The introduction of the Renters’ Rights Act has raised concerns among landlords about the potential exclusion of tenants deemed ‘riskier’ due to poor credit histories, fluctuating incomes, or lack of guarantors. Research by the National Residential Landlords Association (NRLA) indicates that the new legislation may lead landlords to become more selective, potentially limiting housing options for vulnerable renters.

Landlord Selectivity and Tenant Challenges

The NRLA’s recent survey of its members revealed that 78% of landlords anticipate the Renters’ Rights Act will make them more cautious when choosing tenants. Those most affected are likely to include individuals with irregular earnings, international students without UK credit records or guarantors, and tenants reliant on housing benefits, which have been frozen in recent years.

This heightened selectivity stems from landlords’ need for assurance that tenants can maintain their tenancy, a confidence that the new legal framework may undermine. The Act’s restrictions on rent paid in advance remove a previously used method for applicants with poor credit to demonstrate their reliability, further complicating the rental process for these groups.

Concerns Over Periodic Tenancies and Guarantors

One significant change under the Act is the move towards mostly open-ended, or periodic, tenancies. While this reform aims to provide tenants with greater security, it presents challenges for landlords and guarantors alike. The NRLA highlights that some guarantors may be hesitant to commit to rent responsibilities without a fixed tenancy end date, potentially reducing the pool of willing guarantors and complicating tenant applications.

Impact of Court Delays on Possession Cases

Another pressing issue is the backlog in possession cases within the courts. The NRLA reports that it currently takes nearly eight months on average to process and enforce possession claims, which now replace no-fault evictions and include serious rent arrears or anti-social behaviour cases. This delay is a significant concern for landlords seeking to regain possession for legitimate reasons.

Mark Evans, president of the Law Society, has warned that without adequate investment in the courts and legal system, the Act risks creating injustices for both landlords and tenants. Ben Beadle, NRLA chief executive, emphasises the need for clear government targets and resources to expedite case processing, cautioning that failure to do so could undermine landlord confidence at a time when more rental homes are urgently needed.

What this means for landlords

For landlords, the Renters’ Rights Act introduces a more complex and cautious environment. The increased selectivity could reduce the number of prospective tenants, particularly those on the financial margins or with non-traditional income sources. The limitations on rent in advance and the shift to periodic tenancies may require landlords to reassess their risk management strategies and tenant vetting processes.

Furthermore, the extended court delays in possession cases may impact landlords’ ability to manage their properties effectively, potentially leading to longer periods of rent arrears or unresolved anti-social behaviour. Without swift legal recourse, landlords may face increased financial and operational risks.

Fears over sustaining tenancy

Ben Beadle summarised the sector’s concerns: “Today’s findings paint a worrying picture for many renters and serve as an important reminder that reforming the private rented sector comes with considerable risk. Responsible landlords need confidence that tenants can sustain a tenancy. If the system makes it harder for them to seek those assurances, the result will be fewer options for those on the financial margins.”

He also highlighted the government’s delay in publishing a clear plan to accelerate possession case processing, describing it as “causing considerable concern in the sector.”

Source: Based on reporting from Property118

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