The housing minister Matthew Pennycook has dismissed fears that the Renters' Rights Bill could trigger a wave of landlords leaving the private rented sector, despite acknowledging the law will deliver huge changes to the sector.
Mr Pennycook was responding to a written question from Sir Ashley Fox, the Conservative MP for Bridgwater, who asked what assessment had been made 'of the potential impact of the Renters' Rights Bill on levels of private rented housing availability.'
The minister replied that officials do not anticipate harmful consequences for future rental supply from the Bill's implementation.
He said that an impact assessment on the Bill had been carried out and received a 'Green' rating from the Regulatory Policy Committee, which he said, indicated 'it is 'fit for purpose''.
Bill won't affect rental supply
Mr Pennycook continued: "While we acknowledge that it will take time for the sector to adjust to a significant change in regulation, we do not believe that our Renters' Rights Bill will have a harmful impact on future rental supply.
"Although landlords have been aware of successive governments' plans to reform the private rented sector since 2019, the size of the sector as a whole has remained broadly stable since 2013-14.
"The Bill will make sure good landlords have the confidence they need to continue to invest and operate in the sector.
"We will continue to work with good landlords and their representative associations throughout implementation."
Landlords face a £33m bill
Government figures reveal that landlords face annual costs of around £33 million under the proposals.
The impact assessment shows that it will cost landlords £12 annually per rented property, and £1,719 for agents.
However, the Regulatory Policy Committee's report highlights gaps in the government's analysis, and states: "The IA (impact assessment) does not provide as assessment of the impact from the proposal on competition."
The watchdog warned that understanding market dynamics would help assess how many landlords might exit the sector, adding: "The IA should detail how it expects the individual measures of the Bill to impact regions differently where there is variation."
Issues for gaining possession
The committee also warns that the impact assessment doesn't 'adequately consider the potential costs, as well as the impact upon the quality of private rental housing, of making the PRS market more illiquid.'
One issue that landlords struggling to gain possession after Section 21 is abolished, may struggle to pay for meeting higher standards with higher rents.
The committee adds: "However, given the impacts are likely to be borne by a subset of the PRS market as opposed to the entirety of it, the expected impacts would be more substantial for this smaller number of properties."
Lower agency fees
The National Residential Landlords Association (NRLA) also questions the government's 'cost benefits' of reducing gross expenses from £22 to £12 per property.
It says: "This is based on a reduction in letting agent fees due to fewer tenancy changeovers.
"But it's highly likely that agents will seek to recoup these 'lost' fees from landlords in alternative ways."
Registration charges include an estimated £6 per property for ombudsman scheme membership and £28.58 per property for three-year PRS database registration.
The NRLA also highlights problems for gaining possession for landlords without Section 21.
No evidence landlords won't leave
The organisation also challenges the government's optimism about sector stability and said: "The impact assessment does not predict a mass exodus of landlords from the sector as a result of the changes, the biggest shake up of the private rented sector in more than 30 years, however, there is no robust evidence to back this up."
The NRLA also disputes the idea that Scotland's 2017 reforms had no impact on landlords, saying: "We would argue this data has been skewed by emergency regulations introduced from 2020 as a result of Covid-19, and then the cost of living crisis, which restricted repossessions; and the nature of Scotland's reforms, with tenancies transitioning 'naturally' to the new regime, rather than the 'cliff-edge' proposed for Renters' Rights."
Student landlords and the Bill
Simon Thompson, the managing director of Accommodation for Students, said: "Student landlords will already be aware of the issues they face with the Renters' Rights Bill.
"Whilst the £12 per property yearly expense appears manageable, the broader implications around restricted eviction powers and potential tenant arrears accumulation could prove more challenging for smaller portfolio owners operating in university towns."
He added: "The costs appear to be low and there's no mention of the unique challenges facing student landlords because their business model relies on regular turnover between academic years, and these reforms fundamentally alter that dynamic."
