New legislation in the United Kingdom, aimed at bolstering renters' rights, is reportedly leading to increased rental costs and a reduced availability of housing, according to recent reports.
The Renters' Rights Act, which came into effect in May, introduced measures such as ending 'no-fault' evictions, capping rent increases, and prohibiting fixed-term tenancies. However, several months after its implementation, tenants in London and across the country are facing a more challenging housing market.
Landlords, unable to accept offers above the asking price to curb bidding wars, are now listing properties at their highest anticipated rental value. This has contributed to a surge in average rents. In the second quarter of the current year, the average rent in London reached a record £2,791 per month, a 2% increase from the previous quarter. Rents outside the capital also saw a 1.9% rise, averaging £1,397 per month between April and June, according to property portal Rightmove.
Tenants report significant difficulties in finding affordable housing. Laura Meyer, a 28-year-old seeking a one-bedroom flat in southwest London since July, described the market as the "craziest" estate agents have seen in decades, attributing it partly to the Renters' Rights Act. She noted that properties are being listed at maximum price points, making it difficult for prospective tenants to have lower offers accepted. Meyer, who currently shares a flat for £1,200 a month, now estimates a one-bedroom flat in her desired area would cost around £2,000, a significant increase from her initial budget of £1,600.
"The market is oversaturated right now - with fewer landlords and more people looking," Meyer stated. An estate agent reportedly told her that while they typically receive about 50 calls a day during the summer, the new act has led to over 120 calls. Meyer has viewed approximately 50 properties and made offers on three, none of which have been accepted.
Data from the house-share website SpareRoom indicates a 3.2% decrease in advertised rental rooms in the year leading up to June. A survey of over 1,000 landlords in England suggested that nearly half were considering selling their properties to circumvent the new regulations, contributing to the dwindling supply.
Lydia Holt, 25, also recounted difficulties in finding a two-bedroom flat in north London. She and her housemates, who are not particularly selective, were unable to find a suitable place within their budget despite a two-to-three-month search and viewing over 15 properties. She noted that rents for two-bedroom flats have increased by approximately £400 per person per month compared to when she moved into her current three-bedroom accommodation, which cost between £2,800 and £2,900.
Reports also indicate that a considerable number of tenants received eviction notices before the act's implementation. Acorn, a renters' union, reported that 'no-fault' evictions constituted one-fifth of member reports in October, rising to nearly one-third by January. A survey of 4,500 tenants by SpareRoom found that 11% in England were evicted or received eviction notices in the six months between the act receiving royal assent and coming into force, with this figure rising to 12% in London. Among those evicted, 9% cited the Renters' Rights Act or other regulatory changes as the reason.
Hetty, 30, was served notice on her rented four-bedroom house in Earlsfield in autumn last year, ahead of the new legislation. Her room rent had increased from £715 to £940 per month during her tenancy. She explained that her landlord decided to sell the house to avoid new penalties. Upon searching for new accommodation, she found the quality of properties had declined significantly in her area, with rents for even basic two-bedroom flats, described as those without mold or peeling paint, ranging from £2,500 to £2,750 per month. She noted that such costs are often unfeasible for young professionals on a single income.
A spokesperson for the Ministry of Housing, Communities and Local Government stated that the Renters' Rights Act aims to protect tenants from excessive increases, provide stability, and limit rent rises to once a year. The act also bans rental bidding wars and allows tenants to challenge excessive costs. Key provisions include the end of 'no-fault' evictions, extended arrears periods, and a ban on landlords accepting offers above advertised rent. It also introduces rolling contracts instead of fixed terms and prohibits discrimination against tenants on benefits or with children.