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By Marc von Grundherr

Director, Benham and Reeves

OTHER FEATURES

Which Government is the lesser of two evils for property? 

Our politics seems pretty broken to me and whilst I don’t wish to take a side between one flavour or the other, I do worry not just about the fragility of our political system and indeed our political class these days - but particularly about the effect of bad politics on the property sector.

On the one hand, the current government used our sector to prop up the housing market during the pandemic in order to ensure positive sentiment. 

As Covid cases were climbing and uncertainty and fear rose, a parallel disintegration of home values would have been fiscally catastrophic. And so we, as a sector and probably as a country, dodged the proverbial bullet and have enjoyed one of the most buoyant property markets in memory - probably ever - thanks to the Sunak Super Soaker that was the stamp duty holiday. 

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On the other hand, inflation caused by the unleashing of consumer spending after two years of lockdown and Russia’s invasion of the Ukraine, have combined to send inflation soaring and consequently the Bank of England’s reaction has been to ‘protect’ its inflation target mandate by raising interest rates five times in recent months. Someone needs to tell Bank of England governor Andrew Bailey that a bit of inflation is rather better than a full-blown recession. And fast.

As if a looming recession were not of enough concern, landlords and letting agents also must contend with a raft of legislation that empowers tenants all whilst they tackle mountainous rental arrears that have built up over the last 24 months. 

The relinquishing of the not-so-scary-in-practice Section 21, a ‘must take pets’ mandate, EPC ‘C’ standards on all let homes, landlord redress, the abolition of tenancy fees, lower tax relief benefits … have all either been put into place or are coming. Landlords and agents have been bashed by our legislators and will continue to be so under this political administration, one that despite having over 90 of its MPs that are landlords, ironically fails to understand the first thing about the private rental sector.

But what if the other lot were in power?

As I write this piece there remains a beer-cloud the size of Durham hanging over Keir Starmer’s head and one which may burst and lead to his self-ordained resignation as Labour leader. If that happens and someone that’s, shall we say, more popular, gets the job then perhaps the red team may soon clinch power in the face of a government beset with sleaze, errors and a shaky command of the economy?

Regardless of your political persuasion you would have to admit that for landlords this eventuality would be bad news. 

Labour, as is their mandate really, has to side with tenants. In doing so it will seek to ‘tackle’ landlords and we will no doubt start to see even more legislation proposed that liberalises tenants and puts them even more in control of tenancies. Day one of a new Downing Street occupant would no doubt herald a resurrection of proposals to cap rents and to tax landlords harder, perhaps even raising capital gains tax solely for those that own multiple properties and despite the fact that these owners are propping up a deficient social housing sector.

In closing, I am not advocating that landlords like myself favour one political leaning or another. Far from it. What I’m articulating here is that whether right or left, blue or red - sadly we will always be the squeezed middle regardless of what colour the curtains are at Number 10. 

* Marc von Grundherr is director at London lettings agency Benham & Reeves *

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    I realise it wasn't the main point about the article....but when listing all the changes hitting landlords why does nobody mention the move to periodic only...ie no fixed term agreements?
    I know I now sound like a broken record, and seem to be the only one who cares, but I think that switch is disastrous.

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    The Government didn't have to opt for that model - indefinite periodic tenancies- when they wanted to give more power to the tenants as part of what they hoped would be a vote winning populist agenda.

    Welsh Labour simply extended the no fault notice period from two months to six months. They were more intelligent and rational in their approach to the private rental sector - and didn't want to destroy it.

    Landlords and tenants have been unlucky in England. The impending abolition of fixed term tenancies is leading more and more landlords to withdraw from the market and making it much harder for tenants to find good accommodation.

     
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    You're not the only one who cares.
    I'm very concerned about the impact on both the student market and winter lets. I don't do winter lets myself but I live in a tourist area so I'm pretty aware of their value.

    Certain areas of university cities are more suitable for students than others. If students decide to leave in March we're not going to leave the houses empty until September. We'll re-let to either employed or unemployed single people to retain our HMO letting rights. We can't risk letting to families if we operate in Article 4 areas. Once those houses are occupied by non students they will be out of the student market for the foreseeable future. Students will spread further and further from the universities completely changing the character of family areas. They will have to travel much greater distances to get to university, which isn't great from an environmental point of view.
    Properties that are used as holiday lets in the summer are often used as 6 month or shorter lets in the winter. Very useful for seasonal workers who have spent the summer working in agriculture, the festival circuit or as a holiday rep abroad, etc. Or for people planning major renovation of their own home. For years it's been both types of use coexisting perfectly. Landlords would have to choose whether to only do holiday lets or try for a series of short lets without being able to line up the next one until the property is vacant. It would lead to huge amounts of totally unnecessary voids and would be an appalling under utilisation of housing stock.

