Landlords could be forced to forgo rent for a year under Labour reforms
Landlords could be forced to forgo rent for up to a year under Labour's rental reforms, experts have warned.
A provision in Angela Rayner's Renters' Rights Bill, which is just one parliamentary vote away from becoming law, will stop landlords who put their homes on the market from relisting properties as rentals for up to a year if they fail to sell.
With as many as a third of house sales falling through, it could leave thousands of potential rental properties locked out of the market.
So-called 'Section 21' notices – also known as no-fault evictions – will be banned, and all tenancies will be on a rolling basis with no fixed end date.
The Bill will stipulate that landlords can only repossess properties in four circumstances: if they're looking to sell, if they're looking to move in, or if there is redevelopment or if the property is seized by a mortgage lender.
Other grounds include if tenants fail to pay the rent on time, although landlords will have to wait longer to evict for this reason.
Chris Norris, chief policy officer for the National Residential Landlords Association (NRLA), said: 'Whilst we understand the Government wants to prevent abuse of the new tenancy systems, the country cannot afford to have homes standing empty for months on end.
'Around a third of property sales fall through before completion, mostly as a result of problems faced by the buyer.
'Given the scale of the housing crisis, it cannot be right that homes will be left empty for many months even when landlords are not to blame when a house sale fails to progress.'
Nathan Emerson, chief executive of Propertymark, said that the new rules will mean that 'landlords must provide at least four months' notice to a tenant should they need or wish to sell their property.
In addition, there will also be an initial 12 months 'protected interval' at the start of any tenancy where a landlord is prevented from evicting a tenant for the purpose of selling.
Further to this, should a landlord choose to sell the property in question, they will be restricted from re-letting that property for a period of 12 months after evicting the tenant, should the property not sell'.
Mr Emerson added: 'This may in some circumstance cause a degree of property vacancy, in an already pressurised situation where supply is greatly required.'
Many of the reforms included in the Bill were first mooted by Michael Gove, the former Conservative housing secretary. But the original legislation said landlords would have to wait three months to relist a property that had been put on the market, rather than a year.
Landlords have repeatedly warned that the more stringent rules will push them out of the market, eat into margins and make letting out properties unprofitable.
In March, the number of UK properties available for rent hit an all-time low of just 284,000 – 23pc lower than during the pandemic, when the market dried up.
Tax credits on mortgage interest for landlords were gradually slashed between 2017 and 2020, down from 40pc for higher-rate taxpayers to a flat rate of 20pc.
Interest rates leapt, with buy-to-let mortgages at the sharper end of the increases – squeezing landlord profits even as rents rose.
In Rachel Reeves's maiden Budget, an extra 5pc stamp duty surcharge was introduced on additional property purchases.
Housing charities said that the delay of a year was necessary in order to stop the backdoor return of 'no-fault' evictions.
Ben Twomey, chief executive of Generation Rent, said: 'It's right the Government will outlaw arbitrary Section 21 evictions through the Renters' Rights Bill. This change can't come soon enough.
'If landlords are concerned about a property sitting vacant, they are free to sell with sitting tenants.'
A Ministry of Housing, Communities and Local Government spokesman said: 'Our landmark Renters' Rights Bill will bring long overdue fairness to the market by making sure it is unprofitable for landlords to evict a tenant and deprive them of their home, just so they can rent to new tenants at a higher price.'
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