What will the effect of Brexit be on the Private rented sector?

Property Solicitor, Property Lawyer, Housing Lawyer, Possession Lawyer, Commercial Lawyer Kensington

This question has been pushed around by many who can only at best express a speculative view. However, with Theresa May having confirmed that Article 50 of the Lisbon Treaty will be invoked before the end of March 2017 the question demands constant review.

By summer 2019 the UK will be out, and so how will the income and way of life of many Landlords’ / property owners be affected? The question demands a consideration of the continued value of brick, mortar, land and the dynamics of associated Policy and Law.

The buying / selling and renting of property has always been affected by the simple economic concept of ‘Supply and Demand’. This concept is controlled by policy, and in this case the consequences of the decision to Brexit are considered.

Demand for Tighter Immigration Control

The majority who voted Brexit demanded tighter control of EU migration. That said our Prime Minister rejected the proposal of a universal Points Based system (like they have in Australia) that decides who can come in based on criteria. The liberal conservative put forward a preference that Government decide who is to enter, suggesting that this is what the people want. The mechanics of how the Government is to control immigration remains unclear / undecided. However, what is certain is that to some extent Freedom of Movement will be restricted leaving aside the terms of any deal allowing access to the single market. Chancellor Merkel has suggested that where an eastern European works in Europe for a short period and acquires a life-long claim on welfare benefits then that is a matter that can be discussed, suggesting political appetite for negotiation.

The politicians know that without migrants the City of London would collapse. Whatever the terms of any deal that would have to vary the very fundamental principles of the EU it seems that there is political appetite for a restriction on the freedom of movement across western europe. The reform of course would be welcome to many dismayed with the policy that the EU is open for migration.

Boom to Bust to Banking Crisis

Our politicians know well the lessons of boom and bust. From the 1950’s towns created by the Attlee Government to the 1960’s cement tower blocks providing quantity at the expense of quality. With the bubbles of the 70’s and 80’s resulting in a great ‘pop’ in the 90’s (that was long and painful) house building has never been enough. In the 90’s the average decorator listening in to the radio to find that from just morning to afternoon the interest rate jumped to 15% put down his tools and went home. The pain was waking up one Christmas morning to find your neighbour and his family having left in the middle of the night in the face of repossession.

We are now a smart better regulated society; it is more difficult than ever to repeat mistakes of the past. Supply and demand will always be managed better from fear of the hard lessons of the past. The current fact is that supply is limited and demand is high so part of the answer is a control on migration and the Political will to press the same ideas on western Europe to reform the very structure of the EU.

Government Controlling Migration

Whatever the mechanism to control migration from the EU, it would demand a certain degree of flexibility and constant review. In the end a mechanism will be conjured-up and the required migration for better or worse will be ever more controlled to the benefit of the citizens of the UK. The impact of course will inevitably (to some extent) result in less migrants.

With less migrants’ demand for rental accommodation should lessen post Brexit. The current surge of investment and migrants settling should normalise. The result if carefully managed could put a break on the ever-rising rent we have seen over the last six years and may even bring calm to the perhaps dangerously artificial / inflated property prices that the youth of the UK are unable to afford. It seems a balance may be on the horizon for the disillusioned youth without hope to get on the property ladder and tenants falling into arrears faced with ever rising rent and agency fees.

However, a careful balance must be drawn from the danger of the influx of wealthy migrants of displaced populations of middle eastern countries and the wealthy Chinese buying-up properties to be left empty.

Brexit after all may bring much the needed balance to the Housing and Private Rented Sector. As for the recent creation of jobs by GSK, redundancies by Lloyds, the de-valuation of the pound and a potential for a tax bonanza for UK business the road ahead remains uncertain.

What is for our making though is to move away from overt reliance on the EU and look to Africa, South America, the middles east and Asia to forge new and better trade deals. Both British product and service is renowned world-wide, there are huge export markets out there.

Chang in Law and Regulation of Tenancies

There has recently been a greater regulation of the Assured Shorthold Tenancy commonly used by the Private Rented Sector regarding who can enter a tenancy and how it can be ended.

A landlord must now ensure that an EPC, a Gas Safety Certificate, correct version of the Government How to Rent guide and the prescribed information relating to the tenancy deposit has been served at the commencement of the tenancy. Lastly if a tenant complains of disrepair and the Landlord does not provide an adequate response before serving notice seeking possession then its notice is defective.

There are now prescribed forms for the S.8 Notice (Now called Form 3) and the S.21 Notice (now called Form 6A)


Could balance be on the horizon while the UK prepares for summer 2018 post Brexit. There is much preparation and reform both at the UK level and EU level that needs time. It is perhaps, of course, for this reason that our Government has delayed triggering our Brexit. Maybe something greater is evolving for the UK and Europe ahead, something more sophisticated and regulated that is needed to resolve the deficiencies of the current order that led that 52% to Brexit.

The new regulations have made renting more difficult and has increased the administration work involved to ensure that a tenancy and notice served are compliant.

With Brexit it seems that reduced demand coupled with the extra administration work and a possible future ban on lettings fees, Landlords could see increased costs and a drop in rental income.

The future may not be bright for Landlords on all fronts but with the over regulation and increased financial pressure ensure you take legal advice if your tenant fails to vacate. If you do not, then it could cost you a great deal more in both wasted time and cost bringing possession proceedings or having to re-serve notice.

By Arman Khosravi, 30th December 2016.

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