The Renter's Right Act risks being the most Starmerite legislation ever passed; rights-based; under-resourced; and poorly communicated. Ironically, and perhaps like much of the former PM’s agenda, it also had very little to do with him. The Act took effect on the 1st of May - ending fixed-term tenancies and no-fault evictions. And whilst it is a worthy achievement, it will not sufficiently nor automatically rebalance power in the private rental sector.
A combination of successful landlord lobbying and a lack of state enforcement capacity has led to a situation where, whilst many tenants will be considerably more secure, the political economy of the sector will barely change, and the poorest tenants may struggle to feel much improvement at all. If the Burnham administration wants to build on the Act’s considerable potential, it must understand current limitations, and where it must go further in challenging landlord abuse of power.
The Private Rented Sector (PRS)
When compared to owner-occupiers (around two thirds of British homes are lived in by their owners), or social housing tenants, private renters (c.18% of households – not as many as you’d think) pay the highest proportion of their income on housing costs to receive the least.
PRS homes are the least likely to comply with the Decent Homes Standard (almost a third of privately rented homes in the North West of England are non-decent), and the most likely to contain a Category 1 (most serious) hazard under the UK’s Housing Health and Safety Rating System. Citizens Advice report 45% of private renters experiencing damp, mould, or excessive cold, with around half of that group having faced such issues for over a year. Private renters also move homes far more frequently than the aforementioned tenures, and rents are 21% higher than they were three years ago.
Landlords defend spiralling prices as the result of higher costs and mortgage interest rates (although almost 4/10 of landlords are debt-free). In reality, landlords have enjoyed excellent circumstances for decades. Over 40% of ex-council homes sold under Right to Buy are now privately let, meaning over 800,000 rental homes (almost 20% of the market) were bought with a considerable discount from the state that built them. Whilst wages flatlined in the years since, house prices nevertheless rose steadily – speculators beat families to buy houses, and the private rental market actually doubled in size between 2004 and 2024. The UK’s decrepit planning system, low interest rates, embarrassing housebuilding record, regional imbalances, and accelerated-and-previously-unthinkable pace of immigration collectively ensured that landlords continued to profit, despite the relatively poor quality of stock.
As things stand
As mentioned, the Renters’ Rights Act ended Section 21 (no-fault) evictions and abolished fixed-term tenancies. Landlords can regain possession if they decide to sell, move into the property, or move a family member in, giving tenants four months’ notice. In such cases, landlords will be barred from reletting for six months. The act bans bidding wars (advertised rent becomes the maximum payable), whilst also outlawing upfront rent demands, bans on pets, and discrimination against tenants on benefits.
Rent hikes will only be permitted once annually but are not subject to price or increase controls - tenants will have the right to challenge excessive increases at a tribunal. The Act (eventually) creates a PRS database, onto which all landlords will be compelled to register their properties, along with a PRS Ombudsman, responsible for landlord-tenant arbitration. This, however, was not what tenants were promised initially, in the first rewritten bill (following the original Conservative proposals, which also promised an end to no-fault eviction) presented by Labour.
The Act was watered down to pose an agreeably small threat to most landlords. The legislation initially forbade landlords who regained possession (for selling or moving in etc.) from reletting the property for a year, but that was lobbied down to six months. The material effect of that concession is significant – halving the leverage the tenant enjoys by reducing the cost of eviction. More landlords will choose to sacrifice six months’ worth of rental income than keep a home vacant for a year, assuming they feel the need to follow the rules. Initially, tenant notice could be served from the beginning of the tenancy, but this was scrapped for a four-month initial period during which notice is harder to serve (an effective guarantee of six months’ income). Student flats (one of the fastest-growing parts of the housing sector) were exempted from many of the reforms.
Such dilutions remind us of the considerable legislative presence and influence of residential landlords. Around a fifth of members of the House of Lords are declared landlords (the number, as Peter Apps recently pointed out, is likely much higher when trust-owned properties are counted), with four such members - Lord Keen of Elie, the Earl of Kinnoull, the Earl of Leicester and Baroness Neville-Rolfe - having played a central role in securing those concessions, reducing the potency and dynamism of the legislation.
Enforcement
Crucially, landlords will be helped by a lack of rigorous enforcement capability. The British state lacks the capacity to enforce the Renters' Rights Act properly. Some provisions do not require active ‘policing’ or punishment and will benefit tenants (particularly those with stronger awareness of their rights) but many of the worst-offending landlords have regrettably little reason to fear.
