The Renters Reform Bill is the latest of many factors leaving little choice for some private buy-to-let landlords but to sell up, a legal expert says.
Gina Peters, Head of Landlord and Tenant at Dutton Gregory, says many landlords have been asking whether it is actually beneficial being a landlord in 2023, due to all the constraints, lack of Government help, plus introduction of the Renters Reform Bill.
She says Savills has found that 25,000 homes sold in the UK between April and May of this year, were by landlords.
Peters comments: “The recent increase in buy-to-let landlords selling their properties could see an alarming reduction in the number of privately rented homes, with private landlords expecting to bank more than if they were to keep their portfolios.
“However, with more of the population being unable to afford to buy their own home, the UK’s dependency on the rental market is more so than ever.
“This is a really uncertain time if you are a private landlord. Up to the year 2000, property owners were eligible for mortgage interest relief at source, which provided valuable tax relief for higher- rate taxpayers.
“More recently, changes have also been made to capital gains tax thresholds, and in April 2023 the capital gains tax-free allowance was reduced from £12,300 to £6,000. In April 2024, this will be decreased to £3,000, meaning landlords will have to pay out more in capital gains tax when selling a property.
“Official figures from HM Revenue and Customs, based on capital gains tax data, saw that between 2021-2022, the sell up of properties by landlords was 8.5 per cent higher than what was expected, with 153,000 properties sold. It was also reported that 95% of letting agents had experienced their landlords selling at least one of their properties.
“Meanwhile, the Renters Reform Bill is expected to create a big change to the way landlords can regain possession of their properties. This comes at a time when the backlog in repossession cases to be heard at court is already at record levels.”
She continues: “Many of our clients are asking what’s next?
“The Government needs to step up and find a solution so that it remains financially viable for landlords to retain their buy to let portfolio, as it’s critical to a healthy property market.”
Peters has specialised in residential landlord and tenant law for 22 years. She has advised clients through the Landlord and Tenant Act 1985, the Housing Act 1988 and 1996, and the Deregulation Act 2015 and now the 2023 Renters Reform Bill.
Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.
.jpg)
.jpg)
%20(002).png)
.png)
Join the conversation
Jump to latest comment and add your reply
The government need to accept that the PRS consists of many different types of letting and that a one size fits all solution is going to be inappropriate for the majority of tenants and landlords.
Some tenants know they want a property for a specific period, while others are looking for a long term home. Some landlords like to have fixed term contracts at all times while others like to let them roll onto SPTs and just carry on for as long as everyone is happy. As long as tenants and landlords expectations broadly align there isn't a problem. It's when there's a mismatch problems occur.
Certain tenant groups such as seasonal workers and students really need fixed term tenancies to ensure availability of the right properties in the right locations at the right time.
The whole eviction situation needs to be sorted out in a rational way. Tenants who fail to pay their rent, damage the property or terrorise their neighbours need to be evicted ASAP. Section 8 needs to be fast and mandatory. After Section 8 has become functional the need to change Section 21 could then be reexamined. It may be found that if fault based evictions were swiftly dealt with under Section 8 a more generous alternative to Section 21 would be acceptable?
Some properties are suitable for pets, others aren't. Giving tenants the idea that they have the right to keep pets is highly misleading. The landlord does not have the authority to give consent to keep pets in leasehold flats. It's an argument we don't need to have. Pets in houses that only have a tiny back yard or HMOs are highly questionable from a pet welfare perspective. A landlord should have the right to advertise a property as being unsuitable for pets. The majority of rental properties are genuinely unsuitable for pets. The neighbours right to peaceful enjoyment also needs to be taken into account.
The government need to inject more balance into the PRS. In it's heyday it was a very functional partnership between landlords and tenants. The raft of attacks, especially since 2015, has largely destroyed the industry. It's questionable if it is possible to salvage it within a viable timeframe. One inescapable fact is the age of the average landlord. Very soon large numbers of us will exit the industry either into a care home or a coffin. Very few young people are entering the industry as there simply isn't enough profit in it these days to make all the responsibility remotely attractive. Is there a Plan B?
This government don’t do plan B’s. 🆘. I am confident Labour will be worse, and as the rents go up, watch out for what our Scottish colleagues have to deal with 😱 . I think all bets are off given the lefties absolutely hate us.
