11th
Apr 2024
A central London think tank states that BTL investors will not sell up and leave the sector if tougher regulations are imposed with more expensive costs.
The think tank – Social Market Foundation - claims that major concerns over tougher regulations will reduce PRS properties as being somewhat “overblown.”
The SMF states that when English tenancy agreements are compared to similar countries, the contracts are far shorter and many of the countries do not have or if they did have scrapped ‘no fault’ evictions.
The think tank claims that English landlords would not feel any pain if similar measures from other countries were introduced.
It says Scotland has not undergone a major reduction in PRS housing stock since no fault evictions were banned in 2017, and claims it has in fact seen an increase in available properties.
Another example the think tank highlights is the introduction of more and tougher regulation of tenancies to protect renters has not had any effect on PRS housing stock.
However SMF does not provide any other countries examples of eviction bans impacting the sector.
It also states that longer tenancies are far more the norm outside of England as both Scotland and the Republic of Scotland have introduced indefinite tenancies.
The think tank says: “In Ireland, the policy does not seem to have affected housing supply, despite the warnings of landlords: since the initial legislation was passed in 2004, the private rented sector has doubled in size.”
Its report also includes findings on rent controls which Scotland has recently introduced to ‘counter’ the cost of living crisis and London Mayor Sadiq Khan is forever demanding powers to introduce controls across the whole of London, but at the same time is against the Labour Party’s intention to introduce it across England.
The think tank says rent controls are “widespread across Europe, and have more mixed results than the textbooks would suggest.”
SMF says rent price regulations such as rent freezes or putting a cap on increases for existing tenancies on the whole do reduce costs for renters already in residences, but there is a real impact on rental housing stock.
It cites two examples where in Berlin there is a rent freeze and San Francisco where rents are capped at 60 per cent of the rate of inflation, both of the cities now have a major shortage of rental housing stock.
However SMF maintains that In the Republic of Ireland there has been little impact on rental housing supply because of the country’s ‘rent pressure zones’, although it does state “more research is needed.”
Along with introducing indefinite tenancies and abolishing no fault evictions the SMF says the rent dispute system must be made more user friendly and tougher in some cases.
Currently in England dependant on the level of a complaint it may be handled by the housing ombudsman, local councils or courts, whereas in Australia and New Zealand, Ireland and many areas of Canada they have established ‘lead agencies’ as the first handlers of such issues.
Niamh O Regan of the SMF comments: “English renters get a bad deal, certainly compared to their counterparts in other countries. Fixed term tenancies are too short, and no-fault evictions make periodic tenancies too risky. What’s more, cash-strapped councils and fragmented dispute resolution services are unable to consistently guarantee minimum standards, allowing bad landlords to continue to operate. Longer tenancies and stronger protections for tenants would alleviate some of the pressures they face and make long term renting a more attractive proposition – which it needs to be, given many of us are likely to be renting for much longer in future.”
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