And so, it has come to pass! The nay-sayers (like me) who warned the Government that its Renters’ Rights Act would have unintended consequences for both tenants and businesses are beginning to hit the proverbial fan.

Two examples, albeit at the top of the market in London, hit my desk today. But they are canaries in the coalmine and will be echoed up and down the ‘value chain’ within the rental market in the coming months.

First up is Foxtons’ latest trading update, which reveals that it lost some £3million in revenue as many tenants, particularly in the student market, used their new two-month ‘notice period powers’ to end tenancies earlier than otherwise would be expected.

This was widely predicted but a point rebuffed by Labour – namely that students finishing their end-of-year exams would plan ahead and terminate their tenancy agreements early rather than pay rent over the summer.

Prime landlords in London are increasing their rents to cover the increased costs and admin.”

The other news from the Renters’ Rights Act battlefield is that prime landlords in London are increasing their rents to cover the increased costs and admin created by the legislation says Savills, in particular within the Capital’s upmarket outer prime rental postcodes like Clapham and Hampstead.

Savills says this, along with higher tax and increased landlord taxes, means many landlords are looking to their tenants to make up the shortfall.

Expectation gap

Perhaps even more worryingly for Ministers, higher rents are driving an expectation gap between landlords and tenants, a problem cited by half of Savills’ landlords listing properties to rent via the firm, and three quarters of agents across London.

The Renters’ Rights Act is also prompting more landlords to ‘test the sales market’ rather than carry on renting, Savills says, not helped by the greater financial risks following the abolishment of  Section 21 ‘no reason’ or ‘no fault’ evictions.

As the many other PLCs, like Foxtons and Savills, release their trading updates and annual reports, I would expect more and more of them to cite the legislation as a key financial pain point for their lettings divisions this year.

Given incoming Prime Minister Andy Burnham is hoping to transform Britain’s economy from burble to boom, it may be time to review the Renters’ Rights Act particularly in relation to the student market – something housing minister Matthew Pennycook promised to do as it went through parliament.