Right now, the property market is entering a period of uncertainty. Falling property prices and a rising regulatory burden are just some of the reasons landlords are reducing their exposure to the market. One of the biggest challenges facing landlords is evicting tenants. This can be a time-consuming and expensive task, not to mention emotionally exhausting.
We understand this challenge better than anyone, including one of our tenants, who was living a rent-free life in Mayfair. Sitting 6 months in rent arrears, costing the owner circa £75,000! That’s enough to give anyone palpitations!
The tenant's initial argument stemmed from demanding additional property maintenance and subsequent upgrades. Having taken on the property as it was, he demanded that the ground-floor windows facing the communal gardens be replaced due to security issues and some minor condensation, claiming his health was at risk.
Until the works weren’t completed, the TT refused to pay the rent. The owner didn’t want to argue and could already predict what the future was holding. He paid £15,000 out of his pocket and agreed to replace the windows in good faith in the hope that the TT would settle the arrears. What do you think happened next?
The TT continued to ignore the rent arrears demands, including denying us access.
We had no choice but to serve him with Section 21 and Section 8 notices simultaneously. Sadly, both time periods lapsed and there was no payment or communication from the tenant or his partner.
Michael Gove recently delayed the "no-fault" eviction ban amid court chaos. Did you know it can take up to 6–8 months or longer to serve an eviction notice and a further 4 months to actually evict the tenant?
Why are honest and diligent landlords being penalised for providing private rental accommodation only for tenants to take advantage of and mock the system?
Being a landlord in the last 10 or so years has gotten way more complicated. If the plan is to own the property for capital appreciation, then it’s still the safest bet.
Nonetheless, I'd like to present the argument in favour of continuing as a landlord and persevering, despite the challenging circumstances we face. It’s important to remember that being a landlord is a long-term investment; there are no short-term returns here!
A client bought flats in the late 90’s with a view to being able to offer his children a helping hand on the property ladder. His intention was never to sell. Several landlords in his circle, who own more than 2/3 of the properties, made strategic acquisitions during the era of low interest rates, effectively using this opportunity to expand their portfolios. It's undoubtedly a clever and astute investment strategy.
So from our experience, you can look at this in two ways.
- Continue to rent your property—a tough time with rising interest rates eating into your profit.
- Sale of the property when you exit.
If you are renting, then you will have read that several of the big corporate agencies have projected rents increasing by circa 25% over the next 4–5 years.
If you are looking to sell, subject to your personal situation, our advice would be not to sell.
* Yasmin Ulhaq is director of Glenfield Property Management *
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