The UK rental sector is in a state of disarray. Rents are rising at record rates, homelessness is growing alarmingly and landlords are increasingly walking away from the market. 

Social tenants are standing at the coalface, often caught in the crossfire of ill-conceived policies - designed to protect them but which end up doing more harm than good. 

Despite mounting evidence of the rental sector’s decline, successive governments have failed to address the root causes (perhaps because of their intention to get rid of smaller landlords) opting instead for regulatory quick fixes that exacerbate the problem.

Every new rule or restriction aimed at landlords - from stricter licensing schemes to tax regimes to rent freezes - adds to their costs and administrative burdens. These costs inevitably trickle down to tenants, driving rents higher and reducing supply, most concerningly of affordable housing. 

The consequences are dire: 

• More families in unsuitable temporary accommodation. 
• Fewer landlords willing to house social tenants.
• An escalating divide between tenants and landlords.

I shall explore how poorly conceived policies have created a vicious cycle, harming both landlords and tenants and pose possible reforms needed to break it. Through real-life experience and proposed solutions, I shall try to highlight a possible path to a fairer, more sustainable rental sector. 

Over-Regulation 

The  Roots of  Rising Rents 

Government regulation in the rental sector often aims to protect tenants, but the unintended consequences frequently achieve the opposite. Policies that increase costs for landlords - without addressing systemic housing issues - ultimately backfire on tenants in the form of higher rents and increasingly, reduced availability of homes.

The Chain Reaction of Over-Regulation 

Take the example of selective licensing schemes. These programmes intended to crack down on rogue landlords and they require good landlords to pay fees and meet rigorous compliance standards. This sounds reasonable in theory but in practice, the costs are passed directly to tenants. And this is not the only cost they’ve been passed recently. Many landlords also avoid renting to higher-risk tenants, such as those on Universal Credit, or anyone who manages their paperwork badly, due to the increased scrutiny and financial risks involved. As one landlord noted, “We used to house benefit tenants willingly, but now, Universal Credit has made it impossible to communicate with the system. It’s just not worth the risk.” 

When I saw UC on the horizon I first looked at the different ways it might be possible to make the system less risky for me as a landlord.  I really wanted to pay all my mortgages on time, but there just weren’t any methods that could make me comfortable. I just stopped taking new LHA tenants, and now I watch from the sidelines at the pain suffered by both landlord and tenant alike. 

Similarly, rent freezes, like the ones proposed by Unison last month (October 2024), fail to consider the operational costs landlords face. Maintaining properties, meeting new energy efficiency standards (such as new EPC requirements), and navigating ever-increasing administrative burdens - all cost money. When landlords cannot adjust rents to cover these costs, they are left with two options: sell the property or neglect its upkeep. Both of these hurt tenants in the long run.

Key Examples of Policy Failures 

Section 24 Tax Changes 

Introduced by George Osborne in 2015, this tax reform prevents landlords from deducting mortgage interest costs from rental income before calculating their tax liability. It has disproportionately affected small, long-term landlords who now cannot use the same methods of other businesses to claim expenses against income. And they house millions of tenants!

Many have been forced to sell, displacing tenants and reducing housing supply. 

For anyone who doesn’t know already how this works, I shall quote a simple figure analogy by one of the UKs larger socially conscious landlords Mick Roberts: 

“ 

What used to happen is
Rent £800pm
Mortgage £500pm
Leaves you £300pm.
Tax bill £120pm.
Means you make £180pm which then means you've got enough for maintenance, repairs, refurbishment etc.
That's how the Govt allows every other business to work. 

One reason is this Section 24 Tax that is utter bonkers, it's almost impossible to believe. Examples:

£700 rent x 40% Tax = £280 leaves £420 minus £500 mortgage = Loss £80
£800 rent x 40% Tax = £320 leaves £480 minus £500 mortgage = Loss £20
£900 rent x 40% tax = £360 leaves £540 minus £500 mortgage = profit £40.
So the Tax system the Govt bought in for Landlords forces Landlords to lose unless charge high rents.

