'If a landlord wants to sell the property, or move themselves or a family member into it, they should be required to compensate the tenant for the loss of their home.'
Ben Cooper (@BenCooper1995) is a senior researcher at the Fabian Society
After four years of promises, the government finally published its Renters Reform Bill in May. With 11 million people living in private rented homes, this legislation will deliver some security and stability – if it is passed before the next general election. No longer will landlords be allowed to evict tenants without giving a specific reason, which currently means tenants are always just eight weeks away from potentially losing their home. And an end to these ‘no-fault’ evictions should help tenants complain about disrepair and poor conditions, without fearing they will be kicked out in retaliation.
But the legislation is far from perfect. It fails to make private renting as safe, fair and secure as it should be. There remain significant loopholes that will allow unscrupulous private landlords to unfairly evict tenants.
It is particularly concerning that landlords can evict tenants if they wish to sell up, or move themselves or a family member in. And the definition of these new grounds for eviction will fail to prevent misuse. The rules do not place the bar high enough even for legitimate use, considering that it will result in people losing their home.
Moreover, landlords will still be able to raise rents so significantly that it would force tenants out. As the charity Shelter argues, the legislation could mean that ‘unfair evictions … continue to happen through the backdoor’. The legislation restricts landlords to just one rent rise a year, but it doesn’t limit how much they can raise rents by. While tenants will still be able to appeal to a tribunal for a reduction in rent if they feel it is too high, the risk remains of tribunals setting a maximum rent that is higher than landlords originally asked for.
This month, the Fabian Society’s Commission on Poverty and Regional Inequality set out proposals to raise living standards for all of England’s regions. We made a series of recommendations to strengthen the Renters Reform Bill, and put more power in the hands of private tenants. While limited grounds for possession should exist, landlords should be prevented from using some of them for the first year of a tenancy – and the notice period for evictions should be extended to four months, with a permanent ban in winter.
Extending protections currently contained within the Renters Reform Bill is important, but the government should also introduce new ones – designed to eliminate loopholes that may allow landlords to undermine security of tenure. Landlords should be required to make ‘relocation payments’ to tenants who are forced to move out. If a landlord wants to sell the property, or move themselves or a family member into it, they should be required to compensate the tenant for the loss of their home.
These payments should be worth at least two months’ rent and will help renters afford the significant bill of moving, which costs over £1,700 on average. Indeed, Generation Rent estimated that unwanted moves collectively cost renters nearly £230m a year. Simply put, landlords should bear the cost of the moves they cause – especially as they are likely to benefit substantially from it.
Relocation payments should also be used to deter landlords using excessive rent hikes to force tenants out of the property. Rent controls have been ruled out by the Labour Party, but that isn’t the only option on the table, and inaction on rent increases would be unacceptable. We propose if the landlord increases rents by an ‘unreasonable’ amount and the tenant then decides not to pay the new rate, and leaves the property as a result, then the landlord should compensate them.
The government would determine what an ‘unreasonable’ rent increase is by linking it to inflation, wages or a fixed percentage, and landlords could still raise rents by more than that amount. But tenants would then be in a stronger position to either negotiate a smaller rise in rents or to demand improvements to the property, knowing they will be compensated if they move out. And landlords will know they risk paying out potentially thousands of pounds if they push their tenants out by trying to increase rents too much.
The Renters Reform Bill is a good starting point, but it needs strengthening. We need to move the balance of power in favour of tenants, by protecting them from landlords seeking to exploit loopholes to undermine security of tenure. Relocation payments are part of the answer.