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TODAY'S OTHER NEWS

Government U-turn on evictions ban ‘is a misstep’

The government has made a grave mistake extending the evictions ban in England and Wales by four weeks, it has been suggested. 

Ministers bowed to pressure to avoid what they feared would be a devastating homelessness crisis by extending the ban beyond Monday. 

The measure was first introduced in March due to the coronavirus pandemic.

In Scotland and Northern Ireland, the ban has already been extended to March 2021.

But despite widespread concerns, there was unlikely to be an immediate spike in tenant evictions, according to law firm Collyer Bristow.

Lauren McQue, a senior associate in the real estate litigation team at the company, said: “Whilst it is likely that we will see an increase in possession claims, that is unlikely to result in an immediate August spike in evictions. The courts face a backlog of cases and continuing social distancing measures could see most cases progress slowly. 

“There will not be the bulk listing of residential possession cases seen before the coronavirus pandemic.” 

With many landlords now starting to feel the financial pain of the pandemic, Elisabeth Kohlbach, CEO of Skwire, believes that the government U-turn has done little to address the issue. 

She commented: “The last-minute U-turn to extend the ban on landlords evicting tenants in England by another month until 20 September is a misstep. 

“Such brief, periodic extensions are unlikely to offer any real help to tenants without specific legislation, and adds further pressure on landlords who are not only unlikely to evict those with Covid-related financial problems, but have been unable to deal with significant arrears. 

“Indeed, this decision further shifts the burden to the many landlords who are depending on rental income to get by and have had no government support, away from tenants who, thanks to upfront affordability checks and furlough pay, have been supported to keep paying rent. 

“The decision doesn’t satisfy either side, and neither will another short extension further down the line.”

Oli Sherlock, head of insurance at Goodlord, believes that extending the evictions ban to 20th September is simply “kicking the can down the road”. 

He said: “It’s helpful for neither tenants nor landlords. Arbitrary extensions simply delay the issue instead of addressing it and this announcement doesn’t seem to have come with a strategy attached. 

"There are tenants who will have arrears building up - leaving them with huge amounts of personal debt for every month they are unable to pay their rent. At the same, landlords are becoming increasingly anxious about meeting their mortgage commitments or accessing what is often their only source of income. Both groups need more support. If we don't use this extension wisely to come up with a better, more robust plan, we're just compounding the issue.

"The vast majority of tenants and landlords have been communicating effectively throughout this period and making concessions wherever possible to keep people in their homes. But with situations becoming more difficult for many, we need a better system to meet these new housing challenges. 

“The government needs to introduce greater financial support for renters and create new routes to get them into more affordable homes. And they need to strengthen the safety net for landlords who themselves are being financially impacted by the evictions ban. Given the multitude of challenges landlord’s have faced in recent years, this decision will do very little to attract new landlords to the market - something which is desperately needed to meet increasing demand for quality housing for renters."

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    Government should pay the rent and convert the arrears into a loan to be repaid by tenants - with 8% interest - problem solved.

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    Good one.......

     
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    Yes they should, and that would be the sensible approach, we don't want to be evicting tenants, but at some point that will happen to those that don't pay, we will all know who they are so finding a new landlord to take them on could be difficult. I don't think the problem is as bad as being made out, all mine are paying, so far, and I don't know of a local landlord having a problem, as yet.

     
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    Of course a website called Landlord Today agree that this government move is a 'grave mistake' The clue is in the name 'Landlord Today'. However most independent commentators and those writing and speaking in the media agree with the government move. The alternative would be huge numbers of evictions and a vast increase in homelessness and rough sleeping in the approaching autumn and winter. Please remember none of us - tenants included - could have predicted this pandemic and its effects when we and they signed tenancy agreements.
    'A loan to be repaid by tenants' states Robert (above). Where on earth will tenants now out of a job due to the pandemic obtain the money to repay a loan? Unemployment is shooting up at present .....

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    Yes David agreed, but it's the local councils responsibility to house these people who cannot, or will not pay, private landlords do not have charity status .

     
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    Some of those (long-term) homeless were swept away in emergency measures and their reappearance on our streets has nothing to do with landlords.

    Further, the inability to repay a loan, should not therefore mean the financial burden rests on the landlord. It needs to be the tenants (for it is theirs ultimately theirs anyway). At least that way Govt. May be forced to act to help those most in need and now with a loan around their neck…mind you, almost all landlords have a far greater loan around their necks anyway, called a mortgage.

     
    James B

    The whole thing will backfire on tenants .. but sadly government are scared stiff to upset generation rent and lose votes so they go with the easy option to keep tenants appeased .. more landlord will Walk because of this and supply will dry up ever more and rents will rise.. the same tenants will be made homeless eventually .. just delaying the inevitable and making the situation worse .. landlords are an easy target to bash now it’s not a bright future for them

     
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    And how do you think that landlords can afford to pay their mortgages if tenants don't pay their rents? We are not charities but normal people trying to put food on the table for their families.

    The Government should give loans (directly to the landlord) for the tenants to pay their rent otherwise landlords will sell up making the housing shortage worse.

     
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    David W.

    Are you too dim to realise that rent arrears is already a debt? Rest assured those rent dodging tenants will be aware of that soon enough when they are (eventually) given a ccj - and that will cost them far more than the statutory 8% interest - in trashed credit ratings, black listed from all decent properties, forced to rent slum properties from the tiny minority of rogue landlords whom all decent landlords and tenants despise - and who have their own very effective ways of dealing with rent arrears! But for the loony left, only their philosophy counts - and the inevitable harm done is simply collateral damage - and blamed on anyone but them.

