Will Labour destroy property investment? Renters' Rights Bill Update

The Renters Reform bill has been on the agenda for UK Government since it was first proposed in 2019, but with Labour’s win in the 2024 general election, it looks as though it will be reprioritised by Keir Starmer’s party under a new name - the Renters’ Rights Bill.

And with the bill being brought forward by a left leaning party, it’s no surprise that the focus will be on providing more security and protection for tenants while ensuring landlords know their responsibilities.

In today's episode, we'll explore the key elements of the Renters' Reform Bill and what it means for property investors and residential landlords in the UK.

Find all of the details here: https://www.insidepropertyinvesting.com/renters-rights-bill/

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Transcript

In 2019, the conservatives introduced the renters’ reform bill, but by the time they were evicted from number 10, not much progress had been made.

Within 2 weeks of getting into power, the labour government have made clear their intentions to introduce new legislation to protect tenants under the Renters Rights Bill, announced during the kings speech on July 17th. 

But the big question is, what changes have been proposed and how will they affect landlords and property investors like you? 

Now I don’t pay a huge amount of attention to what’s going on from a macro economic or political perspective - none of us can accurately predict what’s going to happen next, and in my almost 20 years of investing, just focussing on the basics and on time in the market rather than timing the market, I’ve done OK. 

But this was a fairly major announcement that I’m sure you’ll be interested in, so I wanted to share the highlights with you. 

There were a total of 9 proposals made in the briefing notes that accompanied the king’s speech, along with the justification for this bill, which started with the rather alarmist statistic that “More than 11 million people in England live day in, day out with the knowledge that they could be uprooted from their home with little notice and minimal justification”. 

That’s not strictly true, given that number is the total of all people renting in the UK, many of whom do have protection from fixed term tenancy agreements. 

But the point is, labour want to shake things up, protect tenants from dodgy landlords, and win some support by doing it quickly. 

You might be surprised to hear that I’m actually not against many of the proposed changes. As with most things, the devil will be in the detail, which is still lacking at this stage, and how the idea translates to execution.

The first proposal, for example, is the removal of section 21, or no-fault evictions. This was part of labour’s manifesto, so it’s no surprise. But it’s accompanied by a promise of more robust and quicker processing of section 8 evictions where a tenant is genuinely at fault, for things like rent arrears or anti social behaviour. 
If you’re a professional landlord running a property business, rather than an accidental or part time landlord, this shouldn’t really pose any problems. 

The next major one is around rent controls, and again the detail is limited here but it looks as though there will be some restrictions around rent increases, and also an attempt to limit bidding wars  between tenants. 

This has the potential to be the most costly to landlords, and doesn’t really address the root of the problem - a massive undersupply of housing compared to the demand. 

The issues with attempts at rent control have been well documented in other areas, but until we know how this will be implemented, it’s difficult to comment on the real impact. 

But if it is introduced, and other factors like inflation and interest rates are left to operate in a more free market sense, there could be some pain here. 


The introduction of an ombudsman for the private rented sector is a positive suggestion in my view, aiming to provide quicker resolution to disputes between landlord and tenant for things like rent arrears or essential maintenance work not being carried out. 

And then we get into a couple of things relating to tenant selection and discrimination, proposing to make discrimination based on having children or receiving benefits illegal, and giving tenants the right to ask for permission for pets. 

There may be some instances where these cause problems, but ultimately I think the impact across the industry will be minimal. 

And the final group of changes relate to improving the standards of housing, as well as giving local authorities more abilities to enforce standards on landlords. 

Increasing housing standards isn’t a bad thing - most of the investors I know and spend time with provide housing that is an excellent standard and are proud of it.  

There’s a need for housing for all budgets, but that doesn’t mean tenants should have to live in unsafe conditions.

The big potential concern here is how the local authorities choose to use their new powers. Some licensing schemes that have been introduced are basically just a stealth tax, attacking landlords who stay above board by registering for them. 

Unless councils have the resources to implement and police these standards on landlords who try to fly under the radar, little real change will be made on the condition of housing, whilst genuine landlords who run their portfolios like a legitimate business will face rising costs, which ultimately will trickle down to more expensive rents. 

And so the cycle begins. 

So in summary, there are a few things to keep an eye on as more details are released, some positive changes have been tables which I’ll be all in favour of, and a few which could have a sting in their tail depending on how they are implemented. 

Whether any of them create a significant improvement for tenants in the UK remains to be seen. 

And as to when they’ll be introduced, following the change of government and the introduction of the revised Bill during the King’s speech, there is still no date or clear timescale shared about when these changes will come into effect. 

It’s fairly certain that with a strong Labour majority, the Renters’ Rights Bill will be prioritised and will become law in the not too distant future, but whether that’s by the end of this year, into 2025, or even beyond, remains unclear. 

It certainly wasn’t the ‘immediate’ promise that was part of Labour’s manifesto leading up to the election.  But that’s politics for you.