Shamplina Speaks: Government must safeguard the PRS

The government must safeguard the private rented sector and the only way to do that is to lend its support to private landlords and incentivise them to stay. 

For too long now, the narrative in the mainstream media has focussed on ‘villainous’ landlords, suggesting they are all profiteers who don’t take care of their properties or their tenants. 

Whilst I appreciate these cases should be reported and such landlords held accountable, we know these are the minority. Demonising landlords must stop.

In reality, most landlords are individuals grappling with the ever-increasing legislation (currently 168 pieces), mortgage interest rate rises with a tax credit worth just 20% of annual mortgage interest payments, and the cost of maintaining and repairing a property. 

Landlords are also facing further regulation through the Renters (Reform) Bill, part of which includes the abolition of Section 21, and until recent days faced having to carry out considerable works to ensure their properties meets the new Minimum Energy Efficiency Standards of EPC rating C or above by 2028. At least the Prime Minister's scrapping of these EPC changes represents some good news. 

But that good news aside, if you were asked to run a business which was going to cost you more to keep it going than you were going to earn, would you take it on? Would you invest your time and money to do that? I think the answer from most people would be no. So why are private landlords expected to house people using a model which in many cases now runs at loss. What is the incentive to be a landlord? 

In the past, when we asked our landlords why they were looking to gain possession of their property, the number one response was always rent arrears. 

Now, more than 60% are looking to gain possession under Section 21, with most of them wanting to sell up now. 

Official figures from HM Revenue and Customs suggested that landlords sold 153,000 properties in 2021-22. Whilst we don’t know how many of those properties were purchased by other landlords, therefore keeping them in the PRS, it still provides an indication of a clear trend.

Whether this was part of the political agenda or not, I would question what the long-term plan is. Even without the amalgamation of factors which are driving more landlords to take the decision to sell up, what happens as our existing landlords get older and naturally decide to leave for their own personal reasons? 

What prospective landlords are coming to back-fill those we lose if there is no incentive for new investors? If there are no new landlords, what does that mean for tenants? 

We already have agents reporting between 20 and 30 applicants for each rental property.  Four years ago, prior to Covid, I was predicting there would be an accelerated rate of landlord wanting to leave the sector, we are seeing that now at an unprecedented pace.

I am not naïve to the gravity of losing Section 21 and have spoken about this on numerous occasions. It is, without doubt, a huge blow to landlords. My years of running Landlord Action mean I know only too well the challenges landlords face when they have to remove a tenant that does not want to leave. 

It’s rarely black and white, and that is why I have devoted so much time trying to educate landlords on the importance of due diligence and professionalism.

However, I am also of the view that we have to accept the things we cannot change and work around them (for those that wish to remain landlords). 

The removal of Section 21 has been in the pipeline for a very long time, it is inevitable, but it does not mean it will be impossible for landlords to gain possession. Good landlords with responsible tenants will have little need to evict for no reason, and those with reason will have access to this through Section 8. Tenants will feel the impact of this move too, as it means that landlords will be far more selective about who they let their properties too. 

Listen to this episode of The Property Cast I recorded with my colleague for more discussion on how the changes will affect landlords.

I am in support of measures which make genuine improvements to the quality of housing, and which offer tenants greater security where needed. However, I am more certain than ever that these must be balanced with equal support for landlords to provide incentives to accept those changes, make the improvements and reinvest in the market. A growing pool of tenants does not need a shrinking pool of properties.  

The reversal of Section 24, whilst unlikely, would be the most favourable outcome, but at the very least we MUST have designated housing courts and more judges to ensure a fluid system in which landlords can be confident.  

We’re working hard to persuade government, wherever possible, to reduce the backlog in the court system which has left some landlords having to wait up to six months (sometimes longer) for an appointment. 

We’ve provided figures, case studies and reports to highlight the extent of the problem and the consequences to the buy-to-let market if issues with the court system are not addressed before the Renters (Reform) Bill comes into force.

I also predict that when the date for abolishing Section 21 is finally set, further landlord panic will set in and we will see another spike in Section 21 notices being served and possession orders issued. Tenant groups must expect this as a consequence.

Listen to my recent LBC interview where we discuss the root causes of the rental stock crisis and the impact on both landlords and tenants

Read Total Landlord’s article for more information on what’s happening to Section 21 and the changes to Section 8.

* Paul Shamplina is founder of Landlord Action, Chief Commercial Officer at Hamilton Fraser, and is on Channel 5's 'Nightmare Tenants, Slum Landlords' * 

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