EPC C Requirements 

Landlords are being mandated to upgrade properties to an EPC C rating by 2028, regardless of whether such upgrades are practical or affordable. 

For older homes (there are many of these in the UK) this often involves invasive and costly work. One landlord described a scenario where a tenant in a well-maintained EPC D property faced unnecessary disruption and significant rent increases to meet the new standard - despite being perfectly happy with their current living conditions.

Pet Deposits 

Landlords once welcomed tenants with pets by charging higher deposits to cover potential damage. The government has now banned pet-specific deposits and capped overall deposits at five weeks' rent. As the owner of a German Shepherd, I can assure you I’m understanding if a landlord is concerned for their property. She has claws, teeth etc, none of which should be a landlord’s concern. 

As a result of the withdrawal of risk limitation, many landlords now refuse to accept tenants with pets altogether, leaving pet-owning renters with fewer options and higher rents.

The Broader Impact

Every regulation creates ripple effects, and the rental sector is

• Complex 
• Dealing with peoples’ homes 
• Part of the free market and susceptible to supply and demand 

Tenants ultimately pay the price of stricter rules through higher rents and reduced housing options, while landlords face mounting frustration and financial strain. 

The Tax Avoidance Debacle 

Another fly in this rather delicious ointment is the conundrum that landlords were placed in when Section 24 (see above) was introduced. 

Many landlords were approached by Tax Advisors (a fully regulated industry) and coerced into schemes that ‘enabled’ them to claim tax relief on their mortgage payments. These are typically referred to as hybrid schemes.

Unfortunately, many years later, many of these ‘schemes’ have been ruled as unlawful, and lots of landlords find that the advice they followed led them only to large fines. 

The result? 

A shrinking rental market that leaves the most vulnerable tenants - those reliant on benefits or seeking affordable housing - with fewer places to turn to.

Real reform requires recognising that landlords are partners in solving the housing crisis, not adversaries. Without this shift in perspective, the rental sector will continue its downward spiral, leaving tenants and landlords worse off than ever before.

Social Housing and Temporary Accommodation 

A System at Breaking Point 

The UK’s housing crisis has forced thousands of families into temporary accommodation, with councils struggling to meet the rising demand. The consequences for social tenants are particularly dire, as councils rely on unsuitable and costly solutions like bed-and-breakfast accommodations.

The Scale of the Crisis 

In Leicester the council housed a family fleeing domestic abuse in a B&B for 19 weeks. The legal limit is six-weeks for temporary accommodation. The situation is not unique; across England, over 150,000 children live in temporary housing, often in cramped, unsuitable conditions. Councils argue that these placements are “unavoidable” due to a lack of affordable housing and insufficient government support.

Leicester City Council refuses to pay compensation to the family. It’s reasoning highlights the financial strain councils face. Paying the Ombudsman’s recommended remedy would set a precedent that could cost councils nationwide an estimated £130 million - money they simply don’t have, and need to fund further accommodation. 

Birmingham City Council has echoed this sentiment, calling for increased grant funding and a long-term homelessness strategy to tackle the root causes of the crisis.

The Cost of Temporary Accommodation 

Councils spent over £2 billion on temporary accommodation last year alone, and this figure continues to rise. While some councils are experimenting with innovative solutions such as converting unused commercial properties into housing, these efforts are far from enough to meet demand. Without significant investment in social housing and alternative accommodation the reliance on expensive, unsuitable temporary solutions will persist.

The Human Toll 

The impact on families living in temporary accommodation is devastating. In the case of the Leicester family being confined to a B&B for months, they are split between two rooms with no cooking facilities. This is quite obviously taking a significant toll on their mental health. Children’s education and development suffer in these unstable environments and this merely perpetuates cycles of poverty and disadvantage.

Addressing this crisis requires more than reactive spending. Councils need proper funding. The government needs to invest in sustainable housing solutions that reduce the reliance on temporary accommodation. TA simply fails to meet basic living standards.

The EPC C Mandate

A One-Size-Fits-All Disaster 

The government’s push to mandate EPC C ratings for all rental properties by 2028 has become a flashpoint for landlords and tenants alike. While the policy aims to improve energy efficiency and reduce carbon emissions, it often ignores the complexities of older properties and tenant needs.

