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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If tenants have an indefinite right to remain in the property and the right to vacant possession in the event of the landlord wishing to sell is lost, then there will be capital depreciation, not capital appreciation.
Rent controls are not necessarily off the table. In the past, tenants had the right to register a rent and that resulted in the rent going down, not up. In the future, rents may be registered and controlled via the new property portal.
Which property portal is that? Watch this space..... for a very long time!!
If Labour introduce a right to buy from private Landlords suspect there would be a tsunami of sales and homelessness - I would certainly be out of the prs no matter what the CGT. I understand there is an issue re legislation (human rights?) that prevents the removal of another person's private property so fingers crossed that this would prevent a Labour Gov from implementing any such legislation
In answer to the question….. it depends on where the landlord is in their lives….. if aged 50 plus, then probably the hassle meter has swung to ‘no it’s not worth it’……with a Labour government en route it’s going to get worse although it’s not been great under Tories
Exactly where I am, and is why I am selling, life is for living. It’s not all about future yield 😂 it about enjoying your family and travelling.
I kinda agree but would add with the multiples of rules coming in favouring tenants why would I take the risk of letting my property now.
When a property becomes vacant I am selling. Two have and 2 will be sold once they have had their makeover.
However my current tenants, whom have been trouble free, have no fear of eviction from me. I am a little worried about them feeling empowered but knowing them as I do I believe all will be good.
I think some older landlords are concerned about the combined effects of capital gains tax and inheritance tax on the value of the property.
However, there is the issue of whether family members would prefer to inherit property or money.
If they inherit property and decide to keep it, then the inheritance tax bill may not be able to be paid outright. They are given ten years to pay off the debt on the property. The interest is charged at 2.5% above base rate, and there is no tax relief allowed on it at all, unlike a mortgage.
This is just an advertorial. "If you are looking to sell, subject to your personal situation, our advice would be not to sell." Wow, a letting agent does not want landlords to sell? Nothing in this advertorial would convince landlords not to sell.
First there is half a story about a non-paying tenant where the S21 and S8 were allowed to lapse. So what happened then?
Then "Nonetheless, I'd like to present the argument in favour of continuing as a landlord and persevering" - well where is the argument in favour?
Perhaps I am having a cynical Saturday, but this is a poor advertorial and does not address the current situation. As Ellie, Catherine and GW have put arguments for leaving the PRS more eloquently than I could.
Clever response!
The problem we, as landlords, face at the moment, is lack of legal certainty. Legal certainty is a principle in law which allows people to regulate their conduct and their businesses.
We have been able to read the Renters Reform Bill and listen to the evidence which was given at the Parliamentary committee stage, but we have also been told that a Labour government will adopt its own approach to the private rental sector, abolishing Section 21 on its first day in office. If they intend to do that through some form of emergency legislation then what is the point of the Parliamentary process in relation to the Renters Reform Bill!
Talk now of snap Spring general election after February budget.
I just hope people are not daft enough to fall for a February giveaway. Remember Sunak's reason to vote for him is that Labour will be worse. A damning endorsement and how desperate is that?
I am not sure AL.
I think probably it would be better if the Fixed Term Parliaments Act were in still in force because we would know when the general election was going to be held - automatically scheduled for the first Thursday in May of the fifth year after the previous general election. As it is now, Rishi Sunak could call a snap election at any point that Labour popularity went down - but they would still probably win.
Incidentally, I believe that once a general election has been called if the Renters Reform Bill has not completed its journey through Parliament and not received Royal Assent it could fall.
However, the Government and the Labour Party could agree to speed up scrutiny and produce an accelerated timetable.
Labour's position won't make any landlords swing to them I feel it is a mistake which will end in tears for some people
As others have said it probably depends what age you are.
I have no intention of selling anything at the moment, largely because of the obscene level of CGT, but equally I won't be buying anything (unless it is an incredibly good deal).
I can't see any reason for young people to enter the industry. Extra SDLT, huge deposit required due to mortgage stress testing, high mortgage product fees, vast amounts of new rules and regulations, the uncertainty of the RRB, taxed on turnover, loss of Child Benefit due to unique tax system and then CGT on inflation.
There are far better things to invest in these days.
I've enjoyed it, I have had some extremely good tenants, I enjoy the people side of it but I certainly wouldn't recommend it to my grandchildren.
A taste of things to come?
