As founder of Landlord Action and chief operating officer at Hamilton Fraser, I’ve been talking to landlords for over 25 years - but never more so than over the last 18 months.
It’s been a taxing time for everyone, yet sympathy and support for the plight of landlords has been thin on the ground. Meanwhile, many landlords find themselves at the coalface of extremely challenging circumstances, dealing with unprecedented levels of rent arrears – as high as £144,000 in one eye-watering case we’re currently handling at Landlord Action.
On the whole, it would seem that things are moving in the right direction. But landlord sentiment remains low. And with landlords asking me “When I speak out, is it worth it?” I’ve been asking myself, “Are landlords looking in the mirror and feeling like they’re at a crossroads?”
I believe they are. And the reason is that although we’re now slowly coming out of the biggest health crisis that this country has seen in post-war times, it’s only in the coming months that we will start to see the true impact on a private rented sector braced for the most radical changes it’s seen in 30 years.
Without doubt the furlough scheme, government grants and the eviction ban - not to mention the generosity of landlords offering substantial rent discounts and payment holidays - have helped many tenants remain in their rental properties.
But the government’s furlough scheme has finally come to an end meaning that around 1.9m people across the UK, many of whom will be renting privately from landlords, will no longer be receiving payments. It’s highly likely that these people will now be unable to pay their rent.
Add to this the ending of the temporary ban on evictions and the economic fallout from the pandemic alongside rising inflation, increasing costs of shopping, surging energy bills and the impending Renters Reform Bill, and you have a perfect storm that will affect landlords and tenants alike.
As the financial support comes to an end and landlords have the freedom to evict again, charities are concerned that the UK could face a wave of homelessness. However, no landlord wants to evict a good tenant. With furlough now over, I would advise landlords who know their tenants have been in receipt of government support, to reach out and find out whether they are returning to work. Early communication is key to reaching an agreement before arrears build up - serving notice should be an absolute last resort.
Landlords who are contemplating serving a possession notice would be advised to consider mediation.
Having a third party intervene really helps with communication and we’ve had some amazing outcomes from our sister company, the Property Redress Scheme tenancy mediation service, where tenants have agreed to repayment plans and landlords have recovered their properties, avoiding court.
And with review hearings at county courts still causing long delays alongside a continued surge in enquiries – Landlord Action has seen a 43 per cent rise in instructions from landlords and letting agents between June 1 and September 1 this year versus the same period in 2019 – court is best avoided at all costs.
The devastating impact of the pandemic on tenants has been well documented by the media, but sadly with little mention of the positive stories of landlords and tenants working together through a crisis that has affected both parties. In fact, the headlines often fuel anti-landlord sentiment when the reality is tenants and landlords need each other.
Recently Shelter published research claiming that 45 per cent of landlords have been involved in ‘illegal’ activity ranging from administrative errors to physical violence. All too often, landlords are painted as criminal fat cats preying on vulnerable tenants, despite the fact that the most recent English Housing Survey revealed that 81.8 per cent of tenants it canvassed were ‘very’ or ‘fairly’ happy with their landlord, or didn’t hold an opinion either way.
In my experience speaking to landlords, the vast majority do care about their property and their tenants. Anti-landlord sentiment, on the back of the impact of the pandemic, is adding to the chorus of landlords who are asking, “Is it worth it, or would my time be better spent elsewhere?”
Landlord Action saw a 17 per cent rise in enquiries to their landlord advice line between June 1 and September 1, compared to the same period in 2019 - nearly 2,000 calls in just three months. And 90 to 95 per cent of them were from landlords wanting clarification on the latest legislation and expressing a desire to sell up and exit the buy to let market.
As we emerge from the pandemic and await the planned government reforms to the private rented sector, due to be published in a white paper this autumn, it’s not surprising landlords feel at a crossroads, when the private rented sector itself is at a crossroads.
With consultations still ongoing into policies such as the ending of Section 21, introduction of lifetime deposits, landlord redress and changes to an AST, the sector is in for a radical overhaul.
But let’s not forget that demand for tenants is still strong and, although I speak to landlords that have decided to sell their portfolios, there are professional investors looking to scale theirs up.
If you’re willing to brace yourself and think professionally, then you can look forward and deal with the changes. But if you do choose to stay, my advice (and I’ve created an online course on this), is that if you weren’t thinking about using a letting agent to fully manage your portfolio before, this would be the time to reassess. With everything that has already happened on top of what lies ahead, it will become harder and harder to self-manage.
I’m looking forward to guiding you through some of the challenges in my monthly blog here on Landlord Today.
*Paul Shamplina is Head of Property for Hamilton Fraser and founder of Landlord Action, and also the star of the Channel 5 show Evicted! Nightmare Tenants.
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