3rd
Dec 2024
The government has at long last stated the obvious that the Renters’ Rights Bill may force landlords to increase rents to offset the costs of additional regulations but nevertheless it contends that landlords with long-term tenants are less likely to implement rent hikes.
The Bill will immediately abolish Section 21 instead of waiting for the court backlog to be resolved and will extend Awaab’s Law to the private rented sector.
In its impact assessment of the Renters’ Rights Bill, the government acknowledges that some landlords might exit the private rented sector if they are unable to recoup the additional costs imposed by the new regulations.
The impact assessment says: “It is likely that landlords will pass through some costs of new policies to tenants in the form of higher rents – to offset those costs and maintain a degree of profit.
“Landlords will likely offset some of the costs of the regulation through rental price growth – though there is a chance that some may be inclined to leave the private rented sector if they are unable to recover some of the costs incurred through raising rents.”
Despite this, the same impact assessment estimates the annual cost for landlords at just £12 per rented property and states that only a small number of landlords will leave the market.
In response to the Telegraph, the Ministry of Housing, Communities, and Local Government stated that landlords with long-term tenants are less likely to increase rents.
A Ministry of Housing, Communities and Local Government spokesperson told The Telegraph:”The evidence shows that landlords value good tenants – and are therefore less likely to raise rents for sitting tenants.
“Landlords will also only be able to raise the rent once a year using the existing section 13 process and our reforms will empower tenants to challenge an unfair rent increase at the first-tier tribunal.”
Feeling pressured by escalating costs, numerous landlords believe they must raise rents to cover these additional expenses.
According to a mortgage lending platform 42% of landlord with portfolios of 4-10 properties intend to increase rents to cover rising interest rates and operational costs.
In the property industry, it's generally deemed best practice to adjust rents annually to keep pace with inflation in line with current market rates.
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