Great assessment. Well said.
It seems to me that the Government had two major aims in drafting and introducing the Renters Reform legislation
Firstly, to turn private rental sector properties into permanent accommodation for poor homeless families, the elderly and other groups who may never be able to buy a property
Secondly, to reduce the size of the private rental sector to encourage/force people to get on the property ladder as owner occupiers. The second aim was a continuation of tax changes – section 24, abolition of 10% wear and tear allowance etc.. The tax changes were also intended to dissuade people from being landlords and increase the number of first time buyers.
The interim result of these aims has been a reduction in availability of flats to let and an increase in rents. The next step therefore could be rent controls in order that the first aim can be achieved.
If I am right, then the government is not going to care about the number of landlords selling as that was their aim.
"Firstly, to turn private rental sector properties into permanent accommodation for poor homeless families, the elderly and other groups who may never be able to buy a property"
The important point here is the government wish to reduce their own costs with respect to local social housing.
Is Section 24 going to be the next PPI repayment? If someone took this to the Human Rights court, I cannot see how the government could explain how it can treat a select group of individuals (private landlords) so differently to not only every other sector, but also a Ltd company in the same sector! Where else in the tax system can you not offset a genuine cost that is essential to run your business? Where else in the tax system does one entity get tax relief whilst another doesn’t for the same thing? S24 is the most unfair and biggest scandal of this government! And btw, I own all my property in a Ltd company 🙏
Anyway you look at it they have done enormous damage, driving out landlords with taxes, regulation’s & punitive licensing Schemes. Creating a shortage & homeless for sure, driving Tenants Rents through the roof making life hell for them.
I don’t follow this part about removing buy 2 let interest relief in 2020 when really all the moaning is about phasing it out this last 4 or 5 years to 20%.
Jo response, comment and Summary covers it better than the Article.
It'll take time before the true chaos is seen, in Scotland it's still early days but once the consequences become truly apparent it'll be with a heck of a bump. Scotland of course relies on the race card to blame the English but eventually as this lunacy is spread across the UK people will begin to ask why can't I live in a house anymore and why are the council offering me a tent?
Everyone seems to be hoodwinked, its for the big Companies and Institutions to take over the industry don’t loose sight of that fact.
They are not going to come straight out and ban small landlords they’ll just make it happen by unfair rules, regulation’s and taxes.
Residential property in house Auction back on again first time after Covid but also bidding on-line yesterday in a central London Hotel very slow and subdued. That’s the first time I ever seen that at Auction in 50 years it’s usually busing and heaving with people.
THE RENTERS REFORM BILL is the culprit in my view scrap it now.
S24 was the death of buy to let portfolio taxing the largest cost as income is the most harshest tax on business in history osbourne needs to hang for that policy all so his rich cronies could swoop in and in the end it’s the tenants that are now suffering as there are no property’s to rent that are affordable
Perfectly said. The greatest act of viciousness from the upper middle class to the middle class
If the current housing crisis was one of the reasons for scrapping the EPC C rules then there is hope that Govt may recognise the RRB is another major threat to the PRS. Perhaps this is behind the delay to the bill going through Parliament.
I truly hope you’re right, but…. I have so little faith in them I fear it’s just wishful thinking 🤔
i do hope so but with Labour in next yr their RRB will be far worse for us
With the rowing back on some of the agendas its worth looking at some of the numbers, that is if they are correct?
So we know with land registry that there is approx 2.7m landlords, Generation, Shelter, Acorn, Ginger Groups claim there is 11m in rented accommodation with PRS. This would mean an average of 4 people per landlord.
Hell of a lot of people ready to be displaced.... 153k sales last year and we all know how the direction of travel is this year. I would expect it to be a lot higher...
Those of us who are most affected by Section 24 tend to house a lot more than 4 people.
You could well be right Jo, 5 years ago I had 13 properties.
I now have 7!
Will be selling 2 more in next 18 months, mainly due to the Government policies.
This Government failed to have any real contingencies. They allowed themselves to be drawn into popular choices instead of doing what was best.
Landlord's grew when social housing was re-defined.
