Landlords are set to be hit with increased costs and complexity from the Renters’ Rights Bill, Zoopla has warned.
The portal’s latest Rental Market Report highlights that the sector in England is facing some major policy changes, which it said are expected to limit new investment in private rented housing and the number of private rented homes in the next two to five years.
Its latest figures show average UK rents for new lets are 3% higher over the past year, down from 7.4% and the lowest level for 3.5 years.
The report said: “Levels of new investment in private rented supply have been lower since tax changes introduced in 2016. Higher mortgage rates since 2022 have compounded the squeeze on new investment, meaning the number of private rented homes across Great Britain has been static at c5.5m since 2016. Demand has grown faster than supply, which is why rents have risen by 24% over the past three years.
“The Renter’s Rights Bill will increase the complexity and cost of being a landlord in England, and is likely to limit levels of new investment, and growth in rental supply, as landlords assess the impact of the changes, which are the biggest reforms in renting for 30 years.”
Another future risk highlighted by the report is proposals for private rented homes to have an energy rating of ‘A’, ‘B’ or ‘C’ before they can be let out from 2028.
Zoopla said: “Almost half (45%) of rented homes require investment to get from a D rating to a C rating. While almost one in five (16%) of private rented homes are currently ‘E’, ‘F’ or ‘G’ rated and, as a result, are more at risk of being lost from the rental market, eroding available supply.”
Commenting on the report, Allison Thompson, national lettings managing director at Leaders Romans Group said:
“The rental market remains under pressure, and while affordability challenges are influencing demand, the bigger concern is the long-term impact of upcoming rental reforms.
“The Renters (Rights) Bill, set to be introduced this year, has the potential to reduce the supply of rental homes, as landlords reconsider their position in the market. Without careful implementation, these changes could exacerbate existing shortages, ultimately putting further upward pressure on rents. Encouraging investment in the private rental sector is crucial to maintaining a balanced market and ensuring tenants have access to a stable supply of homes.”
Tom Bill, head of UK residential research at Knight Frank added: “Just as rising rents come under control after the roller-coaster ride of the last few years, the Renter’s Rights Bill threatens to inject more inflation into the system. By focussing a lot of energy and time on a small number of unscrupulous landlords, the government could inadvertently make life more difficult for tenants if supply falls and upwards pressure on rents grows.”
Angharad Trueman, president of ARLA Propertymark, said landlords are battling ongoing increases in their overheads including rising taxes, mortgage rates and continuous challenges of ever-complex regulation, with many finding it difficult to break even on costs.
She added: “The rental landscape continues to put pressure on current and future investors and, ultimately, without support for landlords to enter in the future or remain in the market, rent prices and stock levels are likely to continue to worsen.”
This article is taken from Landlord Today