Will Rental Reforms Fail?
The Rental Reform Bill is a hot topic at the moment (it seems it always is, and rarely is it positive news)! But this week, the headlines have been, well, pretty damning.
The Telegraph has described the bill as being the ‘final nail in the buy-to-let coffin’, which frankly, doesn’t leave much room for positive manoeuvre, does it?
National Residential Landlords Association (NRLA) has reported that in the first quarter of this year, a hefty 33% of private landlords in England and Wales admitted plans to downsize – that’s 13% up on last year. Whilst there will be a natural percentage in there that were making moves to shrink their portfolios anyway, that’s a big hike. And with such significant media scaremongering, who can blame them? Being bombarded daily with scary statistics saying how terrible the market is going to become doesn’t exactly fill you with the joys, does it?
BUT. But, but, but!
The same data also showed that 67% of landlords said that demand for properties was increasing – there’s more tenants out there looking for rentals. And with only 10% of landlords looking to increase their portfolios, it doesn’t take a genius to work out that there’s all of a sudden going to be a lot more tenants than there are rental properties. The landlords that are left in the market should theoretically have their pick of tenants, and voids should become a thing of the past.
Which leads us on to the Rental Reform Bill. Whilst having swathes of tenants beating a path to your door sounds great, it does rather lead to an imbalance of power, swaying, unusually, in favour of the landlord. If landlords have the ability to kick tenants out of their property at whim, knowing full well there’ll be others waiting to step in to fill the gap at a moment’s notice, that seems a little off, don’t you think?
The bill gives tenants a little more security, formalising the marketplace. And for the majority of landlords, who follow the rules and do everything by the book, it could even help improve their landlording experience.
Some experts think that the bill isn’t actually going to go far enough in pressing reset on a broken sector, and more needs to be done to ensure everyone is getting a fair experience. One of the UK’s leading property experts, Kate Faulkner OBE, said:
We need a new, fair contract. The Renters’ Reform Bill won’t change anything – we’d be better off stepping back and starting with a different agreement.
She has reported wanting to see:
- The Regulation of Property Agents, saying it would make a real difference, rooting out bad landlords and agents, to benefit tenants and the industry as a whole
- The standard Assured Shorthold Tenancy agreement should be updated
- Repair insurance should be standard for landlord insurance
There are still some professionals who have their doubts about the whole thing though. Samuel Rees, senior public affairs officer at the Royal Institution of Chartered Surveyors is warning that the Bill will increase the pressure on landlords and force even more out. He said: ‘The government’s proposed changes…will increase pressure on landlords and may force even more to exit the market. The government needs to ensure that proposed reforms to the rental market are delivered in such a way that it increases support for landlords and tenants and maintains and grows supply.’
So, swings and roundabouts from the professionals, and it’s clear what the press think. But as landlords, it’s only really your thoughts that matter.
What do you reckon to the bill that promises to reform your business?
Rent rate bust – how high is too high?
With an apparent exodus of landlords leaving the market but tenants still flooding in, rents are only going one way… and that’s UP.
There’s lots of changes on the horizon (see above!) but when looking at the bottom line, Capital Gains Tax lies at the heart of many people’s decision to move out of the market. The CGT annual tax-free exemption has been halved – and is set to halve again next year to just £3,000 – making now the perfect time to sell up and maximise profit, before the tax man gets his mitts on more of your hard-earned capital.
Figures from HMRC have revealed that over £18 billion was collected in Capital Gains Tax (everyone’s favourite tax!) in 2022/23, a massive increase of £7 billion on two years ago, so plenty of people are clearly seizing the opportunity.
Clearly, the resulting unbalance of supply and demand is the primary driver behind the rental rate hike. Whilst the CGT cut gives with one hand, it is clearly taking with another, with tenants being the ones that suffer – hardly ideal in a cost-of-living crisis, right?
So, who’s being hit hardest? Well, city-livers are feeling the pinch, with rents for smaller properties in London rising disproportionately over and above family homes, and one tenant in Bristol telling the BBC that she is struggling to find a home because the demand is just too high.
Reports are revealing how tenants are now going so far as to offer up to a year’s rent in advance to secure a property – a pretty big ask with living costs as they are currently.
There have been calls for government support to help address this issue, with campaign groups stating that rents cannot simply continue to rise steadily, pricing more and more people out of the rental market. There are requests for more to be done to support landlords to stay in the market, with seemingly an understanding that if more landlords jump ship, the limited ones that are left will be selling a premium product, and premium products cost premium money.
Hopefully, this crisis may help raise awareness that the sector is a circular entity – landlords and tenants are dependent on each other, and each is as important as the other to maintain a functional rental market. Without one being content, the other also fails to thrive.