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Category: government and politics
A solicitor from a leading law firm has struck out against the Labour government’s estimates for what their upcoming reforms may cost landlords.
Labour have claimed that the changes in the Renters’ Rights Bill will cost landlords £12 per rented property each year.
“Fanciful” impact assessments
The bill’s impact assessments have estimated a £33 million annual net cost to UK businesses, working out at £22 per rented property. However, there would also be a £9 benefit per rented property per year due to lower letting agent fees. It predicts that fewer household moves and reduction in void periods would cause this.
This figure has been deemed overly optimistic by some. David Smith, the head of JMW’s property and commercial litigation teams, has offered a reassessment that he considers more realistic.
He has said that these figures are unreliable best guesses, and that the £33 million figure does not accurately reflect the current landscape because secondary legislation does not exist yet.
So, the cost when we add in the fees for the PRS Database and Landlord Ombudsman rise to £40.1 million and the cost of Awaab’s law and the widening of the Decent Homes Standard are not quantified.
Apparently, landlords will also benefit by £9 a year due to tenants staying longer and having less void periods. I find this to be fanciful given that most tenants left property of their own accord already.
The cost of learning about the changes, increased court costs in evicting tenants, providing more evidence to deal with cases, new s13 notices, considering pet requests etc. is all costed at £22 per property per year over the ten-year impact assessment period, so a total of £220 … I consider it to be a gross underestimate based on what I anticipate agents charging to prepare a s13 notice for a landlord.
Impact on landlords
The upcoming changes listed in the Renters’ Rights Bill are a source of concern for private landlords. With Section 21 evictions being taken away among other legislative shake-ups, many are expecting some additional costs when the legislation comes into effect.
Therefore, it is important that the average forecast costs for landlords are calculated accurately, so that they can budget and prepare properly for the potential challenges ahead.
What’s more, it will be important to landlords that Labour have a true picture of their position. Many fear that the party could be bad news for the sector and that tenants carry unbalanced favour from them.
Can Labour crunch the numbers?
Smith has voiced his concerns that other costs and fees may also be inaccurate, particularly relating to Ombudsman fees, tenant pet ownership, and cost per letting agent.
Labour estimate average Ombudsman fees to be between £4.42 and £13.25 per property per annum. The costs for a tenant keeping a pet were calculated at £7. Lastly, Labour foresee an extra £1,719 per letting agent per year over ten years.
Smith did not elaborate much on these points except a general disbelief that they could be accurate, but he is far from alone in his scepticism of Labour’s maths skills, particularly in regard to recent tax raid controversies.
Overall, the changing costs that private landlords may have to face when the Renters’ Rights Bill comes into effect are not set in stone and only educated guesses can be made. Of course, this applies just as much to those doubting Labour’s rough calculations.
