With rent arears on the rise and the impending Renters Reform Bill, we look at the private rental market and how landlords can mitigate their exposure to rental risks.
Like the housing market, the UK private rental market experienced a volatile 2023 despite increased demand.
The unstable economy and unforgiving cost-of-living crisis is crippling many homeowners with mortgages and preventing millions of first-time buyers from getting on the property ladder. Frustrating for buyers and estate agents but good news for private landlords. Or so it would seem.
Research by The National Residential Landlords Association (NRLA) found that 71% of landlords reported increased rental demand in 2023 – triple the demand of 2019. This trajectory of the rental market means that almost one fifth of UK homes are now privately rented resulting in over 4.6 million rented properties.
The average cost of private rent in England was £825 between April 2022 and March 2023 compared to London where this figure jumps to £1500. With the average UK tenant spending around 40% of their monthly income on rent, it is hardly surprising that 38% of landlords with 5 or more properties have more than one tenant in arrears.
Despite governmental limits imposed on deposit amounts and deposit protection schemes to uncertainty over the impact of the impending Renters Reform Bill, a quarter of private landlords plan to expand their Buy-to-Let portfolio in the next 12 months.
But forewarned is forearmed. What does the Bill mean for landlords and how can they prepare for potential changes in legislation? If people are considering investing in property to bolster their income, what do they need to know before they commit to becoming a first-time private landlord?
The Renters Reform Bill aims to enhance the rights of private renters, improve the quality of rental properties and protect landlords through streamlining legal processes for both parties.
It should also help address the issue of homelessness sweeping the UK – a plight caused by the controversial Section 21 notice in a growing number of cases.
The number of tenants losing their home to no-fault evictions rose by almost 50% last year. According to government figures, 9,457 households in England saw their homes repossessed by county court bailiffs in 2023 after receiving a Section 21 eviction notice.
In the last three years, nearly 230,000 private renters have been served with a formal no-fault eviction notice. This equates to one renter every seven minutes.
The Renters Reform Bill at a glance
The bill, which is currently at report stage in the House of Commons recommends the following initiatives to formalise landlord rights and help renters escape insecure and unjust housing arrangements.
- scrap section 21 ‘no fault’ evictions which allows landlords to evict a tenant without having to give any reason for doing so, with just two months’ notice.
- make it illegal for landlords and agents to refuse to rent properties to people who receive benefits or have children and a change legislation for pets in lets
- create a national landlord register which will give renters the information they need to make an informed choice before entering into a tenancy agreement
- introduce new grounds for eviction for landlords who genuinely want to sell their properties or move back in
How can landlords protect their property investment?
With rent arears on the rise and new legislation reforms, it pays for private landlords to be prudent. If disagreements arise, legal costs can quickly escalate, and some clients may not have the resources to pursue potentially lengthy and expensive legal proceedings against a tenant. That’s where Irwell can help.
Irwell’s landlord’s legal expenses protection allows clients to pursue or defend their legal rights and provides invaluable legal advice throughout proceedings. Likewise, if a tenant has taken them to court for breach of contract or has damaged the property, our insurance covers the associated legal costs.
Our residential policy can extend to include rental income protection for added reassurance – whether the landlord is chasing rental arrears or pursuing an eviction notice.