The new Labour government are proposing to reform the Private Rented Sector by bringing in several measures to help tenants. A summary of the four key proposals which will affect private sector landlords are shown below:
Abolition of No-Fault Evictions
Labour will push through the Rent Reform Bill and would ban the use of Section 21 no-fault evictions. Landlords will be able to get possession on a number of grounds, but would have to apply to the courts to get vacant possession. A summary of some of the grounds available for possession can be found below:
- The landlord or their close family member wishes to move into the property.
- The landlord wishes to sell the property.
- There is superior lease ending or the superior landlord wants possession.
- The landlord is seeking possession to redevelop the property at least 6 months after start of tenancy. The landlord must demonstrate changes cannot be done with the tenant living there.
- The landlord requires possession to house someone who will be employed by them as an agricultural worker or employee.
- Death of tenant.
- Anti-social behaviour, Criminal Behaviour or nuisance behaviour.
- Rent arrears.
- The tenant has caused the condition of the property to deteriorate.
National Landlords Register (NLR)
Labour is proposing to introduce an NLR, which will require landlords to do the following:
- Register themselves and provide details of their properties and rents.
- Upload compliance certificates (Electrical and gas safety tests etc).
- Undertake and submit a surveyors report regularly.
- Demonstrate compliance with annually updated PRS Decent Homes Standards.
Rent stabilisation measures
Rather than bringing in rental caps, Labour are proposing to bring in ‘rent stabilisation’ measures which include only allowing landlords to increase rents annually to levels based on Consumer Price Index (CPI) or lower local wages increases. Labour may also require landlords to give tenants four months’ notice of rent increases. Labour may also ban rent review clauses in tenancies.
Some commentators are suggesting that there may be significantly less property available to rent, leading to a significant increase in the average rental price for tenants.
Preventing landlords moving to other sectors
Labour ais also proposing to bring in measures to prevent landlords moving to other sectors such as the short-term and holiday let sector or nightly-paid temporary accommodation. However, there are sparse details regarding the measures that they will bring in to do this.
Minimum Energy Efficiency Standards
Labour have also announced that from 2030 all houses in the Private Rented Sector must have an Energy Performance Certificate with a rating of at least ‘C’. If landlords fail to get their houses to the required rating, then they may be barred from renting them out. The Government’s reasoning behind the plans is to help reduce energy bills for private rented sector tenants. To get properties to a ‘C’ rating typically requires internal wall insulation and the installation of heat pumps and solar panels etc. For older properties, this will be very expensive and as a result, landlords may be forced out of the private rented sector.
Whilst the Rent Reform Bill is reviewed, including potential provisions preventing Landlord’s getting vacant possession if it would cause their tenant ‘greater hardship’, it is clear that the Private Rented Sector is facing strong headwinds.
Capital Gains Tax & Inheritance Tax
The new government have their first budget scheduled for 30th October. The indications are that they will review capital tax reliefs and potentially rates. This may further restrict options for private landlords to rebalance their portfolios.