Momentum appears to be growing to torpedo the controversial legislation as evidence emerges that the Bill is ‘close to collapse’ in Parliament.
Michael Gove’s flagship Bill, which he has vowed to pass before the next election, as he stated last month. These Tory instigated radical reforms are said by many MPs to risk making tenants homeless and housing more expensive. MPs who are landlords themselves have warned the media.
Sources close to the action have also warned that a momentum is growing to torpedo the Bill, which if passed would introduce a radical landmark piece of legislation abolishing the 30 years old Section 21 no-fault eviction process. This process is favoured by landlords. Also, the Bill would end fixed-term tenancies (the Assured Shorthold Tenancy introduced in 1988) as well as several measures which offer more tenant friendly measures.
Mr Gove, the housing secretary, has promised the Bill will pass before an election but with Parliament time running out in this legislative session and with ministers and backbench MPs seemingly at loggerheads over legislation, it is thought by some there is every chance that this Bill could collapse.
There are said to be around 50 backbenchers who have put forward draft amendments to the Bill which inevitably results in delays which also risk fracturing an already split Tory party even further.
Polly Neate, housing charity Shelter’s chief executive, has accused MP landlords of “holding the Bill hostage”. She told The Daily Telegraph:
“It is outrageous the government would allow the Renters (Reform) Bill to be held hostage by a small minority of MPs, many of them landlords, while renters are put through hell.
“With a General Election on the horizon, an overt betrayal of England’s 11 million renters will not be forgotten.
“The government must show its strength and oppose attempts to destroy or delay the bill from within its own ranks.”
The talk of banning Section 21, the so-called “no fault” evictions, has led to a surge in the number of small-scale landlords either selling up or contemplating doing so. This is leading to a shortage of rental accommodation in areas where it's most needed. Rents are also being pushed up. Many landlords don’t think the new rules would solve the housing problem in any case.
As it stands now, landlords can use a section 21 notice to evict a tenant without going through the long convoluted and adversarial courts system in order to justify why a tenant should be removed. They simply need to give the tenant, once their fixed term tenancy has ended, two months’ notice. There is then a period of a few weeks or months for a judge to approve their document-based application before they get a possession notice, an approval to have the bailiffs evict.
It’s not a case of tenant’s being thrown out on the street because it can take on average around 6 to 9 months to remove a tenant, and that, in by far the majority of cases landlords argue, is because they have stopped paying rent.
Given the state of the English county courts system, which is overloaded with cases, many Landlords MPs fear that the new rules would mean almost every eviction case would need a court hearing. This would probably add months to the time it would take landlords to evict a non-paying tenant, further clogging-up the system.
It would also mean that tenants taken to court would collect a county court judgement against their name, making it very difficult for them to obtain a new tenancy from another landlord – most landlords would become extremely selective when taking on a new tenant given the increased security tenants would have, meaning credit checks would be universal.
Marco Longhi, Conservative MP for Dudley North and a landlord himself, told The Daily Telegraph:
That while the bill was “well-meaning” it would backfire on the very tenants it was designed to help. “There will be a sustained move of private landlords exiting the market. It’s already happening, because they think it’s easier to invest elsewhere,” he said.
“A smaller pool of rental homes will lead to higher prices. That’s a simple economic fact. We need to build homes. Whatever attempts the Government makes to manipulate the market will always come back to this.
“Many of my tenants I consider friends. We’ll go out for meals together. I absolutely know that parts of this bill are bad for tenants.
“It’s the law of unintended consequences. The bill was well-meaning, but I wish the Government would have involved all MPs – especially those of us who actually have a lot of experience in property.”
According to research carried out by The Telegraph, around 20% of Tory MPs are landlords with a good proportion of MPs from the other parties also owning rental properties.
Chris Norris, of the National Residential Landlords Association (NRLA), told The Telegraph that those MPs with personal experience as landlords are well-placed to pick holes in the draft policy. He added:
“If you’re a landlord yourself, you’re going to be more alive to those nuances and understand what the consequences will be. If you want to keep your business going, you want solid legislation.
“There’s criticism about the number of landlord MPs, but it should be beneficial that we leverage the wealth of experience we have in Parliament – from landlords running businesses to those doing case work on the part of tenants.”
With a cost-of-living crisis, high inflation and heightened interest rates, tenants are not the only ones feeling under pressure. Many landlords with mortgages to pay and facing a less favourable tax regime see this suggested change in the letting rules as just another nail in the buy-to-let coffin.
Record numbers sold-up last year evidenced by the landlords’ share of the mortgage market, it having shrunk to just 7.5pc, its lowest point in 13 years. Estate and letting agents report that the number of new landlords passing them instructions – a lead indicator for the volume of new rental housing stock coming on to the market – remains negative since 2021. According to the Royal Institution of Chartered Surveyors (RICS) the buy-to-let market has shrunk by 18 percent so far this year.
MPs on both sides of the aisle have tabled amendments to the Bill, including one major one that would require a mandatory review of the courts system before a ban on no-fault evictions could be introduced. Added to that is another amendment that would prevent landlords using an intention to sell or move in with a family member for at least the first two-years of a tenancy - something the Bill would allow after waiting six months.
Worthing West MP, Sir Peter Bottomley, told The Telegraph, the legislation would remove support for landlords whose tenants can’t or won’t pay. “We need to have a system which is good to landlords, so they can provide properties, and good to tenants, so they can have security. What would be wrong would be to abandon the private rental sector altogether, and to not support landlords who aren’t paid rent,” he said.
Currently the Bill is only at the report stage, and has yet to be scheduled for amendments to be debated, while Parliamentary time is short given then an election could be called at any time this year.
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