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The laborious legislation that continues to threaten the PRS

Landlords are exiting the market in droves.

According to an accountancy firm who analysed HMRC data, 70,000 buy-to-let landlords left the sector in 2022, taking more than 116,000 rental homes off the market.

Substantial tax increases and rising finance costs aside, it’s actually the raft of regulations and laborious legislation that appears to be the final straw for most. The latest English Private Landlord Survey revealed that 55% of landlords said this was one of the key reasons they decided to quit.


And councils are finally clamping down on policing the sector too.

More local authorities are bringing in additional and selective licensing rules to include single tenancy buy-to-lets. Over 50 new schemes and consultations were launched last year and with a licence costing between £370 and £1,000 per property, which usually has to be renewed every five years, that’s both a financial and administrative pressure on landlords.

Non-compliance is hitting pockets hard as well. In 2022, the number of fines dished out to landlords and letting agents exceeded £8 million, averaging a £90,000 per month increase over the course of the year. In Brighton and Hove, there was a significant increase – 550% - in fines issued in just nine months compared to the year before.

If the 170 or so pieces of regulation already in place weren’t enough to put landlords off, there’s more to come.

From April 2023, all rented properties need to have an Energy Performance Rating of ‘E’ or above, and this minimum standard will be raised further in 2025 to a rating of ‘C’ or above for any new tenancies; and all tenancies from 2028.

Radical reforms

The biggest, however, are the changes proposed in the Renters’ Reform Bill, which are highly likely to come into force at some point in 2023.

Under the passing of the Bill, there will be a radical overhaul of tenancy laws which will include no more fixed term tenancies, an end to Section 21 Eviction Notices, restrictions on rent increases and no bans on pets.

  • No fixed term tenancies

The end to fixed term tenancies is a huge blow to the financial modelling of any buy-to-let business. The full cost of letting a property falls on the landlord now due to the Tenant Fee Ban and enforcing periodic tenancies from day one with a two-month notice period means that they could, in theory, be finding new tenants several times per year.

  • Abolishment of ‘no fault’ evictions

Not being able to serve a Section 21 causes many issues, particularly where anti-social behaviour plays a role, like in shared properties with multiple tenants. There are also very legitimate reasons why a landlord might serve notice and not all are malicious.

It’s going to be very hard for landlords to take back their property, perhaps to sell or occupy themselves, and tenants may need to be evicted for landlords to be able to make energy performance upgrades.

It’s an incredibly important certainty for landlords to be able to realise an asset if they need or want to.

  • Rent increase restrictions

The restrictions on rent increases during existing tenancies, which will be limited to once per year and require two months’ notice instead of one, is less of a threat, given that most (reputable) landlords probably follow this review period as minimum anyway.

  • No ban on pets

In shared properties like Houses in Multiple Occupation - where one or more people having different pets would cause a nightmare - there are still several problems with this proposal for single-tenancy lets that have clearly not been thought through.

Firstly, what is classed a domestic pet? Will tenants be able to keep micro pigs in a studio flat or tigers in a high-rise building with no garden? Having all animals written into some kind of legislation will be near on impossible.

You have to consider the type of property and also allergies of other people in the household or building. And what if the leaseholder says one thing, does that mean the landlord would be allowed to let tenants have pets?

Landlords letting go

While they are still available, a lot of landlords looking to exit are serving Section 21 notices in order to be able to sell with vacant possession. This route opens up the property to a wider pool of buyers including owner-occupiers and may therefore achieve a better sale price, but is it the easiest route?

There are alternatives to selling that do not require landlords to do anything – no tenant evictions, no EPC improvements, no lease extensions. And that’s selling to a professional cash buyer.

It’s a good option for landlords, but is it good overall for the Privat Rented Sector?

At LandLordBuyer, we have a number of strategies after purchase that include refurbishment and sale, via our network of investors, estate agencies or auction, and retaining within our own managed portfolio. But even we are not immune to the raft of regulations imposed on landlords and it will not make financial sense in some cases to continue to rent out some properties.

The question is, when with the Government recognise the vital role that landlords play in the supply of homes to rent?

You can achieve a fast and hassle-free sale of any rental property or portfolio, anywhere in England and Wales.

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