After a landslide win it’s down to business for the new Labour government and a wait-and-see period for landlords wondering what impact the election will have on the lettings market. Clarity of how and what the new government will deliver will come in the next few weeks. In the meantime there are a few different factors that landlords should bear in mind.
Rental demand and prices will sustain
Certainly in the short term, rental demand is likely to sustain. For buyers, there is still a shortage of properties impacting their ability to buy. Mortgage affordability is also pushing many to continue with renting.
Interest rate cuts are now likely to be imminent, and that will subsequently bring down mortgage rates and release property and demand within the buying market. But that will take time. Until then the restraint of supply means that rental price rises are likely to continue.
According to recent analysis, average rents rose an average of 0.8% following the 2017 and 2019 elections. Previous elections had seen a rise of 2.7%. It’s expected this time around average rents will rise by almost 2% over the next year.
Landlords will need to prepare for rental reform
Labour has promised rental reform with one of the biggest impacts being the abolition of Section 21 no-fault evictions. This was a key change within the Conservatives Renters (Reform) Bill which they failed to implement while in power.
The new government has pledged to “immediately” end this landlord right to evict without reason, giving renters more protection. The ‘immediately’ pledge was part of the Labour manifesto while the then shadow housing secretary and deputy leader Angela Rayner had pledged in November that the right would be scrapped by Labour in its first day in office, although she later acknowledged it wasn’t that simple.
The impact of this uncertainty could be unnerving for some landlords. A surge of Section 21 notices is expected ahead of the ban as landlords look to secure rental income or get properties ready for sale. Many will also wonder how to manage challenging tenancies in the future. It could prompt some to leave the market altogether further reducing supply.
Improved standards
As part of its wider review of the lettings market, Labour has also pledged to improve standards in the sector, something that is no bad thing for responsible landlords since it will also improve renter trust in the market.
These changes include extending ‘Awaab’s Law’, currently applicable to social housing, to the private rental sector. The legislation marks a crackdown on damp and mould in social housing that requires landlords to fix damp and mould health hazards in their properties within specified timeframes and was created following the death of two-year-old Awaab Ishak from damp and mould in his home.
Greater renter control over what they pay
Landlords may also be a little unnerved by Labour’s promise to give renters greater power to challenge ‘unreasonable’ rent increases. There is already a tribunal process for renters who want to challenge what they see as unfair rent rises. Many landlords will consider this power enough.
Uncertainty around energy efficiency
An exodus of landlords from the market had previously been caused by the Conservative’s plan to force landlords to improve the energy efficiency of their properties from an EPC rating of E to C. However, this was scrapped last year by the then Conservative government.
Labour has outlined the need to meet minimum energy efficiency standards in the private rented sector by 2030 but promises a less onerous process than the previous government had pledged. It says that “nobody will be forced to rip out their boiler” which suggests it’s likely to work more closely with landlords on improving energy efficiency as a shared goal.
We Can Help
At Progressive Lets we are experts in the rental market in the Peterborough area and help landlords find and manage properties within a 50-mile radius. Get in touch to find out more.
