Writing in Property118, The Landlord Crusader questions the experience of the current cabinet.

His blog can be seen here, and in summary says that the election of the Labour government has brought both hope and apprehension among landlords in the private rented sector (PRS). Despite the party’s supporters proclaiming “the grown-ups are back in the room,” a deeper look reveals several concerns and potential challenges that landlords may face under the new administration.

Political Context

Labour’s rise to power came on the back of one of the lowest electoral turnouts in history, with the Reform Party securing second place in 98 constituencies. Keir Starmer’s vote numbers saw a significant drop, raising questions about the strength of Labour’s mandate. This political backdrop is important for understanding the government’s potential impact on the housing sector.

Key Figures and Their Backgrounds

The new administration includes:

• Rachel Reeves, Chancellor, who has previously struggled with financial management issues despite substantial incomes.
• Angela Rayner, Secretary of State for Housing, Communities, and Local Government, with a background in social housing and trade unions.
• Matthew Pennycook, the new housing minister, whose career has largely been in the voluntary and charity sectors, raising questions about his practical understanding of the PRS.

Labour’s Housing Policies

1. Abolition of Section 21: Labour’s plan to abolish no-fault evictions is a major concern for landlords. Propertymark warns that without an adequate replacement mechanism, the court system could become overwhelmed, leading to significant delays and costs for landlords attempting to repossess properties.
2. Introduction of Awaab’s Law: This law aims to ensure better housing standards, which, while beneficial for tenants, may impose additional regulatory burdens on landlords.
3. Ban on Bidding Wars: The proposal to make bidding wars illegal is intended to create a fairer rental market but may also limit landlords’ ability to secure the best rental income.
4. Two-Year Tenancy Rule: One of Pennycook’s proposed amendments during the Renters (Reform) Bill debate was to require landlords to wait two years from the start of a tenancy before they can sell or move back into their property. This could significantly limit landlords’ flexibility in managing their investments.
5. Fixed-Term Contracts for Student Landlords: There is concern that Labour may end fixed-term contracts for student rentals, which could disrupt the established market dynamics in university towns.
6. Homelessness Prevention Duties: Another proposal is for councils to act on their homelessness prevention duties when a possession order is granted, potentially leading to more tenants going through the section 8 route to secure council housing.

Practical Challenges

The government’s ambitious housing policies face significant practical hurdles:

• Court System Overload: The abolition of Section 21 without a reformed court system could lead to extensive backlogs, causing further stress and financial strain on landlords.
• Regulatory Burden: Increased regulations, such as Awaab’s Law and the ban on bidding wars, could make the PRS more cumbersome for landlords to navigate.
• Market Reactions: Higher buy-to-let mortgage rates and the potential for increased tenant rights could prompt landlords to downsize their portfolios, reducing the overall supply of rental properties and potentially driving up rents.

Industry Response

Propertymark and other industry bodies are vocal about the potential negative impacts of Labour’s policies. They stress the need for balanced legislation that protects tenants’ rights while ensuring landlords have viable means to manage and repossess their properties. The call for removing Section 24, which prevents landlords from offsetting their finance costs, highlights the broader financial pressures landlords face.

Conclusion

Landlords in the PRS can expect a challenging environment under the new Labour government. While tenant protections and improved housing standards are positive steps, the practical implementation of these policies could create significant hurdles. With 16 housing ministers in 14 years, there is skepticism about whether Matthew Pennycook will have the time and support needed to deliver effective reforms. Landlords should prepare for potential legislative changes and consider their strategies to navigate this evolving landscape