The Cost to Landlords is passed to Tenants 

Upgrading properties to meet EPC C standards is neither cheap nor straightforward. For many older homes, this involves invasive retrofits - internal insulation, new windows, boiler replacements. One landlord described the upheaval for a long-term tenant, mentioned above, who was happy in an EPC D-rated home. Despite no issues with damp or heating, the upgrades disrupted her life and drove up her rent - making her distinctly worse off overall. 

I ran a construction firm for a good few years, and the bulk of our work was refurbishing Victorian property. The man I learnt the trade from was pushing 60 when I started, and had worked on Victorian stock since the age of 13. Naturally he knew a little more than the New Zealand interns sent to us by Hackney Building Control, and even head of the Spitalfields Trust. Dennis, god rest his soul, taught me many things that didn’t work in old stock. The same things, I later learnt again in ‘revolutionary’ documentaries and books. But these practices are often ‘recommended’ as methods to upgrade. 

I have only last week had a call from a landlord who followed the council, agency and contractor recommendations for a damp solution. Unfortunately it hasn’t solved anything and may lead to structural issues down the line. It has caused the landlord expense, the tenants disruption, but created no gain. Not even really for the construction firm, and their google reviews may suffer a hit! 

The unintended consequences of across-the-board rules and regulations can be disastrous. 

Unintended Consequences 

The costs, of course, are not borne by landlords alone. To cover the expense of upgrades, landlords are forced to raise rents or sell properties altogether. This leads to a double blow for tenants: fewer affordable homes on the market and higher rents for the ones that remain. Vulnerable tenants, particularly those in older housing stock, are disproportionately affected as landlords leave the sector. 

Supply and Demand 

The factors at work of course are not simply that costs go up so landlords raise rents. What happens is that: 

• Housing is sold. 
• Supply decreases. 
• Demand increases. 
• Rents can and do skyrocket. 
• Landlords are blamed. 
• It is claimed landlords are greedy and making a killing. 
• But landlords are often making no money, and even losing money. See Mick’s calculations above. 

Don’t get me wrong, not all landlords are nice people, some are only in it for the money. But many do care, but have been truly f**ked over (apologies for the language but there is not better way to express it). 

A Better Approach 

Rather than imposing blanket standards, the government might consider more flexible policies that account for property type, tenant needs, location and economic feasibility. Incentives for gradual upgrades, alongside grants or even tax relief, could help landlords improve energy efficiency without displacing tenants or shrinking the rental market.

The EPC C mandate illustrates a broader issue in housing policy: one-size-fits-all solutions often create more problems than they solve. Collaboration with landlords and tenants is essential to crafting policies that deliver real benefits without unintended harm.

Landlord Safety and Privacy 

A Growing Concern

The October 2024 requirement for landlords to disclose their home addresses to tenants has raised significant safety and privacy concerns. While transparency in landlord-tenant relationships is important, this policy overlooks the real-world risks many landlords face.

The Risks to Landlords 

Landlords often house tenants from diverse backgrounds, including those with complex histories such as ex-offenders. Disclosing personal addresses puts landlords at unnecessary risk of harassment, intimidation, or even violence. 

One Nottingham landlord recounted concerns when the council introduced a similar requirement during a selective licensing programme, stating, “I house ex-prison offenders. Are you ludicrous?”

Other industries, such as retail or hospitality, do not require staff to disclose personal addresses to customers. Petrol station attendants or pub staff, for instance, are not expected to provide such information, recognising the inherent risks involved. 

Why should landlords be treated differently?

The Unintended Consequences 

Without doubt, this requirement to tell the tenant where you live, discourages landlords from renting to higher-risk tenants altogether, further reducing housing options for vulnerable groups. 

Landlords are often willing to give people in need a chance - housing ex-offenders, benefit recipients, or individuals with challenging circumstances – but these are effectively penalised. In extreme cases, landlords may and are exiting the market altogether, exacerbating the housing crisis.

