Middle-income landlords ‘face bankruptcy’ under new Labour rules which could allow tenants to go months without paying rent, legal experts have warned.
The government’s sweeping set of renting reforms, called the Renters’ Rights Bill, received Royal Assent last week and will come into force in April next year.
It promises to deliver private renters the greatest increase to their rights in a generation and was overseen by former Housing Minister Angela Rayner – who resigned after The MoS revealed she had failed to pay the appropriate duties on her new seaside home.
Yet campaigners fear the laws could see tenants abuse the system and go months without paying what they owe.
They say landlords could lose hundreds of thousands of pounds in unpaid rent and legal fees – and risk mortgage repossessions and financial ruin.
The legislation extends the period renters can fall into arrears from two months to three, and the notice period required to begin ‘Section 8’ legal proceedings to kick them out from two weeks to four weeks.
It also scraps the ability for landlords to serve Section 21 notices, or so-called ‘no-fault evictions’.
Fixed-term contracts will also be abolished in favour of rolling contracts.
The Renters’ Rights Bill was overseen by former Housing Minister Angela Rayner – who resigned after The MoS revealed she had failed to pay the appropriate duties on her new seaside home
Paul Schamplina, the founder of housing law specialists Landlord Action, said: ‘It could be catastrophic.
‘Tenants will get wised up to the fact that if they’re not paying rent, they know it’s going to take ages for the tenant to be evicted.
‘Tenants that play the system or don’t care about their credit rating, their aim is to stay in the property as long as possible, not pay the rent, and leave a day before the eviction.’
Critics also fear the reforms could trigger ‘tens of thousands more’ Section 8 cases against occupants, pushing landlords’ waits for repossession hearings – already as long as eight months in some parts of London – even further.
During that time, legal fees can stretch into the tens of thousands for landlords, while tenants get free legal aid and can continue to let debt pile up.
Chris Norris, head of policy at National Residential Landlords Association, said: ‘Now landlords are typically waiting six months before you get a hearing.
‘If tenants refuse to move out. Then you have to go back to get a warrant and then wait for bailiffs.
‘You can be waiting months to get your property back, even after the court has told you that you are entitled to your property back because those tenants have refused to move on.
‘In the worst-case scenario, you could end up having that property repossessed, you potentially face bankruptcy.’
A Ministry of Housing, Communities and Local Government spokesperson said: ‘Good landlords have nothing to fear from our reforms.
‘As well as making the market fairer for tenants, our landmark Renters’ Rights Act will ensure landlords can fairly act where it is needed, including with strengthened repossession grounds.’
