Tighter regulation on landlords will force more out of the market, as they fear fines and rent controls further down the line, a 69-year-old landlord from Chelmsford said.
Neil France, who has a training business, has a portfolio of seven rental properties.
He has four properties in the north, which are rented out to families and three nearby in Essex, which are mixed home occupancies and aimed at young workers.
Despite steady demand and profits of around £35,000 a year, Neil says the regulatory environment is making being a landlord more stressful and with rising costs it’s harder to maintain returns.
New regulations include the Renters’ Rights Act that came into force for most private rented tenancies in England on 1 May.
It bans Section 21 “no-fault” evictions, ends most fixed-term assured shorthold tenancies by moving renters on to periodic tenancies, limits rent increases to once a year, restricts rent in advance, and gives tenants stronger rights to challenge unreasonable rent rises and poor landlord behaviour.
The Government says the aim is to give renters more security and make the private rental sector fairer, though landlords warn the changes could add more risk as they have less power to deal with problem tenants and adds extra administration.
Neil said: “It’s bad enough with all the regulatory change, you’re left thinking, have I done it right? Because if you don’t, then you get a £7,000 fine. Everything is going up so you’re constantly a bit nervous”
“There is a lack of clarity on how an ombudsman will work in terms of evicting problem tenants.
“That makes me extremely, extremely nervous because if I do get a bad tenant, it looks like it’s going to be a nightmare. I totally understand why people are just saying, forget it.”
He was also concerned over the rumours that Rachel Reeves was considering a year-long rent freeze to help households with the effect of the US-Israeli war with Iran.
Government ministers, including housing minister Matthew Pennycook, have denied the plans, saying, “It’s not a credible or serious policy proposition”.
However, should they come into force in the future, Neil is worried it would have a negative impact on the whole industry.
He warned that a rent freeze would mean that he would have to put up rents before rules were to come in, if they ever were to, and believes that smaller landlords would be under more pressure to sell up.
He said: “I can understand why Rachel Reeves [might do] that because it would stop a major cost of living increase.”
Scotland enforced a freeze on rents in October 2022, with a cap of a 3 per cent increase from April 2023. These rules were temporary and expired in March 2024.
“I looked at what happened in Scotland… when they stopped it after two years some people were suffering from 10 per cent increases,” Neil said.
“All that happens is that it just builds up, so when it stopped rents went through the roof again”.
He added: “I think people like me of my age group are progressively bailing out. I think there’s going to be a lot of people [who] just can’t be dealing with the hassle anymore.”
Neil has tried to shield tenants from sharp increases in rents where possible, despite rising costs from mortgage rate rises and other bills going up and says he has a “moral responsibility” to his tenants.
He said: “We’ve had a stonking great increase but I said to them I’ll absorb that for the next couple of years and pass on some of it to them – but rents will need to go up every year.
“If you don’t keep putting them up by £10 or £20 a month, then very quickly you’re going to be in a situation where you break even at best.”
Neil added that the regulations make it much tougher for private landlords to make a profit, arguing that corporate landlords are not as understanding if tenants have financial issues.
He often works with tenants who have had such issues to put payment plans in place and warns that corporate firms may not be as understanding.
Neil believes supply remains the fundamental issue in helping to ease housing costs, adding: “The real answer to all this, of course, is just to build more blooming houses.”
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