Described by the government as a “once in a generation overhaul of housing laws”, the Renters’ Reform Bill would – if it passes through parliament – prevent landlords from evicting tenants with no justification, while empowering them to repossess properties from anti-social tenants.
The arrival of the Renters’ Reform Bill finally provides greater clarity on what actually may be on the way, allowing property investors to respond accordingly.
Any action to improve standards and stability in the PRS should be welcomed, but on the other side of the debate, there are landlords, brokers and affiliated businesses who have been quick to point out that this is the latest act in an ongoing ‘war on landlords’.
A chief concern is the long waiting times for court cases to be heard, which will make it increasingly difficult for landlords to vacate tenants – good or bad – from their properties.
Will we see a landlord exodus?
In early May 2023, just before the bill entered parliament, Market Financial Solutions (MFS) surveyed a group of more than 160 UK landlords.
The vast majority (61%) said they believe the government’s priority is taxes and regulation, rather than building new homes.
While 65% described the shortage of affordable housing as one of the most pressing social issues in the UK, just 32% felt the government is doing enough to tackle the issue.
One of the key issues within the PRS is the lack of properties available for tenants, which impacts both rental prices and the standards of properties.
Adding red tape to make BTL property ownership less appealing will risk some landlords opting to sell-up and leave the market.
If, as some are predicting, their properties are bought by homeowners rather than other landlords, the available housing stock within the PRS will shrink, exacerbating these issues.
It seems clear that while there are positives to the Renters’ Reform Bill, in isolation its impact might limit progression in the PRS.
More attention needs to be paid to housebuilding activity, as we need hundreds of thousands of new homes for renters and buyers alike.
Yet just six months ago the government opted to remove mandatory housebuilding targets and major reforms to the planning system, which would make it easier for housing developments to get the green light, have seemingly been kicked into the long grass.
What can lenders and brokers do?
The BTL sector will need to digest this latest news, and no doubt landlords will weigh up how they intend to manage their portfolios in the months and years to come.
Landlords will need support on the Renters’ Reform Bill, EPC rules, and other reforms in their sector and will need to know what the implications might be for their investment properties.
Specialist finance will have its role to play in the responses — which might be in the form of short-term loans to make wholesale improvements to landlords’ portfolios in line with industry standards — or they may need to seize the opportunity to expand their portfolios at a time when other landlords leave the market.
Speed, flexibility, transparency and, above all, a personal touch will be so important for brokers and their clients because understanding the precise wants and needs of landlords in the current climate is essential.
We should expect to see the BTL space adapt and evolve in line with government reforms.
The underlying appeal of investing in property — given its ability to deliver rental returns and long-term capital growth — should not be hastily dismissed.
It’s likely that while some landlords choose to sell and exit the market, others will embrace the opportunity to strengthen their position and adapt to the new rules.
