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9:38 AM, 26th March 2024, About a month ago 43
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A landlord has told Property118 of his frustrations in dealing with the courts and rent tribunals – and warns that the abolition of Section 21 will bring in ‘tenancies for life’.
Paul has 20 rented properties around the Fylde coast and says he is an ‘accidental landlord’ after a successful career with a Fortune 100 company.
But he says the growing dysfunction of the private rented sector is making him question his future as a landlord.
He said: “As landlords, we don’t realise how things work until we use them, such as rent tribunals or courts and then only a small proportion of landlords have had the benefit of relying on these organisations.
“It is only then you realise how dysfunctional they are.
“As landlords, we accept an incredibly low level of service from Universal Credit where data protection appears to be weaponised against us.”
He also warns that a six-month tenancy will become a tenancy for life if Section 21 ‘no-fault’ evictions are abolished under the Renters (Reform) Bill.
Paul said: “Consider an employment contract where someone is given a job. They are on probation usually for six months.
“If the employer doesn’t get on, they can end the employment in probation.
“A six-month tenancy is the same – a probation but not now thanks to ‘no-fault’ section 21. The landlord loses control of his property, and the courts don’t work.”
He adds: “The landlord is the first to lose out financially in any problem because the landlord has allowed the tenant access to a huge asset for a relatively small monthly payment, by comparison to the home value.
“The tenant stops paying or damages the property and there is instantly detriment to the landlord.
“The best a landlord can hope for is the rent is paid.”
He adds: “There is little a landlord can do with a difficult tenant one who wants money off by alleging issues. You can’t even visit and check.
“One of my tenants put a dozen razor blades down a sink it blocked, and they complained it was making them ill, they didn’t allow access and stopped paying rent.
“What recourse does a landlord have to these stresses?
“Why on earth don’t they reform tenancies?”
He points out that effectively bringing in tenancies for life is not what landlords agreed to when they offered their current six months’ tenancies.
Paul adds: “If there are new tenancies needed then have a Tenancy Reform Bill.
“Introduce new tenancy products and allow landlords to sell them instead of introducing a morally bankrupt policy to change millions of existing contracts.
“New products could offer tenancies over a longer period for those who want them.”
Paul explains that he recently had a tenant leave without notice and he only found out when he saw on Facebook that the tenant was booking a removal van that day.
When Paul went to the furnished property, he found the tenant had not only damaged it – but had also stolen everything too.
He adds: “Universal Credit did help – just him. They are his partner in crime and immediately stopped paying me, including the arrears.
“I couldn’t talk to them as they have no phone contact for landlords, but instead their UC system allows his case manager to call you back within the next two weeks, but they don’t.
“They just stop payments and make themselves unavailable.”
To compound matters, Paul has another tenant who has stopped paying rent after it was increased by £960 a year – after Paul’s mortgage rocketed by £4,400.
He says: “The court under Section 8 was sympathetic – to the tenant.
“And they won’t give me the property back under Section 8. She claims she went to the First-tier Tribunal in November 2023, after the £80 rent rise.
“But you hear nothing from the Northern First-tier Tribunal, they just said they are running three to four months behind in assessing cases.”
He continues: “I am not blaming them; they are probably also underfunded but the system doesn’t work.
“But who can I complain to about the bank getting £4,400 from me when they had affordability rules in place and stress tests to check I could afford interest rises?
“The problem is the stress tests were set at 2% under BoE rules PRA (Prudent Regulation Authority) and then BoE raised the rates by 5.24% almost three times their own cap.
“They knew would make payments impossible for some.”
Paul also questions the 30% LHA rule since LHA rates on the Fylde coast are rising from £576 to £625 for a three-bed property in April 2024 – even though they were £520, 17 years ago.
The rates haven’t kept up with inflation and are to be capped again next year.
He adds: “Meanwhile the real problem, the true villains are the banks who can put their rates up by 100% for those who they catch, those who don’t have fixed rate products or who through bad timing fall out the end of their product.
“Whilst banks can raise costs on a whim, landlords who find themselves in an impossible financial position are criticised for raising rents.”
