Some landlords staged a knee-jerk reaction to the Renters Rights Act, leading to a surge in rental stock coming to the sales market.
That’s the view of Philippa Martinez, regional sales manager for Auction House Kent.
“There was a bit of a knee-jerk reaction, which led to an influx of landlords looking to sell up quickly.
“Some were afraid that they would end up stuck or unable to take their properties back into possession.
“Professional landlords who run their rentals as a business have been less affected as they were probably already playing by these new rules.
“Now, there is an attitude of waiting to see what happens.
“Some landlords may see that the new conditions were not as frightening as they first appeared. I believe this will tighten up the market giving the landlords that remain the chance to thrive.”
Generally, Auction House says that across the country last month it saw a 70% increase in tenants properties going under the hammer than in the same month last year.
The shift has created a two-speed market, says Auction House.
As some smaller or less compliant landlords sold up, a growing number of experienced investors have acquired their properties at significant discounts, sometimes 30 to 40% below vacant possession value.
The trend has been visible in auction results nationwide.
A tenanted property in Newcastle recently attracted 86 bids in a single online auction, selling for £219,000 against a guide price of £115,000.
Oliver Prior, managing director of Auction House UK, says the impact has been clear in the group’s listings:
“This has presented a real opportunity for well-capitalised landlords who are prepared to adapt.
“Larger landlords, or those with stronger systems in place to manage their properties, have not not only capitalised on continued demand, but snapped up properties being sold off as others exited the market.
“We have seen this in action across our auction rooms nationwide.”
Meanwhile a prominent buying agent operating in prime central London is warning the glut of landlord sellers not to be over-ambitious with asking prices.
Jo Eccles – managing director of buying agency Eccord – says she’s seen many landlords evicting tenants and trying to sell in the run up to the Renters Rights Act, which came into effect over the weekend.
She comments: “A large number [of landlords] served notice to tenants in the run up to the changes, deciding to try to sell their property before they became locked into longer, rolling tenancies. Concerns over losing flexibility to sell the property has proved to be the tipping point for many landlords.
“If they serve notice to a tenant in order to sell the property, but it doesn’t sell for any reason, it now cannot be re-let for a period of 12 months, which could mean landlords having to cover mortgage costs, service charges and maintenance costs for up to a year without any rental income.
“A large number served notice to tenants in the run up to the changes, deciding to try to sell their property before they became locked into longer, rolling tenancies.
“… Our advice to landlords who remain firmly anchored to a higher price is to be mindful of the cost of extended void periods and the negative impact this will have on their net yield.”
She adds that rather than relying on Land Registry or Rightmove data – which typically lags the market by six to 12 – correctly interpreting pricing requires a forensic understanding of each micro-market, how long a property has been for sale, any previous price reductions, and the owners’ personal circumstances and motivation for selling.
