Landlords warn they may raise rents in response to Labour’s renters’ rights bill

Landlords are warning they may raise asking rents in high demand areas if long-awaited reforms unveiled in parliament on Wednesday turn parts of the private rented sector into “Airbnb Lite”.

A ban on no-fault evictions and brakes on in-tenancy rent rises in England will be among key changes in Labour’s renters’ rights bill, as first revealed last week by the Guardian. But landlords are warning of up to 10% hikes if expected flexible tenancies mean tenants can walk away from deals in just two months.

Angela Rayner, the deputy prime minister and housing secretary, said the bill would “rebalance the relationship between tenant and landlord”, end bidding wars, and crack down on unscrupulous landlords. The ban on no-fault evictions is understood to be on course to come into effect next summer at the earliest.

The move completes a set of reforms which the former housing secretary Michael Gove first promised during the last government, then watered down in the face of pressure from Tory backbenchers, then abandoned entirely at the end of the parliament.

But with the bill expected to allow tenants to end rental agreements with just two months’ notice from the first day they move in, the National Residential Landlords Association said landlords might respond with rent rises in areas like city centres and coastal tourist hotspots.

Renters want maximum flexibility to quit tenancies quickly – for example, if an unscrupulous landlord paints over mould which then emerges soon after moving in. But the NRLA, which represents 110,000 landlords, said its members were discussing how to adjust prices to mitigate the risk to incomes posed by renters who would be able to sign a tenancy agreement and pay for only two months before leaving. Previously, tenants often had to wait for six months before they could leave, the NRLA said.

“The new model could lead to Airbnb Lite,” said Chris Norris, the policy director. “If you need a place for two months you could go to a private rented sector landlord, [sign a tenancy agreement] and then immediately serve notice.”

Renters dismissed the concern. Dan Wilson Craw, the deputy chief executive of the Generation Rent campaign group, said: “If you want a short-term let, it’s always going to be more straightforward to go through a platform like Airbnb, so these warnings are completely implausible.”

The main change in the reforms will be a ban on section 21 evictions – which don’t require landlords to find any fault with their tenant, but are sometimes used to retaliate when tenants raise complaints. Tenants will still be liable for eviction if they don’t pay their rent, cause serious damage or engage in antisocial behaviour, and landlords will be able to take possession if they want to sell the property or move in.

If the bill becomes law next spring, the no-fault eviction ban could come into force as soon as the summer.

The new laws, which cover England only, will also:

• Set deadlines for landlords to tackle dangerous conditions in an extension to the private rented sector of Awaab’s law , named after a two-year-old who died from the toxic effects of mould in social housing.

• Only allow landlords to raise rents once a year, and only to the “market rate”.

• Fine landlords up to £7,000 if homes do not meet a “decent homes standard”.

• Abolish blanket bans on renting to people with children or who are receiving benefits.

The Renters’ Reform Coalition of charities and campaign groups welcomed the bill as “a stronger piece of legislation than the previous attempt” by the Conservative government. Tom Darling, the director of the RRC, said eviction protections meant “a lot of renters will benefit from increased security of tenure”, but safeguards were still needed to stop ongoing unfair or fraudulent evictions.

There will also be an attempt to stop bidding wars, although how this will be enforced is not yet clear. Landlords and letting agents will be legally required to publish an asking rent and will then be “banned from asking for, encouraging, or accepting” higher bids.

But landlords said they could respond by advertising higher rents than they expected to get and then taking bids beneath that – effectively still running an auction.

“Renters have been let down for too long and too many are stuck in disgraceful conditions, powerless to act because of the threat of a retaliatory eviction hanging over them,” said Rayner. “Most landlords act in a responsible way but a small number of unscrupulous ones are tarnishing the reputation of the whole sector by making the most of the housing crisis and forcing tenants into bidding wars.

“There can be no more dither and delay. We must overhaul renting and rebalance the relationship between tenant and landlord. This bill will do just that and tenants can be reassured this government will protect them.”

A spokesperson for the Ministry of Housing, Communities and Local Government said fears that some of the rental market could become “Airbnb Lite” were a “mischaracterisation” of the reform.

“There is a broad consensus more needs to be done to level the playing field between landlords and tenants and this is exactly what our proposed reforms will do,” they said.

“The majority of landlords already meet their responsibilities to tenants and have nothing to fear from these reforms.”

• This article was amended on 11 September 2024 to clarify that the renters’ rights bill covers England only, not the whole of the UK.