Paul says: “The real problem goes unseen and that is landlords often provide homes to the people the banks won’t touch with a barge pole.
“The banks take most of the money and the landlords have been punished since we are no longer allowed to offset our full interest costs.
“Labour promise to make things worse for landlords by tightening regulation still further.”
He adds: “The Tories’ banning of ‘no-fault’ evictions is helpful – to bad tenants – who don’t want to pay their rent or are difficult.
“Letting someone live in a home you have borrowed money against is extremely stressful – there is no recognition of this.”
He warns that the biggest issue is a shortage of housing while landlords are being scapegoated because no provision has been made to house everyone.
Paul says: “The government have made it choppy waters for both tenants and landlords by allowing the BoE to break then scrap its own affordability rules.
“The system is broken, and the issues are largely avoidable and manmade.”
He adds: “The decisions being made are morally bankrupt.
“Honestly, who would be a landlord?”
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Tenant to pay the legal cost of eviction?
JB
8:13 AM, 29th March 2024, About a month ago
Reply to the comment left by GlanACC at 28/03/2024 - 16:09
Me too, with plenty of drawdown finance available as well. I was buying properties in a rundown area where no stamp duty was payable due to the powers that be being desperate to get someone (anyone!) to buy and renovate properties. So we were doing a favour, putting our money and work in to get properties fit for habitation. Now Red Angela wants to appropriate our investments.
GlanACC
8:46 AM, 29th March 2024, About a month ago
Reply to the comment left by JB at 29/03/2024 - 08:13
I have to say that although I benefited from little regulation, some regulation was obviously needed - hence the affordability criteria which probably saved a lot of BTL landlords from going bankrupt. I know of one landlord that bought literally a block of 10 flats off plan (yup, he was one of the Housemouse followers). He lasted nearly 2 years before he went bust
Lisa008
7:44 AM, 30th March 2024, About a month ago
I was listening to a Scottish landlord talk about how he was selling up... the 'writing is on the wall' and he couldn't understand why others couldn't see it. Were LLs being overly optimistic? Dangerously naiive? Or just willing sitting ducks?
But the question no-one ever goes into, is the alternatives to providing social housing at a loss or at great detriment to your mental health due to a rogue tenant. Where else do you put your money to work hard? One alternative I've come across is LandlordsExodus.com ...
I always read these forums with great interest because I can see the stampede for the door... and I love it. I just can't wait to see what happens next? Will tenants be buying the houses and the PRS can shrink? Will it be big social providers like BlackRock who have the deep pockets? I can bet that these punitive rules won't apply to them, and this is how they get the 'little guy' out of the game. You will own nothing... and be happy. It's all by design.
Pamthomp33
18:04 PM, 31st March 2024, About a month ago
Reply to the comment left by Judith Wordsworth at 26/03/2024 - 11:35
I am an accidental landlord as I inherited a property with a tenant who has a protected tenancy for life.
Paul Smith
18:45 PM, 1st April 2024, About a month ago
Reply to the comment left by Keith Wellburn at 28/03/2024 - 08:21
All correct - You may know The BoE regulators are responsible for stress tests for both Residential and Buy to Let mortgages. The stress test you referred to that was scrapped in August 2022 related to residential mortgages managed by the FCA arm of the bank. Buy to Let products were regulated by the PRA (Prudential Regulation Authority) arm of the BoE. Their 2016 (onwards) Stress test criteria stated rental income should exceed 125% of mortgage interest cost and the borrower should be able to afford a a minimum of 2% rise in interest rates. With an actual 5.24% rise in interest rates - their criteria looks less than competent? Given it was the BoE who chose to put the rates up beyond their own stress tests, it is perhaps reasonable to think people who had borrowed within the BoE stress test rules should not have been sacrificed by the banks in the way they have been?