     
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    Ellie. As a Welsh landlord I can advise thet it was originally proposed to bring in new contracts in Wales starting July 2022. These contracts not only include your 6 monthly notice period for landlords, but also cancels S21 and landlords can only terminate a contract for a specific reason of which there are several and many of them are not mandatory. This appears to have been rushed in so fast that neither landlords nor agents were able to implement these new directives by July and the deadline is now extended to December. Incompetence reigns and tenants will be left with little choice when seeking a tenancy.

     
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    The Welsh Government website states that tenancies can still be ended for no reason - you just have to give a longer notice period - six months.

    No fault notices still exist. There is no change to that.

     
    Ferey Lavassani

    Open ended tenancies (no fixed term) plus rent control, will take us back to the bad old days of Rent Act 1977. In other words "sitting tenants". Although Section 8 remains as a tool for landlords to gain possession where there is a serious rent arrears, nonetheless, we will end up with some sort of tenancies that are partly "protected" and partly "assured". Does it sound complicated? Let me simplify it for you. Under the proposed reforms, you will simply lose the control of your assets.

     
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    About 10% of labour MPs are landlords. I believe they will want to ensure good rentals for tenants eg no poor standards, but I think they will provide similar results to the Tories.
    Starmer has been cleared by Durham. He did not break the regulations.

    PossessionFriendUK PossessionFriend

    Re Starmer cleared by Durham, If you watch Mark Steyn on GB News he suggests Starmer tried to or claimed he had taken out an injunction on the actual result of Durham's investigation, and Steyn says he DID receive a penalty !

     
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    Lesser of 2 evils some choice.
    For all the Regulation’s we now seem to be having more residential fires than ever with all the Regulation’s under the Sun, waste of time when LL is made powerless and excluded from the property, loss of control means extra coming & going unofficially and subletting, plus HMO’s promoting room lettings with cooking facilities in rooms, so not just one source of potential fire at the property but several.

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    Excellent points!

     
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    It's a pity that the Government didn't focus on solving those very real problems in the private rental sector, instead of causing problems.

     
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    brilliant point!

     
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    It goes against the grain to say it but I think landlords have less to fear from a Labour government. Everyone else will be worse off but last time Labour were in power was a fantastic time for landlords. It may have been because Tony Blair was creating optimum conditions for his own property owning gains.
    In 1997 I was a young widow on Income Support. By 2010 I owned 5 houses (all with at least 4 bedrooms) plus the house we lived in.

    The coalition wasn't too horrendous but since the Conservatives gained overall control in 2015 it's been assault after assault on rental housing.

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    Respect to you. Jo, on your achievements.

     
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    You've done brilliantly Jo!

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    Never has there been such a concerted attack on private Landlord. Jo you done exceptionally well in difficult circumstances. Many of us didn’t get an easy start certainly no silver spoon like many today. I missed out on further education as I had to work to exist and dad rip at 47, when I see the chance so people have with parents support. I worked in the fields at 15 on piece work for example thinning mangles, beet & turnips @ 1s-2d per 100yds your own sandwiches & bottles of cold tea, one 4 day job earned £8-7s-6d delighted at the time, crawling the furrows with canvas bags tied on my knees with twine, that equates to 8 miles on the knees on storey hard ground. Certainly given no advantage when I see other continuing education into their twenties.
    I could never have imagined in my wildest dreams that a Conservative Government would have treated us so unfairly no just that but went out of the way to damage us.

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    The current Conservative Government has now reaped the consequences of poor decision making. Let's hope that someone takes over who will think through the implications of their policies - and not be quite so unfair to the ordinary, hardworking people who are providing the housing.



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    Jo & Ellie excellent comments from you both yesterday if I may say so, if other landlords would read and grasp the contents of what you are conveying to them about the reality of what’s coming our way. Government or someone in Authority might take notice before it’s to late, 2 million landlords without a voice only a couple of dozen ever comment on here. The Organisation’s that’s supposed to help us haven’t grown much since Amalgamation and now only interested in creating more money streams for themselves on the back of those Anti-landlord new Regulations that’s clear enough.