     
    PossessionFriendUK PossessionFriend

    Nobody's arguing that Tenants who ( GENUINELY ) can't pay rent because of the virus shouldn't be evicted, but that can only happen if Govt take up their Welfare responsibilities and pay the tenants rent, or else, have Local Authorities to have to do the same ( likely at higher cost )

    What isn't acceptable is the state Transferring its welfare responsibilities onto Private landlords, by manipulating the law. If the Judiciary weren't ' Bent' they wouldn't have gone along with the Governments unjust request to manipulate the judicial process.

     
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    I thought tenants were of the same status to everyone else. Homeowners with mortgages are not complaining they are getting on with it. They don't get to live in the property for a year with no consequence.
    Id like to see this as a gov loan made payable direct to the LL with it being registered on tenants credit profile. in the case of default gov can recover via their future benefit payments or wages and then they will see what we have to deal with

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    Keeping voters happy ?? how many tenants vote tory ?

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    Andrew

    The problem is the Tories know that landlords are very unlikely NOT to vote Tory, so they can ignore our voices and needs. Everyone seems to be cozying up to the younger generation - even M&S - and the young are no more likely to buy there as they are to vote Tory. In Scotland, it's even worse as the SNP know full well that landlords are too financially savvy to vote for them - hence they are even more anti landlord than any of the others. Unfortunately their tenant supporters are too dim to realise the harm done by anti PRS legislation - reducing the availability of rental properties and increasing rents through market forces.

     
  • Paul Barrett

    Govt seeks the destruction of the LL class.
    LL would do well to understand this.
    It makes eminent sense to reduce to unencumbered rental properties.
    That way it will put many rental properties onto the market.

    The fewer properties LL have the better.
    Income will remain the same but from fewer properties.

    LL need to reduce their property numbers.

    It makes no financial sense now being heavily geared.
    If unencumbered then at least with rent defaulting tenants thete is no risk of lender repossession.
    It makes sense to become financially resilient.
    This is best achieved by being mortgage free

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    Paul

    I don't totally agree. With less than 50% ltv and interest cover of at least 4 times, landlords with several properties have probably enough of a spread to be reasonably safe. The % of rent arrears is actually relatively low and the"crisis" being claimed by the loony left is grossly overstated. In my case, I would have to sacrifice at least £60k of gross rental income to save £20k of mortgage interest - and suffer a substantial CGT bill into the bargain. I'm very happy with the ltv and net yields I achieve currently and have no intention in becoming mortgage free.

     
  • Paul Barrett

    @robertbrown
    I'm in a totally different place to you.
    4 at about 65% LTV.
    Have had to reduce rent by 10% as that is how much the occupants have had their basic wage reduced by.

    Due to 2 being posted am only receiving half rent on one.

    One flat vacant.
    Rent just about covers mortgage.
    Nothing else.
    Effectively I'm now a Housing Charity.

    I wish to sell up ASAP.
    If I had zero leverage I would be viable.
    I am a fag paper from bankruptcy.
    Just not worth the hassle anymore.
    Far rather sell up and have one 4 bed resi property and take in lodgers.

    If I had a larger portfolio like your yours then possibly could cope with rent defaulting and long evictions.

    I can't do this with only 4 properties.

    I am desperate to get out of AST lettings.
    I will not take on anymore tenants.
    Not while they cannot be evicted effectively for years!!!

    I wanted to sell up in 2015 when stupid S24 was announced but can't just yet for various reasons.

    I long to be OUT of the AST market!

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    Sorry to hear about your situation in detail Paul.

    I agree with everything you say and your desire to get out.

    I would point your real life situation out to any leftie that would listen - but that will be none!

     
  • Paul Barrett

    @robertbrown

    Yep I'm not after any sympathy I am fully prepared to be involved in the cut and thrust of the PRS.

    But if I am very effectively prevented by Govt from operating my business then it isn't really a level playing field anymore.

    Inability to get rid of rent defaulting tenants is the biggest issue for leveraged LL.


    It undermines the very concept of BTL.

    If I was able to get rid of rent defaulting tenants quickly and then was subsequently unable to source new tenants well that would be my lookout.

    That would be an acceptable business risk as far as I was concerned.

    I'm not asking for any Govt subsidy just the chance to operate my business.

    The risk of not being able to get rid of rent defaulting tenants just makes the whole business proposition unviable.

    Of course if it ever came to such unviability due to 4 rent defaulting tenants I guess I could auction all 4 properties off.
    I would no doubt receive sufficient to repay mortgages but unlikely to receive any of my invested capital back.

    Yes this could easily happen to me and many other LL if we cannot remove rent defaulting tenants quickly to give us a chance to source suitable rent paying tenants.

    For me to support 4 mortgages in the absence of any rent is unviable.
    I could probably just about manage if I had one property.
    It is therefore my aspiration and intention to achieve such.

    Personally I consider this is highly unlikely to be achieved.
    I consider I will be actually very lucky to get out of AST lettings with my original capital preserved.
    I fear this will not be the case.

    The eviction ban has revealed to me how precarious things are for leveraged LL.

    I'm sure there must be some LL out there who like me have multiple leveraged properties that aren't receiving any rent.

    That isn't me .......yet but I do wonder how these affected LL are managing.
    Do they have magic money trees!?
    Cos I DON'T!

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