Can landlords afford a rent freeze in the UK?

Can landlords afford a rent freeze in the UK?

16:24 PM, 10th March 2023, About 12 months ago 13

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I can’t say that I am surprised at the news that Labour Mayors, trade unions and rent activists are calling for a rent freeze – not on the grounds of saving tenants a few quid, but because landlords can afford it.

The latest wheeze underlines my prediction that a rent freeze or a rent cap will come in England. Let’s see how the economy performs this year before the naysayers and critics wade in saying I am stirring things up or being alarmist.

Anyway, back to the Property118 article about an open letter calling for a rent freeze and the astonishing statistic that private landlords earn £55,415 on average before they get a penny in rent.

There are two issues with this figure:

  • It’s an average and not a fact so I’m guessing that far more landlords earn much less. For example, me and my landlord friends – most of whom are hard-working people with a trade trying to provide for a comfortable retirement – don’t earn that sort of money. I’m guessing that figure might just reflect the earnings of London-based landlords
  • The figure is calculated before rental income. But what rental income? Most landlords with a mortgage would be over the moon to clear £200 a month. That’s not even really profit since we still have other overheads to meet
  • Actually, I have a third point. Many of those signing the letter are on six-figure salaries and a lovely gold-plated pension – including the London Mayor Sadiq Khan. No need to invest and work hard at providing homes for those who are less fortunate.

‘Cost of living crisis’

I appreciate too that renters are struggling in a ‘cost of living crisis’ – but not all of them.

There’s another broad sweep of the brush to paint all tenants as poor and struggling. That isn’t true.

And the London Renters Union says many private tenants will be made homeless as they struggle with rising bills and trying to pay rent.

Does a private landlord not have rising bills too? Those of us with a buy to let mortgage dare not look at how much the repayments will go up when we renew.

We also get treated to the canard that most homes in the rental market don’t have a mortgage so the landlord can afford to take a rent freeze.

Nope. That’s not true either.

We have invested and worked hard to buy an asset that we then rent out to tenants. That doesn’t mean we can afford rent controls.

Drive landlords out of the market in England

Let’s face facts. A rent freeze will literally be the straw that breaks the camel’s back to drive landlords out of the market in England. Don’t believe me? Look at what is happening in Scotland.

A rent freeze and now a rent cap brought in by Nicola Sturgeon and the Scottish government has seen landlords pack in and rent levels rise.

I’ve mentioned before that the Welsh government looked carefully at implementing something similar but baulked at the prospect of fed-up landlords leaving. This is an interesting scenario considering the lack of social housing.

The other big issue is that there’s never any mention of the landlords who look after their tenants. Offering rents at below the market rate, carrying out repairs immediately and making improvements. All these things have to be paid for and a lot of landlords won’t be putting up the rent to cover these costs.

Why? Because ’rent activists’ ignore the fact that most landlords are decent people who want to look after their tenants. Most of us only have one or two homes to rent out and having happy tenants makes our lives easier. I can’t speak for bigger landlords, mind.

So, while I’m predicting that controls on rental property are still likely, I’m also going to highlight another issue for the likes of the London Renters Union, Shelter and Generation Rent.

The ending of section 21 notices

You know that demand you have made for the ending of section 21 notices – which has unfairly been deemed as ‘no fault eviction’ notices, well you need to be careful what you wish for.

It does appear that the government is going to outlaw these but that will mean that lots of landlords will decide to sell up and quit. Others will have rents increase to meet their costly obligations. There will be a mass of section 21 notices being handed out before they are banned.

That’s lots of tenants being made homeless as their landlord decides enough is enough and sells. And you brought that on yourselves.

And here’s a thought: homeowners are also facing rising bills and huge hikes in their mortgage payments so why don’t we step in and help them? Why not subsidise their homes? It’s not just tenants who are struggling – lots of hard-working homeowners are too.

Demand rent caps and the ending of section 21

Essentially, it is becoming increasingly obvious that the people and organisations who sign up to these open letters and who demand rent caps and the ending of section 21 really don’t understand the private rented sector at all.

And that’s a shame because if they spent any time talking to us, they would see that we are decent people trying to do our best for tenants in a world where everyone’s bills are going up.

But, apparently, the deep pockets of landlords can afford to subsidise their tenants. I ask again: Can landlords really afford a rent freeze in the UK?

