Lettings market guru warns tenants of more rent rises ahead

I recently have a house empty. I’m taking my time fixing it up. Market is bad for selling and I’m not renting it again due the the Renters Reform Bill.

What you are doing Nick is a good investment. However, it is most unfair that you - and all landlords really - have been put in this dreadful position.

We have pulled all three of our properties - whilst we can.

I really don't know what planet Labour are on, to 'shift the balance of power' from a Landlords' asset to a tenant. Remind me, Whose name is on the title deeds?
I'm afraid Labour are for the 'free-stuff socialists' who think that they are entitled to everyone else's hard-earned income and assets.

Our (adult) children will now have a roof over their heads whilst just paying for utilities. Thankfully we are mortgage-free on all properties.

We cannot… so we sell 💰💰

You're right that most BTL mortgages are interest only. That's been standard for at least 15 years and fairly mainstream for several years before that.
The criteria of lenders has caused some of us to consolidate borrowing onto the smallest number of properties to give access to the greatest number of lenders. Some will only lend to people with less than 3 properties, some with up to 10 BTL mortgages, etc. It can make borrowing decisions irrational. Small, self contained properties have lower mortgage rates than HMOs but because they are lower value it's easier to clear those mortgages and consolidate borrowing onto the more valuable HMOs.
There are so many different factors skewing the whole situation. CGT is a major factor and again has an impact on which properties we mortgage. Most of my mortgages are now consolidated onto the properties I have owned the longest as I am least likely to sell those due to the CGT. My more recently bought stuff is mainly unencumbered so there are less barriers and penalties should I wish to sell anything. From a mortgage rate perspective it's a crazy way to operate but it's what the lenders and their treatment of portfolio landlords has led to.

It seems counterintuitive to favour amateur landlords with only a couple of properties. Surely they are more likely to be unaware of their legal obligations and therefore be at greater risk of being fined, treat being a landlord as a hobby to fit in after their day job, family life, etc. How many people try it and realise they hate being responsible for tenants, they resent the time it takes up and feel they have made a mistake?

Personally I think it would make more sense if lending decisions were based on the overall portfolio LTV rather than the number of mortgages.

Some of us live and breathe being a landlord. It's a very high priority to us. We fit other aspects of our lives around it. My husband and I both have zero hours or agency jobs which we do when we haven't got any landlord or family stuff to do. We then find mortgage lenders don't understand that concept. On a remortgage application one lender got very het up about my ZHC (which I've done for over 8 years as an alternative to a gym membership). I know lenders hate gym memberships but it seems they also hate a well paid alternative.
It just seems bizarre lenders will lend millions of pounds and then not encourage us to nurture the assets that money is secured against.

While I agree with most of what Jo says, indeed her comments are usually very good; I would point out that a small number of rentals doesn't equate to "amateur landlords". Sorry.

The meddling politicians peddle the line of needing to professionalise the PRS as a reason for their current Bill.
Which is why I am writing this, pushing back on it.

I'm a small LLD, with just the right number for me, but I have got things right several times when a couple of lettings agents got them wrong: so I was both paying them and having to correct them. Because I took the time to check things out, they didn't.

Very small LLDs I know (one property e.g. to aid their pension) use Agents -who should be professional- to manage their rentals, and so avoid much of the hassle etc Jo describes.
If they don't they are leaving themselves wide open: to con-artist tenants, and the increased rules that Govt. have introduced over the years.

85% of landlords own between 1 and 4 properties and 45% own only 1 property. It is possible to self-manage very efficiently that number of properties.

Henry, I used a very well known agent who I consider to be a con-artist. Not filling out the paper work properly, blocked me issuing a S21 even though I asked them to correct their mistakes. Grossly inflated tradesmen costs, and more chasing them to do anything when I could just get a builder myself quicker, cheaper and less hassle. They claimed to be all heart, but they don't have one....

Well the mistake there Nick was using a '' well known big agent where you are no more than a number, these big agents employee wet behind the ears boys and girls who talk the talk know the lot and in fact know F all, small and local are the ones to use

Obviously some small landlords can have many years experience and be very knowledgeable. Most portfolio landlords started small and may well downsize and become small again. I guess the level of knowledge and competence is really down to enthusiasm for the subject. However, lenders seem to encourage complete newbies with no experience whatsoever with better deals than portfolio landlords have access to.

While around 85% of landlords may own between one and four properties each isn't it something like 18% of landlords own 50% of rental properties? So that presumably means a disproportionately high number of tenants are impacted by Section 24. Especially if you assume portfolio landlords are more likely to own HMOs as very few lenders are willing to grant HMO mortgages to inexperienced landlords.
It's the fact we get charged more than a newbie for the vanilla stuff that really gets me.

It's purely to do with risk ... the banks that normally lend on residential owner-occupied property understand that if you have a regular income from steady employment, then you are a very safe bet in terms of keeping up to date with payments.
By contrast, rental income is not certain, so they see each property as a potential liability. So the more properties you have, the greater the potential for trouble, ignoring statistical effects like the law of large numbers and central tendency that they really should understand. You would expect the underwriters to have some exposure to the relevant mathematics.
This was really brought home to me when I applied for a larger mortgage from my bank so I could move house. I was shocked at how little they would lend me and queried it. It turned out that my unincorporated BTLs reduced the size of the available loan by about 50% because they considered them a risk. I pointed out that my tax returns have shown a profit every year from renting out property, to which the assistant replied: "There might be voids". I asked if she had any idea how ridiculous that sounded given the current demand for rental property? She didn't disagree but said that was the policy and if I just had my work income or if they were in a limited company structure then they would have been happy to lend me the money I needed to buy the property.

That's really interesting Peter because what you have said is based on real experience, not simply speculation.