let landlords who remain to become more professional.
“Landlords with one or two properties, particularly those who entered the sector accidentally through inheritance, relationship change or an inability to sell, are more exposed to rising complexity and costs,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank.
The government argues that the Renters’ Rights Act is a long-overdue effort to provide safety and security to tenants.
Angela Rayner, the former deputy prime minister who helped push the bill through parliament last year, told the FT she “doesn’t apologise” for the new rules and denied it was piling pressure on landlords.
“There are landlords out there that can make a profit without it being at the expense of other people’s safety and security,” she said.
For tenants, the act will mean they can challenge any “unreasonable” rent increases at a tribunal. It will also end bidding wars, by forbidding landlords and letting agencies from soliciting multiple offers on a property. Among the most significant changes will be the abolition of Section 21, which allows landlords to evict tenants without cause.
Landlords are concerned that this will make it more difficult and costly to deal with problem tenants, and property lawyers are reporting a rise in eviction notices before the act comes into force.
“We’ve seen a massive increase in serving the Section 21s before the deadline day,” said Paul Shamplina, founder of Landlord Action, a company that specialises in housing law.
Shamplina said the firm had seen a 62 per cent increase in the number of eviction instructions year on year, equivalent to “hundreds” of additional notices. Ministry of Justice figures for evictions this year have not yet been released.
From May, landlords will only be able to evict tenants if a reason is given, such as non-payment of rent, antisocial behaviour or because the landlord is moving into the property.
This change is expected to lead to more property tribunal cases and added pressure on an already strained court system; the Ministry of Justice said it was working “to strengthen capacity”, including hiring more judges.
Kristine Ng, a partner at Morr & Co solicitors, said she was seeing more landlord-tenant disputes and evictions as property owners moved to “sell, redevelop or re-let properties on different terms” before the new regulations took effect.
Landlords who do not comply with the act will face fines, including £7,000 if they fail to send a Renters’ Rights Act Information Sheet to tenants, as well as additional penalties for failing to deal with mould and electrical risks.
However, Shamplina argues that tenants are most likely to be the worst hit as the regulations cause landlords to reprice risk and increase rents.
Anastasia Karaseva moved with her daughter to Richmond, south-west London, five years ago. But the former paralegal, who is undergoing treatment for breast cancer, said she was “shocked” when she received a Section 21 notice from her landlord last month.
Karaseva, who is herself a landlord through a property she owns overseas, is working with the Acorn tenants union to fight the eviction.
“It’s just outrageous because they’re doing exactly what the act will prevent them from doing,” Karaseva said.
Her landlord, the Poppy Factory veterans’ charity, told the FT it was evicting “a small number” of tenants to bring properties up to market rate before the new rules on rental increases came into effect.
“The Renters’ Rights Act has meant we have had to move more quickly than we would have liked,” a Poppy Factory spokesperson said, adding that no veterans or charity beneficiaries were affected by the move.
Some landlords have opted to move outside of the mainstream private rental sector. London-based specialist property agency Elliot Leigh said it had seen an influx of landlords interested in multiyear “guaranteed rent” deals, which involve properties being signed over to councils for use as temporary accommodation or social housing.
Last month, the FT reported that Criterion Capital, which provides both private rental and temporary accommodation, had served Section 21 notices to private residents in 130 units across its property portfolio.
“There are growing signs that some landlords are evicting tenants, only to rehouse homeless families at higher rents,” said Susie Dye of the Trust for London, a non-profit group.
