The Institute of Economic Affairs (IEA), a free market think tank, has raised concerns that the Renters’ Reform Bill may disadvantage those entering the rental market for the first time. They make the point that removing the rights of landlords to evict will make it harder to find rented accommodation as landlords will be more selective when choosing tenants to minimise risks.  

The new laws will benefit those tenants who have been renting for longer and can prove their reliability, as well as those with higher incomes and steady jobs, reducing their long-term risk to landlords.

The groups who are currently suffering most from the housing shortage like students, young professionals, recent immigrants, and those on low incomes, are likely to suffer even more. It will be harder to rent for those who don’t have much in savings or wealthy parents willing to be guarantors.

The IEA suggests not only will the legislation lead to more selective landlords and higher rents but also lead to unseen effects like dissuading potential landlords from entering the private rented sector at all.

The effects of rising interest rates, a growing burden of compliance, tax increases and the forthcoming Renters’ Reform Bill are already seeing landlords leave the market. If these factors are causing landlords to leave the sector they will almost certainly have dissuaded many more from becoming landlords at all. This will only further restrict the supply of homes available to rent, push up the cost of renting, and increase the power of landlords who remain in the market.

The IEA make a general statement that the reason tenants are often poorly treated by landlords is that housing supply is so restricted. They suggest that if the Government relaxed planning laws to allow more homebuilding, particularly in areas with acute housing shortages like London and the south-east, then house prices and rents would go down. Such a relaxation would force landlords to compete for tenants, ensuring their properties are well-maintained and of a higher standard.