Will a New Tribunal System Help or Hinder the South London Rental Market?

As the Renters’ Rights Bill edges closer to becoming law, there’s a bit of a storm brewing in the background – and it is one that has implications for landlords and tenants across South London, as well as the rest of the country.

Everyone’s talking about the end of Section 21, the shift to periodic tenancies, and even the issue of pets in properties – all issues that are being addressed in the Renters Rights Bill.

But there’s another matter lurking that might not be getting the airtime it deserves: the issue of rent increase disputes.

Landlords will be able to increase rents; but tenants will have the right to challenge them.

So just who is going to pick up the extra caseload this will bring, and how long will any given case take to reach a resolution?

A System That’s Already Creaking

The current tribunal system hasn’t been built for this. Right now, it handles niche cases – things like licensing appeals, leasehold disputes, perhaps the odd HMO fine.

But if rent increases end up being challenged, these tribunals in their current shape are going to be swamped – which leads to problems if this issue isn’t considered ahead of time.

Just imagine:
You’re a landlord in Lambeth trying to cover your mortgage. You serve a rent increase. The tenant pushes back. And so, as the system will allow, it goes to Tribunal. Perhaps you’re now stuck in lettings limbo for three months whilst you wait for an arbitrator to decide – and meanwhile, those mortgage payments keep coming out…

Or maybe you’re a tenant in Tooting, and as the anniversary approaches you are unsure whether your rent is about to jump by £30 or £130. Not great for anyone's peace of mind. Do you stay or do you go? Do you start to look and leap too soon… maybe into less suitable accommodation.

The Lords have suggested amendments to the current Bill in this regard, which have so far been rejected by the Government.

Baroness Wolf of Dulwich put forward an idea that appeals should go to the Valuation Office Agency first, before proceeding to a first-tier Tribunal. The government has commended this idea, whilst still not accepting it, and has also conceded that filtering out unfounded cases would lessen the burden on the tribunal system. That said, as yet, this has not moved closer to being considered as an amendment, sensible though it does sound – and we remain hopeful about its further consideration.

Are Rent Caps the Solution? Or Just Another Problem?

Some in the House of Lords are calling for rent caps, tying rent increases strictly to a specified metric, such as Consumer Price Index (CPI) inflation or wage growth, reviewed periodically. On the face of it, that might sound like a reasonable solution. Predictable rents. Less volatility. A fairer system overall, is that not so?

But there’s a problem being ignored: landlords aren’t the bottomless money pits that so many people imagine they are.

By removing flexibility, and throwing in a long-winded Tribunal process on top, whilst many non-landlords can only see logic, those involved in the private rented sector (PRS) are voicing valid concerns. And we’re already seeing the outcome of this and other unresolved worries, from Colliers Wood to Clapham Junction and beyond – portfolios are shrinking as some landlords choose to call it a day. It isn’t a mass exodus – yet – but the worry is, it might become one. And less lettings supply = higher rents. It comes down to simple maths, at the end of the day.

As yet, no amendments to the Bill that would usher in Rent Increase Caps have been accepted by the Government – the onus is all on the tribunal system. And, whilst accepting that capped rent increases would provide tenants with more certainty, in what is essentially a free, market-led PRS environment, knowing that an appeal process of some sort will be in place seems a sensible enough approach.

At this stage, most landlords we talk to remain hopeful of determining their own rents – something we support, whilst advocating fairness when it comes to in any increases, in line with market values.

There is still no mass exodus of landlords, despite reports suggesting some are leaving the sector due to the forthcoming changes.

Reform Will Happen – But it must be Practical

Let’s be clear: we’re not against reform. We know the current system is riddled with inherent problems and we know that tenants don’t just need more security and safety, they deserve it. We do want a system that is fair, safe, and balanced. But it has to be those things for all if it is going to work – and that includes good honest private landlords just as much as tenants.

• Landlords need clarity, not confusion.
• Tenants need security, not stress.
• And Agents, like ourselves at Your Home Managed, need a system that keeps moving, not one that grinds to a halt under red tape (or even the threat of it!).

If these proposed Tribunals can’t handle the pressure, we’re all in trouble. And if rent caps push more landlords out of South London’s already stretched market, tenants will be the ones who ultimately end up paying the price… quite literally.

A Final Word

Reform is coming. That isn’t in doubt, and much of it will be welcome, and help us create a more balanced market moving forwards – if it is done right. But that doesn’t stop us asking the questions:

• Can our Tribunal system realistically handle a flood of rental disputes?
• Would rent caps of some sort be a solution likely to help tenants in the long term, or push landlords out of the market?
• What will the outcome be if the system slows down so much that nobody can move forward?

Nobody wins if things get bogged down in a legal mess. Not landlords, not tenants – and dare I say, not us agents either, working to hold it all together.