Paul Smith
18:45 PM, 1st April 2024, About a month ago
All correct - You may know The BoE regulators are responsible for stress tests for both Residential and Buy to Let mortgages. The stress test you referred to that was scrapped in August 2022 related to residential mortgages managed by the FCA arm of the bank. Buy to Let products were regulated by the PRA (Prudential Regulation Authority) arm of the BoE. Their 2016 (onwards) Stress test criteria stated rental income should exceed 125% of mortgage interest cost and the borrower should be able to afford a a minimum of 2% rise in interest rates. With an actual 5.24% rise in interest rates - their criteria looks less than competent? Given it was the BoE who chose to put the rates up beyond their own stress tests, it is perhaps reasonable to think people who had borrowed within the BoE stress test rules should not have been sacrificed by the banks in the way they have been?
Keith Wellburn
19:37 PM, 1st April 2024, About a month ago
Reply to the comment left by Paul Smith at 01/04/2024 - 18:45
There is no doubt the BoE had a record of less than competence, ‘unreliable boyfriend’ Carney and Bailey and Co too slow to act in 2021.
Such turmoil since 2008 has created winners and losers, and banks will of course stick to the T&Cs of individual mortgages. I bought a couple more post crash and the margin above base for new deals was just ridiculous, around 4%.
Even when base rate was 0.1% I rolled a TMW loan onto a 1 year fix as I was about to sell, fee 3% so an overall rate of 4% - or an incredible 40 times base rate.
I had a lot of Mortgage Express loans written before the crash, many direct but some were ex GMAC. As the norm was to roll onto a new deal I hadn’t paid too much attention to the SVRs. Basically market conditions and MMR prevented me moving. The direct MX loans reverted to SVR of 1.75% over base so 2.25% or less for many years. The ex GMAC were on managed SVRs and reverted to a rate more than double that - which was a typical SVR for all new business written post crash, ties to base just disappeared as SVRs all became managed rates at high margins when base rate was on the floor. My solution, hang onto the base + 1.75% loans and ditch the managed SVRs. (They’ve all gone now).
I see where you’re coming from, but just as the T&Cs were stuck to on my loans for good or bad, I’m not sure how the banks are supposed to ignore them over something that is outside their control, basically defying the central banks interest rate policy when they are mandated to use interest rates at their discretion to hit the inflation target.
My own incredulity is S24, nearly ten years on, I still can’t comprehend the casual and arbitrary tearing up of such a basic tenet as interest deduction. I had an unincorporated retail business as a sole trader, VAT registered. When I became a LL I never even considered incorporation, my accountant never mentioned it and no one I knew did it as a Ltd company, there were virtually no Ltd Co loans, and for a long established portfolio no easy or cheap way to incorporate.
To see Osborne's pal Hunt swan in with his Mortgaged 7 flats tucked up in a newly created Ltd company when my 14 properties were left between a rock and a hard place, still makes my blood boil, and perhaps shades the rather lengthy list of all the other things wrong. Nearly out now primarily as a result of S24, which obviously has far greater consequences now interest rates are higher, but I do accept that not everything will go the way you want and overall I have gained.
Purnima Obhrai
11:09 AM, 2nd April 2024, About a month ago
Reply to the comment left by James Sim at 26/03/2024 - 19:30
100% agree with you James, the horrendous backlogs within the court systems is destroying fair and respectable landlords. We have a small portfolio of 4 properties - 2 of which tenancies have rent arrears of fast approaching 1 year and we’re still no closer to reclaiming the properties . In each case the tenants knew we would be hamstrung by delays, - read about it /Citizens Advice , Shelter, the Council told them ?? So what’s not to like , a nice property rent free ! Will get out of this business fully soon as we can
A W
12:55 PM, 10th April 2024, About 4 weeks ago
I had a warrant of the property in December 2023. It was 6 months after I applied.
But I have not had a date of eviction until now. 5 months after having issued of the warrant, I have no idea when I would get back the property.
No replied from the enforce officer, or the court kept saying to wait until I get a date. No contact details. The system has broken down. Tenants have a lot of rights but not for a landlord. Who can help me in this situation?
GlanACC
16:52 PM, 10th April 2024, About 4 weeks ago
Reply to the comment left by A W at 10/04/2024 - 12:55
You could try and use the High Court Sheriffs as they are private companies and can act quicker