One reason for such doubt is our inability to enforce existing tenant’s rights legislation. The Act introduces first-time and minor non-compliance civil penalty fines of up to £7,000, and serious and repeat penalties of up to £40,000. Civil penalties have existed for landlords in narrower contexts prior to now but have been remarkably ineffective. They are rarely and unevenly used, and sporadically collected when they are. In 2021, four years after the introduction of civil penalties, the NRLA studied their use using FOIs, and found that 20 local authorities (7% of total) were responsible for 71% of all penalties, with six of the top ten being London boroughs. 19% of authorities had issued between 1-5 penalties in the three years prior, and 53% (145 councils) had not issued any at all. In other words, between 2018-21, less than half of councils issued a single penalty. Between 2021-23, 49% did not issue a single penalty either. More worryingly, of the fines levied, less than half are actually collected. The NRLA found that £13m worth of fines were issued to landlords in 2021-23, but only £6m was collected.
Councils are not set up to exercise the oversight the Act demands – a £60m enforcement pot for councils (just shy of £200k each – a few officers on a temporary basis?) will not be sufficient. Consider what the state must monitor. If a landlord evicts tenants with the stated intention of selling the property, but then attempts to re-let it, who will know? Who will stop them? If a landlord falsifies PRS database information, how would the state – at local or national level – find out? There is an increasing grey market of rental properties being let through WhatsApp chats, Gumtree, and Facebook Marketplace. If this market grows, who tackles it? How do councils know the extent of it? Councils currently do not have this intelligence, nor the immediate means of gaining it, and the ombudsman’s eventual role remains unclear. Beyond the intelligence problem, there is a casework/dispute resolution challenge: these responsibilities will be split across the First Tier Tribunal (for rent hikes), the ombudsman (for abuses or disputes) and the councils (dealing with unlawful behaviour). All will be subject to backlogs and appeals. All must work effectively very quickly, to ensure tenants feel challenging landlord abuse is worth the pain. It is hard to imagine this at present; a Government report from 2022 summarised current enforcement capacity in frank terms:
‘local authorities face significant barriers to tackling poor conditions, resulting in an uneven picture of enforcement. For example, few local authorities participating in the study had sufficient, comprehensive knowledge of the local private rented stock to inform strategic decision making, and enforcement capacity was so limited in some teams that they described mostly ‘fire-fighting’.’
Lastly, the state’s ability to discipline abusive or shameless landlords is made more complicated by a reliance upon cheap private rentals to fulfil its scattered obligations. Nowhere is this dependence more visible than in poorer regions, which feature cheaper homes and considerable statutory obligations and support requirements.[1] Lower house prices also means local councils (across the north of England) are competing with their southern cousins; London boroughs sending homeless families to temporary accommodation in Durham or Hartlepool; or looked-after children being housed ‘hundreds of miles away from friends, family and schools. Council desperation means plenty of landlords will not be short of competing statutory demand, irrespective of stock quality or prior behaviour.
What next?
To deliver on the potential of the Act, the Government must focus on three challenges; permanent enforcement funding; availability of information; and the question of where responsibility and enforcement capacity best sits.
The recent top-up for enforcement funding will not plug serious capacity gaps in certain local authorities. A long-term funding framework which accounts for local PRS prominence and conditions, and which allows local authorities to retain and bolster enforcement teams is needed. Councils should also be allowed to keep a significant proportion of PRS penalty receipts to incentivise proactive action and cover costly disputes.
Information is the next challenge. The commitment to build the PRS database is welcome – Zoopla and Savills know more about the market than the Government. But the database will not aid enforcement unless it contains enough information for council teams to shift onto the front foot. Enforcement teams should be able to see landlord complaint and penalty histories, eviction logs, health hazards, EPC ratings, and associated agents, with serious repercussions for falsifying data. Problem landlords would quickly become identifiable and prioritised for inspection or investigation. This, along with the funding settlement, would help councils on from the fire-fighting described in the 2022 report. Councils must be able to go beyond a model of PRS oversight which relies on repeated tenant complaint. Tenant reticence or material precarity protects abusive landlords in such circumstances.
Lastly, the location of enforcement teams, skills and responsibilities needs careful consideration. I have referred to councils because of the status quo and their likely continued centrality to PRS oversight. But certain functions of enforcement teams may sit more comfortably at the regional (perhaps combined authority or mayoral) level, not least because many landlords operate across boroughs. Government analysis has pointed to skill gaps at the immediate local level – specialist investigators, data analysts and lawyers covering a wider area would help enforcement teams in especially complex cases involving the largest or most elusive offenders. Pooling small amounts of team budgets may be highly rewarding, in other words.
PRS oversight matters because unchecked landlord cash extraction makes (typically younger) households and high streets poorer and worsens the condition of British residential property. If Prime Minister Burnham is serious about confronting shameless rent-seeking and alleviating the costs of living, ensuring effective and muscular oversight of landlords is a prerequisite. It should be noted that any and all further action in the rental market – price controls for example (a topic for another piece) – will still rely on the enforcement architecture we have yet to build.
- And it goes beyond temporary accommodation – landlords (an increasing number wanting more return than standard local housing benefit rates) are profiteering off the provision of exempt supported housing, or opening up new ‘children’s homes’ (illegal ones in some cases).