Could Labour win the next election and bring in a raft of new rules for landlords?

Prospective and existing landlords are facing uncertainty in the wake of the Renters Reform Bill being scrapped and the looming possibility of a Labour government coming to power.

The long-awaited Renters Reform Bill, which had been debated for half a decade, was abandoned leaving many in the industry frustrated. Now, all eyes are on the Labour party who are likely to introduce their own version of the bill should they win the next General Election.

Tom Bill, head of residential research at Knight Frank estate agents, said: “Until then, uncertainty reigns. It seems a safe bet that any new legislation will still involve the scrapping of no-fault evictions but how practical will any proposals be given the pressures already on the courts?”

Labour’s Shadow Chancellor, Rachel Reeves, appears to have ruled out the introduction of rent controls but has hinted at other measures which could affect landlords such as tax changes and stricter energy efficiency targets. Some experts believe this uncertainty, and the potential for further legislation, could lead to some landlords selling up and exiting the market.

Tenants Face Soaring Rents

This reduction in the number of available properties has pushed up rents, particularly in the capital. The average rent in prime central London is now a third (33%) higher than it was in February 2020, before the pandemic began.

Those living in more affordable areas haven’t escaped rental hikes either, with average rents in outer London now 28% higher than three years ago.

According to data from property portal Rightmove, the number of new rental listings in London during May was 10% lower than the five-year average (excluding 2020 when the market was impacted by the pandemic). This shortage of available properties has tipped the balance of power in favour of landlords, with many increasing rents for both new and existing tenants.

Rent Rises Slowing

There are signs however that the pace of rental growth may be starting to ease with some tenants pushing back against large rent increases.

While rents in prime central London rose by an average of 4.1% in the 12 months to May, this is down from the significant increases seen previously. Similarly, in prime outer London, rents went up by 3.7% over the year.

As the cost-of-living crisis continues to bite, and with the prospect of further uncertainty in the rental market, it remains to be seen whether this slowdown in rental growth will continue.