Then with cheap interest rates a lot of lower income, working class individuals with a determined entrepreneur spirit and a fair degree of risk decided to become Landlord's. On top of this were the individuals whom could afford to buy a second home and move into it and rent their old home as the value had taken a knock or that there were no buyers.
Therefore for a short period there was a boom of an industry.
Osbourne, instead of concentrating on the economy and encouraging the Bank of England to raise rates then decided on attacking Landlord's. He certainly didn't factor in any other potential issues further down the line.
This Government then have been hit with problem after problem, war in Ukraine, Covid and not forgetting the woke viewpoint and the green agenda.
Now interest rates are higher, but by no means high and that the policies that the tories have brought in are just making many businesses unviable, certainly not an industry worth investing in.
This is the problem currently and is very ably demonstrated by the Housing situation.
We've now seen one little glint of light with the slowing down of the green agenda. I hope that the Government can now review some other policies.
Anything which makes it cheaper for a Landlord to operate will without doubt be better for tenants.
More choice for tenants will increase the standard of rental properties, though some tenants will prefer a more basic property if the rent is at the right price.
All governments need to take note of the last 15 years of often unnecessary interference. They certainly need to learn a light touch when it comes to steering the economy in my opinion!
Jo . When Mayor Khan was complaining about the cost of renting and making comparisons he counted one property per individual.
However the BBC pulled him up on that he had no answer, in other words the rent is more likely to be shared by 4,5,6 people, now you can compare that to a couple trying to buy, good luck with that.
We all know there are both bad Landlords and Tenants but The Renter's Reform Bill and a Registration system is NOT the way to deal with it.
I have been a landlord for the past 30 years and have only ever had to serve 1 section 21. RRB and Landlord Register will be the last straw for me so unfortunately that will be 20 families affected.
In all of the discussions I read on property websites, nobody comments on the imbalance in the treatment of private sector tenants and social housing tenants. As social housing tenants pay highly subsidised rents they rarely move on, even when they can afford to, which means there will be hardly any social housing units becoming available. Those in the private sector ( both landlord and tenant )are subject to real market prices. In my opinion this must have a massive affect on the availability of rental property, particularly for the poorest and most disadvantaged. Why is this never mentioned?
Legal net migration 606,000 last year +illegals = 5000 new homes needed every week
Yes that really is
5000 . NEW . HOMES . NEEDED . A . WEEK
Most people migrating to live in the UK move into rental property when they arrive. Most of my applicants for tenancies are people from abroad. Hard to find rental property in Southampton now. More demand yet less rental properties due to this government's war on LLs.
This government are boosting the demand to an unprecedented level whilst throttling the supply with their war on private landlords. The rental sector's vital for people who might be in a city for couple of years so not worth them buying, migrants newly arrived, students or people who don't want to buy or can't afford to.
Where are they meant to live if there's no rental properties?
A serious crisis is looming unless government stops hounding landlords & starts to drastically reduce net migration.
England's already the more densely populated large country in Europe. Only need to drive on our main motorways & see how much countryside is being destroyed with urban sprawl to realise that we need more people here like a man on fire needs petrol.
Huge numbers arriving to West London are the older generation both men & women more like retirement age.
The government under George Osborne decided that the PRS needed to be taught a lesson and brought to heel to appease the complaints of renters' pressure groups who bemoaned that landlords were buying properties and renting them out to their members.
Current policy remains to kick the PRS into the long grass. There's no way that they are going to backtrack until the damage is so great that sufficient people demand that they do something about the mess they have created by their hostile and unjustified attacks on a group of largely innocent people just trying to run a business to fill a need in society that the government decided not to satisfy.
So take the hint and get out of the business, or buckle up and weather the storm if you want. Either way, it's going to be very difficult for both landlords and tenants, but probably more for the tenants as landlords will have the power that comes with owning a scarce commodity that people can't afford to lose, regardless of any Renters' Reform Bill.
Thirteen properties four years ago. Five and soon to be four by Xmas. Nine sales in four years. Only one to another landlord. All my big CGT hitters gone and profit banked before allowances cut. Just a few tiddlers now. And I'm out. All my pensions are kicking in now which are a lot less hassle than tenants and lefty liberal property hating politicians. Cie La Vie!
Please login to comment