12-month re-let ban puts landlords under financial strain

The government’s 12-month no re-let rule has caused chaos in the private rented sector, leaving landlords in financial limbo, a story in The Telegraph claims.

Under the Renters’ Rights Act, landlords who evict tenants in order to sell a property, but whose sale then collapses, must wait 12 months before re-letting it.

Last year, the government admitted it had not carried out an assessment of the impact of banning landlords from re-letting homes if a sale falls through.

There’s no way back

The Telegraph reports that some landlords rushed to sell properties before the Renters’ Rights Act came into effect on 1 May. However, those who were unable to complete a sale have been left in limbo, facing financial pressure while waiting for a buyer.

Research by Hamptons shows that of all London flats listed for sale in January this year, only 45% had received an offer by April.

Chris Norris, policy director at the National Residential Landlords Association (NRLA), told The Telegraph that the reforms have made selling a buy-to-let property financially risky.

He said: “Once you pull the trigger, there’s no way back. The clock starts ticking on that 12-month no re-let period in which you can’t earn any rental income.

He added that market conditions, especially in London, have made the situation more difficult

He said: “The housing market, especially in London, is not in a good shape. Over the past couple of years, it’s not been uncommon for landlords to put their properties on the market for six months, realise they’re not getting the sale price and put it back on the rental market.”

We can’t sell

The Telegraph also spoke to Rachael, a London landlord who listed her flat for sale but, after eight months without success, was forced to return it to the rental market.

She told The Telegraph: “There is a host of new legislation that makes it untenable to be a landlord, but we can’t do anything about it as we can’t sell. But we can’t afford to keep it empty either.

“We already had it empty for eight months and we put it back on the market to rent because we couldn’t afford to keep it empty any longer. We are stuck between a rock and a hard place.”

Government has not carried out impact assessment

As previously reported by Property118, Housing Minister Matthew Pennycook admitted the government have not carried out an assessment on the 12-month re-let ban.

He said: “My Department has made no such assessment. Landlords making use of new mandatory possession ground 1A (sale of dwelling-house) will be expected to sell their property with vacant possession as intended.

“To prevent abuse of this ground, landlords will not be able to market or re-let their property for twelve months after using the selling ground. This will remove the financial incentive to landlords from misusing the grounds and evicting a tenant with the intention to re-let at a higher rent.”

Despite a last-minute attempt in the House of Lords to reduce the period from twelve months to six months, the amendment ultimately failed.