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TODAY'S OTHER NEWS

Tory leadership candidates urged to ‘encourage more investment’ in the PRS

Jeremy Hunt and Boris Johnson, the two men competing to become the next Conservative Party leader, are being to urged to support investment in the private rented sector, as research shows that landlords are fleeing the buy-to-let market.

Tax and regulation changes continue to have an adverse impact on the buy-to-let market, with many landlords selling their buy-to-let properties.

Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past couple of years, which largely explains why so many people are exiting the buy-to-let market and thus reducing the supply of much needed private rented stock.

Many prospective tenants now face having to bid against each other, pushing rents up in the process, as a result of falling supply, caused primarily by the government’s draconian tax changes.

Government data shows that 10% of landlords representing 18% of all tenancies in the sector plan to reduce the number of properties they rent out whilst 5% of landlords representing 5% of tenancies plan to leave the sector altogether.

Recent Residential Landlords Association (RLA) research suggests that almost half - 46% - of landlords are planning to sell some or all of their properties.

With demand from tenants gathering pace, at a time when there has been a striking reduction in the number of new properties for renting, the Royal Institute of Chartered Surveyors (RICS) predicts that national rents could rise by as much as 15% between now and mid-2023.

The RLA is now calling on the leadership candidates to back its five point plan for the sector:

1: Pro-growth taxation to ensure enough homes to rent to meet growing demand.

2: A fair system for repossessing properties that protects tenants from unfair evictions whilst retaining the confidence of landlords to regain possession of their property where there is a legitimate need. This needs to be coupled with a dedicated, housing court to settle disputes swifter and easier.

3: Supporting vulnerable tenants by ending the Local Housing Allowance cap.

4: Rooting out criminal landlords by providing councils with more resources to better use the powers they already have.

5: Rejecting all forms of rent controls which serve only to dry up the supply of homes to rent, reducing choice for tenants and thereby increasing rents overall.

David Smith, policy director for the RLA, commented: “The new Conservative Prime Minister needs to reconsider the approach to the private rented sector. Otherwise the situation for tenants will just get worse as they face less choice and higher rents because of a growing shortage of properties.

“We need a raft of changes that will encourage more investment in high standard homes rather than efforts to scapegoat landlords for failures by successive governments to build enough homes.”

  • Suzy OShea

    Let's hope that who ever is elected will be listening!

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    ?Who are you kidding S O. Politicians don't listen they only have their own interests at heart. They need to stay in politics as they have no idea how to make a decent living in society.

     
  • Paul Barrett

    Will never happen.
    The obvious response would be to first abolish S24 which is clearly a ludicrous tax policy.
    If Govt wants to restrict the ability of LL to use leverage to purchase then simply impose a maximum of 50% LTV on any new borrowing for new purchase properties.
    Though of course this will have a similar effect as S24 but perhaps in a less extreme fashion.
    The eviction process in cases of rent default only needs to be radically changed to facilitate LL being able to remove rent defaulting tenants once 2 months of rent arrears have occurred.
    This means that for those tenants that pay rent monthly in advance that after 1 month and 1 day the LL can evict with police assistance if necessary with NO requirement to use any Court action apart from issuing the relevant S8 notice and S21 while that process is available.
    Such a situation would encourage more to take a risk of becoming a LL.
    Rent defaulting is a major problem for LL and deters many from entering the PRS.
    This is a major problem when LL have mortgage commitments.
    Surely no Govt can support Tenants being able to remain in a property whilst rent defaulting.
    It therefore seems perfectly reasonable to allow LL to remove tenants immediately once 2 months in rent arrears.
    Most evictions are caused by tenants rent defaulting.
    There should also be encouragement for LL to take on HB tenants.
    So I would offer LL VAT free on all refurbishment costs for up to 10 years providing the LL let to HB tenants in that 10 period.
    There should also be other sorts of incentives to persuade LL to bring empty properties back into use.
    The SDLT surcharge should most certainly be immediately abolished.
    Good LL have no incentive to get rid of good tenants.
    It is only the ridiculous anti-private LL policies that are causing LL to sell up and not to even bother considering becoming LL.
    Tenants want a 'level playing field' and for that to occur they need the PRS to be expanded which is exactly the opposite of what is currently occurring.
    But all this conjecture is pointless.
    Govt will not change policy such is their hatred for all things PRS.



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    Point #2 and 4 are laughable.
    Unscrupulous Tenants and rogue councils already have too much power to make honest good landlords life difficult by ongoing harassment & refusal to evict the lodger and/or tenants.
    An Immediate Bailiffs warrant eviction order should be issued without requiring a court hearing, no exemptions if the tenant decides to pay the rent on final day of court hearing/Bailiffs arrival.
    Currently LL’s first have to face rental income losses for at least 1 month plus further 6-9 months in total whilst waiting for 2-3 months for Courts hearing listing, then giving tenants 14 days, followed by another 2 months waiting for a Bailiffs appointment.
    After non payment of rent Or anti social behaviour of tenants (and lodgers), the councils shouldn’t be allowed to get involved to stop eviction.
    Councils should be stripped of powers to harrass LL’s in cases of non payment of rent, property damage and anti social behaviour by tenants.

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    Everything you say mate is spot on, but we all know it will never happen, central government (tory or labour) and local government are our enemies , treat them as so, then we won't be disappointed will we.

     
  • Paul Barrett

    In light of all the attacks on the PRS LL certainly need to reconsider their investment strategies.
    Especially for the 50% of LL that have mortgages.
    It simply cannot be business as usual.
    Properties that are prone to degradation by wrongun tenants should be disposed of.
    Deleveraging is sensible and investing in property where quality tenants may be sourced is the ideal.
    The lower end of the market is now too risky with the recent new regulations.
    It makes more sense investing in say one quality property than 4 in a not so good area.
    Forget CG in rough areas...... won't happen for years.
    So guaranteed yield with tenants who qualify for RGI is the way to build resilience.
    Reduce mortgage debt and resilience is far more robust.
    Fewer better quality properties with lower leverage is about the best way of remaining in the AST market.

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    Agreed Paul, one good property, with good tenants, is worth 4 bad properties with bad tenants, leave the bad properties and bad tenants with those landlords with funny surnames.

     
  • Paul Barrett

    Hmmm!
    Not that I have 4 bad properties but I wish in hindsight that I had gone for one good property relatively unencumbered rather than the 4 good properties I have.
    I was beguiled by the prospect of CG on each one.
    Hasn't happened ......................unfortunately!!
    So to some extent hoisted by my own petard or as could be more realistically described.............. Greed!!

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    "Surely no Govt can support Tenants being able to remain in a property whilst rent defaulting.
    It therefore seems perfectly reasonable to allow LL to remove tenants immediately once 2 months in rent arrears."
    P B it seems that this and previous governments are doing just that, supporting non paying tenants by the ponderous system currently in place.
    Do you think politicians would wait 6 months or more to get paid without any guarantee that the money would be passed to them? Don't think so.

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