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    The NRLA are firmly in bed with the government. I have stopped being a member years ago because of this and I was also given the wrong legal advice years agol

     
    Ferey Lavassani

    Periodic tenancies are different from open ended tenancies that the government is introducing through this Bill. A lot of landlords do not understand the difference between Section 21 and Section 8. Under Section 21 you will get a "possession order" whereas under Section 8 you will get an "eviction order". Try to get an eviction order from your local County Court, then you will understand how badly the loss of Section 21 will effect us as landlords.

     
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    Michael, you always hit the nail on the head in everything you write about the issues facing landlords and tenants, and therefore you are doing a fantastic job. Not being afraid to speak the truth is very important.

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    I'm not so sure periodic tenancies should be a problem for most landlords if handled properly and there is proper means for landlords to repossess if needed. All my tenants are periodic. I just give them a contract for the statutory 6 months and tell them that they can stay as long as they like as long as they don't cause me any problems. I even allow them to give me 1 month notice at any time as I appreciate that circumstances can change and people may need to move on. That is half the point of renting, is it not?

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    Agreed, good tenants can stay as long as they like, but sec 21 has been useful to me in the past getting rid of bad tenants quicker and cheaper than sec 8, this white paper is also planning to make sec 8 harder to use as well

     
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    The new legislation allows Tenants to give only 1 month notice, but the Landlord has to have the contract running for 6 months, then give another 6 months notice. One law for the Tenant, another for the Landlords who has to take all the risks and pay all the expenditure. Where is the logic and fairness in that?

     
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    Rental reform means driving Private landlords Out. or to the wall.
    The problem they will have is by the time the next Election comes along not only will be required to donate our Properties to Tenants. EPC Regulations will be kicking in so Over a million Homes will be unrentable, we are going to see mass homelessness.
    I am sure the Homeless people will be voting for them.

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    Yes this should all kick off in 2024/5 just in time for the new labour government to handle the fall out, no wonder the Tories don't want to win the next GE

     
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    Peter nearly everyone in the same boat so why the Change other than to stitch up the Landlord.
    They already have Contracts that most Landlords are happy to allow to become and continue as Periodic. So why get rid of Section 21 an integrated of the process undermining the whole
    business.
    There a massive difference between staying as long as they like by consent and staying as long as they like as of a right by a non owning occupant.
    Loads of new blocks of Flats in Ealing all sold more or less apparently but so many vacant bought by over seas investors many from China, how does that help the housing situation.

  • Matthew Payne

    Irrespective of political persuasion, whoever is in power will very soon have to deal with the chickens from the last 5 or so years coming home to roost. The social housing sector is saturated. The PRS is shrinking, when it needs to be increasing by 200,000 a year, and is already at least 2 million units short. House prices or mortgages are out of reach for most, spiralling rents for many more. Throw into the mix 6.8 million "officially settled" EU citizens in recent years who all made the last ferry before the Brexit door slammed shut who have warped the supply/demand curve. We have a major problem that one administration or another needs to deal with, and squeezing the middle even further will make it even worse.

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    Agreed, this could be why the conservatives are doing everything in their power to lose the next GE, leave the problem to labour when the ssss really does hit the fan in a couple of yrs

     
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    If successive governments hadnt sold off council or the states properties the private rental sector would be smaller thankfully, but if your a Landlord it has been good for you as its either buy if you can, or the private sector

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    I agree David, if governments hadn't sold off social housing on the cheap to their tenants the PRS would be smaller, but they did and continue to do so, it certainly has been good for me and other landlords, what's wrong with that ?

     
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    David, yes the government has made a huge mistake in selling state properties to their tenants, who sold these properties and bought in better areas. The government has been short sighted then as they are responsible for the social housing and not the PRS. Especially when housing do not pay rent directly to the landlords and the irresponsible tenants cannot manage their finances and paying rent is very low on their minds. Now the government is again being short sighted in bashing the PRS wherever they can. They have various meetings and have brainstorming exercises and cannot see the consequences of each of their initial ideas, except how thy can hurt the LLs most. This is all going to backfire to a different set of politicians. Decisions and policies made now will come to roost and these decision makers will be long gone with their heavier pensions to keep them in champagne and oysters. The tenants will suffer with high rents, lack of housing etc. Shelter and Rent Generation should help them then, as they are the bog talkers and benefiting from huge salaries. Maybe they need to share their salaries with the social housing tenants as they are so goody, goody. They need to show some practical help rather than being dictatorial.

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