More landlords will move out of the longer-term lets arena if new legislative changes go ahead in their current format, experts have warned.
The government’s recently published Renters’ Rights Bill was introduced to Parliament last month.
It plans to remove fixed term tenancies and prevent rent payments being taken in advance of tenancies starting.
However, these elements must be “fully assessed” ahead of the bill becoming law, warns Propertymark.
The trade body said there may be “unintended consequences” of these proposals if they go ahead.
In particular, it suggested that a “significant number” of landlords would be attracted to higher rents in the short lettings market, which also offers being unregulated.
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Fixed term tenancies
A fixed term tenancy provides security of tenure for a tenant and a guarantee of rent payments for landlords.
Propertymark insisted they are requested by tenants, including many nurses working in hospitals for set periods, as well as those from overseas and families who want to stay in an area because their children are at a local school.
It claimed that the complete removal from tenancies of an initial fixed term will cause every tenancy to effectively become a short-term let, which, with limited supply, will drive up rents for individuals, couples and families looking for a long-term home.
It went on to explain that with no security of a rental term for landlords beyond the two months’ notice period and no long-term guarantee of rent, it would expect a significant number of landlords attracted to higher rents in the short letting market, which also offers them the advantage of being unregulated.
Student lettings
Removing fixed term tenancies is also expected to impact the student market.
The proposed Ground 4A as currently drafted refers to houses in multiple occupation (HMOs), which, by definition, are dwellings with three or more sharers.
With rent instalments being limited to one month’s rent, removing the possibility of paying rent in advance could change the student sector, where tenants typically pay rent from receiving student maintenance loans termly, as well as impacting those on fixed incomes.
Timothy Douglas, head of policy and campaigns at Propertymark, said: “Property agents recognise that the government wants to increase protections and security for tenants, but they must recognise the unintended consequences of the proposals in the Renters’ Rights Bill and not reduce choice and flexibility for tenants.
“To support renters, we want to see fixed term tenancies retained as an option and request that an impact assessment is done on the UK government’s plans to remove fixed term tenancies and shared publicly with the sector.
“The UK government must enact the registration of short-term rental property requirements as passed in the Levelling-up and Regeneration Act 2023 alongside these reforms to level the playing field for landlords and the long-term rental market.
“To support students, the government must extend Ground 4A to one or more student sharers, move student maintenance loans to monthly instalments and/or, allow rents in advance for student renters and others to keep flexibility and access to housing.”
