Kim Lidbury, head of lettings at Propertymark, an industry body, warned that refusing landlords the increases they asked for risked leaving them with no choice but to quit the sector.
“Tenants should be protected from unreasonable increases,” she said. “But landlords must also be able to generate sufficient income to maintain their properties and remain financially viable.
“If that balance becomes harder to achieve, some may reconsider whether they can continue letting their properties.”
Snowballing exodus
First-tier tribunal panels – typically made up of a judge and at least one property industry expert, such as a surveyor – determine rent increase proposals based on two main factors: comparable properties and the condition of the home.
The former evaluates agreed rents for similar-sized homes in the area and what the property would achieve if let in a good condition. The latter is used to make adjustments based on its current condition, typically from an on-site inspection and evidence provided by both the tenant and landlord.
Panels are not permitted to consider personal or financial circumstances, even if it means that turning down a rent rise request will cause the landlord to lose money.
This narrow view threatens to be deeply damaging to landlords, with signs of a snowballing exodus from the sector. More than 40,000 rental homes have been sold since the start of July – more than three times as many as in the same period at the start of the decade, according to property data company TwentyCi.
But Dan Wilson Craw, of campaign group Generation Rent, suggested basing decisions on market rates alone also affected tenants.
“The tribunal was only ever designed to stop landlords charging more than they could get if they re-let the property,” he said. “It takes no account of what the tenant can actually pay.
“The Government must look at how rent increases can be made more predictable and affordable for tenants, rather than leaving them to rely on a tribunal that can only tell us what the market rate is.”
Mr Dumitriu warned that as more landlords leave the sector, rents were bound to increase, undermining the very purpose of Labour’s reforms to improve conditions for tenants.
He said: “Rents are high because we have a shortage of homes. Any attempt to reduce rents over what landlords are willing to charge on the open market will have bad consequences for everyone.”
A Ministry of Housing spokesman said: “Our Renters’ Rights Act empowers tenants to challenge above-market rent increases through the tribunal – stopping private landlords from using increases as a backdoor means of eviction.” They insist there is no evidence of a landlord exodus.