A Sensible Alternative 

Instead of requiring landlords to disclose home addresses, councils could establish a secure point of contact system, ensuring tenants can communicate effectively without compromising landlord privacy. Digital platforms or third-party intermediaries could streamline dispute resolution and address tenant concerns, safeguarding both parties. 

Tech has allowed so much automated connection. Why is it not being used here? 

The Bigger Problem 

Policies Without Collaboration 

At the heart of the rental sector’s decline is a glaring disconnect between policymakers and stakeholders on the ground. Landlords, councils, and tenants are rarely consulted on the practical implications of new regulations, and seemingly never listened to, resulting in policies that worsen the very problems they aim to solve.

We’ve already looked at Pet Deposits and EPC changes, but Universal Credit and Licensing Schemes is also a good example here. 

Bureaucratic hurdles and punitive fines discourage landlords from housing benefit recipients or taking on higher-risk tenants. Why should these measures fail to distinguish between rogue landlords and responsible ones, penalising the latter disproportionately? 

A Collaborative Path Forward 

To create meaningful and effective reforms, the government must actively involve landlords, tenants, and councils in policymaking. 

Key actions could include:

• Establish forums where landlords and tenants can share insights on proposed policies.
• Focus on addressing specific issues, such as rogue landlords, without penalising compliant ones.
• Allow for market-driven mechanisms, like optional but not prohibitive higher deposits or risk-based insurance schemes, to address specific tenant needs.

By fostering collaboration and leveraging stakeholder expertise, policymakers can craft solutions that genuinely improve conditions for both tenants and landlords, ensuring a more balanced and sustainable rental market.

Toward Solutions 

Breaking the Vicious Cycle

The rental sector's problems stem not from a single misstep but from a series of disjointed, reactionary policies. To truly address the housing crisis, our still new government must shift from punitive measures to collaborative, long-term solutions that balance the needs of landlords, tenants, and local authorities.

Key Actions for Reform 

Encourage Stakeholder Collaboration 

• Establish regular forums for landlords, tenants, councils, and policymakers to discuss practical reforms and provide proposals to Government.
• Align legislative priorities with on-the-ground realities rather than ideological assumptions.

Flexible Deposit and Rent Policies 

• Reintroduce deposit additions for tenants with pets or specific risks, ensuring only those causing damage bear the costs. The government could even put this under insurance if they wished to help all. 
• Allow landlords and tenants to negotiate flexible arrangements without unnecessary bureaucratic hurdles. Yes this needs handling with care, but it should be possible. 

Targeted Support for Vulnerable Groups 

• Simplify Universal Credit processes to enable direct communication between landlords and housing benefit administrators. Better still, scrap UC. Allow landlords to be assured rental payments without interference.
• Provide incentives for landlords to house benefit recipients or those with complex needs, such as grants or even tax relief.

Investment in Social and Affordable Housing 

• Prioritise funding for new social housing developments and innovative solutions, such as converting underutilised commercial properties. Support and funding really needs to come from Government. Maggie’s era hasn’t left a good legacy here. 
• Support councils in creating sustainable alternatives to temporary accommodation, reducing reliance on expensive, unsuitable TA. 

Energy Efficiency Without Displacement 

• Design EPC upgrade policies that consider property type and financial feasibility, offering grants and tax incentives to offset costs.
• Phase in requirements gradually, ensuring tenants are not forced out of their homes and don’t have to suffer disruption they don’t want.

A Path to Stability 

The UK rental sector is at a critical juncture. Years of misguided policies have created a fractured system that fails to serve either tenants or landlords. With rents climbing, TA bankrupting local authorities and homelessness increasing, the stakes have never been higher. 

The solution lies in recognising landlords as partners in solving the housing crisis, not treating them as adversaries. 

Collaborative policymaking, coupled with targeted investment in affordable housing and thoughtful regulation, can restore balance to the sector. By focusing on sustainable, practical reforms, the government can ease the burden on councils, stabilise the rental market and most importantly ensure safe and affordable homes are on the increase.

The time for action is now. 

Ed Fowkes

November 2024