As Keir Starmer settles into his new home at 10 Downing Street, we are reflecting on what the recent change of government could mean for landlords in the private rental sector. Here, we share what we currently know.
A landslide victory for Labour means their ambitious plans for housing reform took a significant leap forward on the 4th of July. Their manifesto including targets to build 1.5 million new homes over the next five years; a promise to reform national planning policy; and several changes aimed at improving conditions for renters.
For M A S O N S landlords this is what we know now…
1.5 million new homes are coming… but we don’t know where
Labour’s promise to build 1.5 million homes within five years is significant, potentially addressing the housing shortage that many areas face. However, their track record isn’t encouraging; the last Labour government oversaw the lowest levels of house building since the 1920s.
If they succeed in delivering this ambitious building programme it should alleviate property shortages in the targeted areas – and in turn, halt (or reverse) the high rent increases we’ve seen in recent years. However, until specific locations are announced, it’s unclear exactly how this will impact Hertfordshire landlords. So, it’s one to watch.
A ban on no-fault evictions
A notable change is the proposed ban on no-fault evictions (Section 21) and an expansion of the grounds for Section 8 evictions. This ban is not a new idea. It was originally proposed by the Conservative government as part of their Renter’s (Reform) Bill, but landlord objections to this delayed progress in parliament.
The new government may face similar obstacles in getting this legislation over the finish line. However, whilst some landlords feel anxious about losing the flexibility of Section 21, the practical impact is likely to be minimal. Landlords typically avoid evicting tenants due to the cost and hassle involved. If the reasons for a Section 8 eviction are expanded, then responsible landlords should not face significant issues. For renters, this change will provide peace of mind that they cannot be evicted without a clear and valid reason.
Empowering tenants to contest unfair rent increases
Labour’s manifesto promised to empower tenants to challenge unreasonable rent increases. It’s a little tricky to predict what Labour could practically do to further empower tenants – as tenants already have access to free tribunals to dispute unfair rents.
Will greater tenant rights make a difference? Well, in our experience, landlords are very keen to retain good tenants. So, when a rent adjustment is required, sensible landlords tend to offer a fair rate that reflects current market value. They know that savvy tenants are well-informed on what a reasonable increase looks like and we find there is usually room for a level of negotiation to allow any rent increase disagreements to be amicably resolved without resorting to a tribunal process.
If Labour aims to streamline or enhance this process, it remains to be seen what can be done differently in practice.
Awaab’s Law for the private rented sector
The tragic death of two-year-old Awaab Ishak in 2020, led to Awaab’s Law, which mandated swift landlord responses to damp and mould issues in social housing.
Labour plans to extend this Law to apply to the private sector. We see this as a positive development, that will ensure healthier living conditions and prevent property damage. A win-win for landlords and tenants.
There have also been some calls for this Law to be expanded to cover the 29 health and safety hazards that can occur in rental properties – ranging from excess heat or cold, pests and lighting, to VOCs, lead and radiation risk. However, this change is not yet in the pipeline – as far as we know!
Keeping mortgage rates low
Labour’s commitment to keep mortgage rates low is another promise that lacks detail on implementation. The impact on landlords will depend on how effective this promise is in practice.
In general, if interest rates fall (as widely expected) we should expect an uplift in the buying and selling of property. But, until mortgage affordability is addressed, and housing supply remains low the increased rental demand will continue. Hence, rental prices are still predicted to rise by an average of 2% this year.
Energy efficiency – EPC C rating by 2030
By 2030, all private rented sector properties will have to achieve an EPC C. Band C indicates that a home has been numerically rated between 69-80 in terms of energy efficiency. For reference, the average currently is 60 which equates to a band D. This plan was previously proposed under the Conservative government, but then scrapped. Labour’s plan includes £6 billion per year in grants and zero-interest loans to help landlords upgrade their properties, where necessary.
This will only impact landlords with properties rated below C at present. For tenants, improving energy efficiency is a big plus, as it will reduce their utility bills, and beyond that, there are environmental benefits too.
Abolishing the leasehold system
England’s outdated feudal leasehold system has long been problematic, and Labour intends to abolish it, making commonhold the default tenure. This reform addresses issues like unpredictable service charge spikes. For landlords with a leasehold property this is good news, which should increase their investment stability.
So, all in all…
From what we know of Labour’s plans right now, there isn’t anything too worrying on the horizon – that is of course if you’re a responsible landlord!
Most changes will only require a reasonable level of adaptation. It goes without saying that we will keep a close eye on the detail as these promises and ambitions come to fruition. That way, we can prepare and support our landlords through any future changes.
M A S O N S is a leading letting agent in Hitchin, covering rental and buy-to-let properties in Hertfordshire. Founded on award-winning lettings experience, we specialise in property management, buy-to-let, and residential lettings – drop us a line at [email protected] or call us on 01462 557477.
Please note: this article should not be interpreted as legal or financial advice.