Labour MPs have tabled 26 amendments to the Renters Reform Bill that demand much tougher financial penalties for errant landlords and stricter rules around deposits.
They are part of more than 100 pages of amendments which are largely made up of tweaks and clarifications made by the government as part of the legislation’s Parliamentary journey.
Green MP Caroline Lucas has tabled an amendment for details on the online portal to include the information necessary to “allow for the operation of a national system of rent controls with local flexibility following the design of such a system by an independent commission”.
@ Ellie
I saw that too but even this crop of PMs are not that stupide, are they? Surely even Gobby Rayner would realise that once that amendment was passed, landlords like Jo Westlake would give serious consideration to selling up.
BTW Sunak gave me a laugh today. He said that "A vote for everyone who is not a Conservative is a vote to put Keir Starmer into office." Obviously terrified that people will vote REFORM UK. So his best argument for voting for the faux-conservatives is that Labour are worse. What an admisson of failure.
The whole Renters Reform package seems to be perfectly designed to end the private rental sector - making it totally awful and impossible to be a landlord.
I heard first about rents being controlled via the Portal when evidence was submitted to the Parliamentary Committee recently. I don't think the idea is confined to the Greens.
It makes you think of voting REFORM UK in case there is a possiblity that they might be scrap the whole thing, but they are not likely to win.
@ Ellie, I think we may all be surprised at how many people will vote REFORM UK. They have had enough of the faux-tories.
Can I just say this evening give a thought to Andrew Townsend this week and hope he is doing ok - regular contributors will know he has not been well - we are thinking of you Andrew
You did so well to remember Catherine that Andrew's op is today.
Really hoping it goes very well.
Thank you for reminding us, Catherine.
I hope all goes well with the operation and that Andrew will soon be back among us, fighting fit.
So hope it all goes well for Andrew, one of our champion commentators.
Wishing you all the best, Andrew.
Came back on here soon to let us know how you are.
THANKS @Cathrine for the reminder.
Andrew I wouldn’t worry at all before hand if you are having stents but be extremely aware in the days immediately afterwards. No over exertion and keep taking the thinners exactly as instructed. I have seen too many fall foul of this, they feel so good and take liberties thinking that was easy and then bang the Clot.
I have been there done that 19 years ago I was building a house doing the roof on my own when disaster struck I eventually slowly made my way down the ladder not good I didn’t even want to go to Hos’ , my daughter in law a nurse insisted and took me, following blood tests and while waiting in reception area, a guy came out with a wheelchair and I am looking around to see who it was for, never thinking it was for me, they said I had 2 heart attacks that day, apparently they can tell from the blood if its recent. Anyway I was back working after 6 weeks and continued with the house.
I could write the book but just take care don’t be frightened and be very aware.
Just over 30 years ago, I had a triple bypass at the age of 47. Tough operation and took 3 months to recover, but well worth it and I'm still going strong. Being an elderly landlord who wants to exit does nothing to help though.
@William Well done, you must be looking after yourself very well.
The agent in the article clearly not sure what they are saying. It seems a mismatched article telling us of defaulting tenants and lapsed S21 and S8. What happened after that. The tenant continued to stay there forever. One would think it will follow on to state that this is the reasons landlords will be leaving the PRS in droves. Instead the advice is to invest in properties for the future capital gains. All the hassles in between buying and selling are the reasons why it is not worthwhile. Also capital gains is not guaranteed if Labour will have right to buy from PRS. As Ellie and a few of you have stated it is worth downloading some of the properties or get out of the market. However, it will be a gradual process and politicians are so short sighted they will not declare the truth if it faces them.
Vibha, I am not sure what to do.
People carried on letting when the 1977 Rent Act was in force, and before that, too. Under that legislation, tenants had the right to stay indefinitely (as did their children and grandchildren) and there were rent controls. The majority of landlords were not prepared to let their properties indefinitely and have them subject to rent controls, but they did find legal ways to let them which were not covered by the legislation.
The article asked whether being a landlord is worth the trouble. It is a good question because it will be more difficult for many landlords to carry on after fixed term tenancies have been abolished. Personally, I am letting to visiting mature professionals who stay for a specific period. It is a good way of letting - no problems. I currently give them a fixed term shorthold assured contract for precisely the length of time that they want to stay in the property, but provide absolutely everything - bed linen, crockery, pots, pans etc.
