UK government’s proposal to limit a residential landlord’s ability to evict tenants without a specific reason, commonly known as “no fault” evictions, has been met with mixed reactions. On the one hand, the proposal is a step towards improving tenant rights and providing more stability in the rental market. However, there are concerns that the proposed changes to the law could have unintended consequences, such as a decrease in the availability of private rental accommodation and an increase in rental prices.
The proposed legislation seeks to prevent landlords from serving Section 21 notices, which allow them to evict tenants without any specific reason. Instead, landlords would have to provide a valid reason for eviction, such as rent arrears or antisocial behaviour. While this may seem like a reasonable proposal, it is likely to cause many buy-to-let landlords to reconsider whether the market is still attractive to them.
In recent years, changes to tax reliefs for buy-to-let landlords have already caused many private investors to exit the market. The introduction of taxes on rental income instead of profits has made the investment loss-making, especially for those paying higher-rate tax. This, combined with tighter lending criteria, higher house prices, and pressure to improve energy performance, has already led to a decrease in the number of private landlords.
If the proposed legislation is passed, it is likely to exacerbate this trend. With fewer landlords in the market, the availability of private rental accommodation is likely to shrink further. This is particularly concerning given the high level of demand for rental properties, both in the private and social sectors.
Furthermore, the new legislation may lead to an increase in rental prices, which would be unwelcome news for tenants struggling to afford housing. Landlords who remain in the market may have to increase rental prices in order to maintain profitability, given the restrictions on their ability to evict tenants. This would make renting even more unaffordable for many people, exacerbating the current housing crisis.
Whilst the proposed legislation to limit no-fault evictions is commendable in principle, there are concerns that it could have unintended consequences. It is likely that many buy-to-let landlords will reconsider their investment in the market, leading to a decrease in the availability of rental properties. This, in turn, could lead to an increase in rental prices, making housing even more unaffordable for many people. Only time will tell how this proposal will pan out, but it is clear that more needs to be done to address the housing crisis in the UK.
To find out more about what these changes could mean for you, contact our Property Litigation team: property.litigation@porterdodson.co.uk