Fears of ‘exodus’ by private landlords are groundless, says major think-tank

Fears that the Government’s plans to strengthen the rights of private tenants will lead to an exodus of landlords from the sector have been dismissed as groundless by a new report from a major think-tank.

The Centre for Social Justice (CSJ) applauds the decision by Rishi Sunak and his Levelling-up Secretary Michael Gove to press ahead with the controversial Renters (Reform) Bill to be voted on in the Commons on Monday (October 23).

The Bill abolishes assured shorthold tenancies and consequently ‘no fault’ section 21 evictions, said by critics to number 540 a day, giving tenants just two months to find a new home.

But at the same time, it seeks to strike a fairer balance between tenant and landlord. In a major new report, “Raising the Roof”, the CSJ says ministers are right to simultaneously overhaul section 8 of the Housing Act 1988 to strengthen the rights of responsible landlords.

There should be firmer grounds for possession for landlords wishing to sell their properties or to enable family members to move into them.

Repeated serious rent arrears, damage to property by tenants or anti-social behaviour should also be clear grounds for landlords reclaiming their flats or houses. Clear statutory guidance should be issued to explain how courts should deal with their anti-social behaviour cases.

Andy Cook, Chief Executive of the CSJ, said that claims of a landlord exodus had been exaggerated.

“The independent impact assessment for this Bill shows that average net costs to Landlords are minimal, at £10 per tenancy. No-fault evictions were ended in Scotland in 2017, and we haven’t seen an exodus. This change in the law will protect some 11 million people from the threat of arbitrary eviction, give them greater security, and reduce homelessness.”

The CSJ says there are a number of factors suggesting that the new Bill will benefit renters and landlords alike.

Despite higher taxes on landlords, the private rented sector has grown by over 2 per cent in the last four years with nearly 5 million properties in use.

The number of landlords may have fallen as smaller buy-to-let owners drop out of the market but this does not mean fewer properties becoming available as larger landlords have stepped into the breach. In 2010, 78 per cent of landlords had just one property, but that figure is now down to 43 per cent as the sector has consolidated.

The CSJ points out that the ending of ‘no-fault’ evictions is balanced by changes giving landlords greater rights to reclaim their properties where tenants are at fault or where landlords want to sell.

The CSJ report also calls for specialist new housing courts to prevent a hiatus in the country’s legal system from a potential surge in disputes between landlords and tenants.

It concedes the proposed changes will add to the burden on over-stretched civil courts as landlords resort to Section 8 orders where they have to prove good reason for reclaiming their properties.

The CSJ urges the Government to act now to begin the introduction of specialist housing courts, staffed by judges with expertise in housing matters. All housing cases could then travel through a single body with the institutional insight needed to process them more quickly and effectively than at present.

The report warns that under the present arrangements, court backlogs are severe and it can take landlords up to 12 months to regain possession of their properties through Section 8 procedures.

The CSJ also welcomes the decision to introduce a mandatory Ombudsman for private landlords. This will provide a redress system with powers to investigate complaints and ensure systematic administrative failures are investigated and tackled at root cause.

It highlights the need for much better enforcement to tackle absentee landlords who don’t maintain homes and treat tenants unfairly, backing the Government’s proposed mandatory Property Portal. It will enable local authorities and tenants to verify the quality of any landlord or property they look to rent and avoid signing on with rogues and cheats.

More broadly, the report says there is a real need to create professionally run, high-quality rental options in both the private rented sector (PRS) and social housing.  New analysis presented by the CSJ reveals that more than 60 per cent of low-income households under the age of 45 now rent privately – nearly twice the level at the turn of the millennium.

While 1.2 million households are on the waiting list for social housing, the proportion of young (under 40) low-income households (under £200/week, in real terms) in social housing rentals has almost halved from over 41 per cent in 2002-03 to under 21 per cent in 2021-22.

Without much needed reform, the PRS currently cannot provide most renters with the long-term stability that is required to create communities and put down roots in an area.

In a foreword, former Housing Minister Eddie Hughes MP welcomes the report and backs the Bill:

“This report recognises the importance of the PRS and the need to encourage excellence, innovation, and investment within it. 

“It’s no exaggeration to say that this Bill represents the biggest and most comprehensive set of reforms of the sector in a generation.

“The CSJ’s report offers helpful recommendations on how Government can deliver these reforms, whilst also laying out practical policies that can complement the legislation to ensure it works well, including a court system capable of processing housing claims fairly and quickly.”

CSJ housing expert Sam Bruce said:

“Far more young, low-income households now live in the Private Rented Sector than twenty years ago. This bill will give them confidence to challenge absentee landlords and seek redress. The vast majority of landlords are good, and reforms to Section 8, the new Property Portal, and an Ombudsman should help to reassure them and drive excellence in the sector.

“However, our research reveals that poor enforcement could undermine efforts to create a fairer rental market. We must ensure that local authorities are able to enforce properly, and that the courts have capacity to deal with increased cases. Creating a dedicated housing court system will enable both landlords and renters to be secure in the knowledge that they will not be stuck in legal limbo if problems or disputes occur.”