The Houses Of Parliament close up with hazy sky in background

Category: government and politics

UPDATE: Since this article was put to press, Wes Streeting has resigned from his position as Health Secretary because he lost faith in Sir Keir Starmer’s leadership.

Phase 1 of the Renters’ Rights Act took effect on the 1st of May. Six days later, the local election results were released, which will also greatly impact how many landlords conduct their business.

Labour lost a tremendous number of seats to rivals in Reform UK and the Green Party, which will soon change the political composition of the councils charged with enforcing the Renters’ Rights Act policies.

These parties’ underdog victories have led some news outlets to hail the end of the two-party system, traditionally dominated by Labour and the Conservative Party.

Enforcement and licensing may look very different, depending on which side of a borough boundary your property sits.

Turmoil in Downing Street

With Reform UK and the Green Party seizing so much ground from Labour strongholds across the country, Sir Keir Starmer’s position as Prime Minister has possibly never been more tenuous.

There were widespread reports speculating on the possibility of prominent Labour figures, such as former Health Secretary Wes Streeting, moving to challenge Starmer’s leadership.

Although these local elections are not intended to shift the balance of power in Downing Street, they may ironically have this effect. However, even in the event of the Prime Minister’s resignation, the overall Labour regime would likely continue working towards the same core objectives as before.

That means the Renters’ Rights Act, the energy performance upgrade deadline, and other Labour policies affecting the private rented sector (PRS) are unlikely to go away.

Licensing will diverge sharply between boroughs

Selective and additional licensing schemes have expanded since central government removed the Secretary of State’s approval as a requirement at the end of 2024, and councils are now free to designate schemes of any size. 

The Reform position

Reform won by far the biggest gains of this election, with 1,454 councillors in total, compared to Labour’s 1,068. They have seized control of many councils across the country, most notably their first ever local government victory in London with a Havering Council takeover.

Reform’s incoming council leaders have signalled a light approach to licensing, although they inherit consultations and committee decisions already in flight, and reversing direction is rarely as quick as the campaign promises suggest.

The Green position

The Green Party also seized large majorities of council seats in May, taking control of councils in Norwich, Waltham Forest, Hastings (the latter had previously been a minority Green administration) and more. In the May executive mayoral elections, Zoë Garbett smashed the competition by 9,000 votes in Hackney Borough, while Liam Shrivastava won in Lewisham Borough.

Garbett supports rent controls, and her deputy mayor Dylan Law controversially claimed that landlords should not be allowed to profit from renting property on human rights grounds.

New Green Party-led administrations are likely to favour wider borough-level licensing and more proactive environmental health inspection.

The practical effect is that two landlords with identical portfolios in neighbouring boroughs may now face quite different costs, application processes, and inspection schedules within a single mortgage term. Civil penalties for letting an unlicensed licensable property can reach £40,000, and under the Renters’ Rights Act, Rent Repayment Orders can extend to 24 months of rent.

The hung council problem

More than 30 councils around the UK now have no single overall party control.  This means that planning committees in these hung councils will be structurally slower, decisions will be more often deferred. In addition, policy frameworks such as local plans, Article 4 directions, and licensing consultations are vulnerable to being parked while coalition talks continue.

For landlords looking to expand a portfolio, convert a property to a House in Multiple Occupation (HMO), or progress a refurbishment that needs planning consent, the practical effect is timetable risk that runs straight into drawdown windows and refinance dates.

EPC and HMO enforcement will be locally variable

The national Energy Performance Certificate (EPC) ‘C’ target for the private rented sector remains 1st October 2030, but councils have considerable discretion over local enforcement.

Article 4 directions, which remove permitted development rights for HMO conversions, are increasingly the tool of choice for councils wanting to restrict HMO growth, and the Green administrations elected last week are more likely to use them.

Three questions every landlord should ask of their council

  • Is your council settled, or still in coalition negotiation?
  • Has it consulted on a new licensing scheme in the past 12 months?
  • Does it have an Article 4 direction in force, or under consultation?

The answers will be valuable in determining your near-term compliance and refurbishment costs.

If you are reviewing your portfolio in light of the new political map, Commercial Trust’s specialist buy to let advisors can help you plan the financing side. Call our broker team for free or request a call back online.