Risk for landlords looms as competition watchdog weighs in on rental chaos

CMA signals it will police the market amid shortage of properties and soaring costs for tenants

LANDLORDS are facing a fresh crackdown after the competition watchdog signalled it will police the rental market amid a shortage of properties and soaring costs for tenants.

The Competition and Markets Authority (CMA) has launched an investigation into consumer protection for renters amid concerns landlords have too much power in negotiations with tenants.

The report will examine how an extreme shortage of properties has enabled the rise of onerous contract terms, such as demands for rent guarantors.

It will also look at whether properties are being adequately maintained, regulation of letting agents, as well as restrictions faced by tenants on changing energy suppliers in order to reduce their bills.

Chris Norris, of the National Residential Landlords Association, said: “The review will need to consider how regulation best meets the need to protect tenants from rogue and criminal landlords, whilst supporting the vast majority of responsible landlords to provide the homes to rent the country needs.”

The CMA’S review of the rental market could pose a further blow to landlords who already face a regulatory crackdown from plans to scrap Section 21 “no-fault” evictions and move all tenancies onto a rolling basis.

At the same time, landlords are grappling with soaring mortgage costs and higher taxes, since the reduction in tax relief on buy-to-let mortgages came into full effect in April 2020.

Looming plans to introduce minimum Energy Performance Certificate requirements for newly let private rental sector properties by 2025 mean £10,000 upgrade bills are also in the pipeline.

In the wake of the pandemic eviction ban, when many buy-to-let investors were unable to get properties back from problem tenants, landlords have increasingly been asking tenants to provide guarantors to back their rental agreements.

But an extreme imbalance between demand and supply – made worse as the end of lockdown brought a rush of tenants back to city centres – means renters have little choice but to accept landlords’ terms.

In the student rented sector, parents are frequently asked to guarantee their children’s rent, with terms that sometimes make them liable for a whole house share.

Separately, the CMA said it will also look into potential competition issues in the property sector and how this impacts housebuilding. At a time when house prices are falling, for example, developers have little incentive to increase the supply of homes.