I don't know whether I would also need to now provide services (cleaning etc) for my business model to continue. That could be much more hassle - and when you do provide services, for legal reasons, they have to be worth at least 25% of the rental value e.g. if you were letting for £1000 per calendar month the services would have to cost £250 or more per month, so you could only receive £750 in rent.
My business is successful and trouble free at the moment because I offer an exceptionally cheap deal for short lets; my prices would have to go up if I offered services, and it would take up much more of my time. Also I would pay the council tax and that could mean that I became subject to some new licensing requirement.
Just a little correction Ellie. Grandchildren unlike the children will bot have protected tenancies. They will only have assured tenancies. Thus, Section 21 does not apply but Section 8 will.
Hi Fery,
I was referring to the past - and regulated tenancies under the 1977 Rent Act. A spouse, civil partner or cohabitee of the tenant who lived in the property immediately before the death of the tenant could succeed to a statutory protected tenancy, as could a family member if the tenant died before 15th January 1989.
Ellie, I had one. The property was let to the grandmother in 1927. She passed away in 1956. Her daughter succeeded to the tenancy and died in 2014 . She was in rent arrears by £2000.00. Rent was 40 pounds a week. Then the granddaughter took the tenancy but this time not protected but assured. I put the rent up to £750.00 per calendar month as it was the market rent. At this stage Housing was paying £450.00 a month. I had to wait for the shortfall to accumulate to two months arrears. Cut the long story short, at the Hearing with advise of the duty solicitor, she claimed disrepair. Something that was never mentioned before. Now we have a counter claim. A chartered surveyor was instructed by her solicitors (legal aid paid the surveyor fees). Minor issues were raised, fixed then I instructed my own surveyor for a report that I paid for. The arrears were written off against her counter claim. Start calculating the arrears again to accumulate to two months. It took me well over a year and costing legal fees surveyor fees loss of rent to eventually gain possession. I can see all this coming back. That is why after forty years in the trade, I am out.
It sounds like you went through a very worrying and very expensive experience, Fery!
I am so sorry!
Annoyed. THE LANDLORD REFORM BILL they couldn’t even get that right, or which part of the Bill is Reforming Tenants ?. We are the whipping boys and 100 more amendments to make it as bad as possible all lies, deception, wronging and discriminations is not enough.
All this Homelessness for the Big Boys to over which is the main contributory factor otherwise why drive out hundreds of thousands of landlords or cripple them remaining with Regulation’s, Legalisation and unfair taxes.
The Building’s that are being rushed up now are a throw back to the 1960’s. They are either Portable Cabin style stacked on top of each other with a half brick skin wrap around I predict a problem with those over priced units.
The other type Concrete floors and Columns then we are back to Cladding again with those it happening we are not blind.
Good luck to the Buyers being coaxed and hoodwinked into those lifetimes commitments of unsuitable family homes.
South Action is one of the better Built Replacement Estates of the ‘60’s more traditional Brick Built element, following on from the Grenfell disaster but that mindset didn’t take long to wear off did it.
Ellie, not a problem we have to be nasty like everyone else don’t change £1’000. add £250. + plus another £250.00 make sure you are covered.
All my Rents are hundreds per month below the Market and some over a thousand each.
Suppose we want to do comparisons to the 1970’s when houses on outskirts of London could be bought for less than £10’000. My friend rip was selling his in Rockley Road, Shepards Bush, for £6’200. when I advise him it was under valued. He pulled out went to another agent and got £3’000. more real money in those days.
We didn’t have the rubbish Benefit System with people living off the State, we didn’t have single parent families all been kept, housed and reared from cradle to grave at tax payers expense, can’t keep housing build quick enough for them impossible, see how many waiting in B&B in London alone to avail of this they are not stupid we are.
So we can’t go back there to 70’s where will the Billions come from to cover the leaches it’s getting a bit tight now with landlords exit, they won’t be getting this huge tax from Corporate Co’s with all the advantages and exemptions they have.
You are probably right there Michael.
Because you and I charge well below market rents, we could cover additional costs associated with serviced flats.
There is more work attached to them though. However, there is the advantage that you can walk in regularly to check on everything and deal with a developing repair problem straight away. Obviously we would still need to be very respectful of the occupants and not disturb them. There is also the advantage that the flats would always be clean!
You are right, too, that the tax that the Government are getting from private landlords is going to plummet.
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