Until next time,

The Landlord Crusader


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Comments

DGM

12:20 PM, 10th March 2023, About 12 months ago

If they mandate rent freeze and rent cap then surely the Government can do the same with Supermarkets and energy companies and freeze food prices and energy, no difference really. Their profits are far higher so they can defiantly afford it and levels the field for all. Simples

Har Kaur

12:22 PM, 10th March 2023, About 12 months ago

Brilliant summary of the issues. I'm one of the small landlords, with 2 buy to let's, both mortgaged, all with the same provider, TMW. All 3 mortgages have increased, my residential by £600 a month (and counting..if base rate goes up again it will increase further). I feel like; being hammered. So I've decided to sell the little studio in London, in order to get out before S21 disappears and rent control comes into play. I'll be displacing a young woman who's been living in the property for 3 years who works locally and is perfectly happy there.

The question that nobody seems to be really quantifying except for landlords (but nobody hears us) is 'just exactly how is all this benefiting tenants?'

Alex Pawlowksi

12:23 PM, 10th March 2023, About 12 months ago

Excellent piece. The mad hatters party comes to mind.

Crouchender

13:16 PM, 10th March 2023, About 12 months ago

Reply to the comment left by Alex Pawlowksi at 10/03/2023 - 12:23
COST OF 'RENTING' CRISIS narrative has not become main stream in the media YET but it will especially as we get closer to next years election.

The dividing lines will be S. Khan's/ Labour policy RENT FREEZE for > 1,2,3 years?? It will sound like populist music to tenants ears and their voting power.

OR

RENT CAPs policy which I predict the Conservatives will adopt over the coming year so allow some LLs to increase rent (3%??) (with several conditions from RRB attached e.g. like bring their homes to decent standard/ EPC C rating?).

Of course there needs to some parity with social LLs and their rent caps to be fair but it will easily be double PRS.

Either way something is definitely on it way as LL Crusader has that foresight.

I have never ever used S21 at all in 25 years as a LL but I will have to use it before it goes. As it will allow me to put a new bathroom or kitchen and then remarket to significantly increase my baseline rent PRIOR to election results so if a FREEZE or CAP is on the way within 100 days of any government taking power I have soft landing cushion available to deal with the next volatile 5 years.

Crouchender

13:52 PM, 10th March 2023, About 12 months ago

There was a post on P118 a while ago where someone was advocating a S21 'day' for ALL PRS LLs (Send make a point to government instead of petitions). There was lot of negative response to this TACTIC! However again reading LL Crusaders article again make me think whilst there will not be synchronized S21 day it will certainly be a s21 'year' i.e. 2024.

As you have to remember even if the RRB gets brought into parliament before Easter (a prediction) it will still take time to get on the statute book.

Labour will use the massive rise in S21 in 2024 vs 2023 as part of their policy fire power for their hard line PRS populist approach!

northern landlord

14:46 PM, 10th March 2023, About 12 months ago

This sums things up nicely. You would hope that the powers that be look at property 118 and the other on-line publications to realise the situation landlords are facing. They probably do, but choose to turn a blind eye. Maybe it’s a race memory dating back to Victorian times with overcrowded rented slums, cholera, rickets and tenants being tossed out on a whim.The myth still abounds that landlords are rich and heartless living high on the misery of their tenants. Landlords are not seen as they should be, proving a service the Government and local authorities can’t do, namely providing a decent roof over people’s heads. Meanwhile, the Government uses the myth as a smokescreen hiding the fact that their own policies force more and more voters into renting. They exploit the myth so they can be seen as a sort of modern day Robin Hood “stealing from the rich (landlords) and giving to the poor (tenants).
Basically the Tories have stolen the Labour party’s clothes with the proposed renter’s reform bill. The Tories have said that they do not intend to bring in rent controls. Assuming this is true (have they ever lied to us?), the only clear water that Labour will have between themselves and the Tories is rent controls as pretty much everything else is being done to landlords anyway. Lack of supply has really pushed rents up. How many landlords are charging below market rates? Time to “hike” them using the typical journalistic jargon?

Dean Robertson

18:25 PM, 10th March 2023, About 12 months ago

The Lanlord Crusader is spot on, an excellent article. Iv been a private landlord for 25 years with 5 properties which took me 10 years to build up. They are mortgaged and iv been working since I was 16 years old and still nearly 50 still work nearly 60hrs a week. My properties are always in good condition with no complaints and if something breaks its repaired quickly or replaced for new. This year I'm selling it all and tenants don't want to move but I'm basically working overtime just to keep them in the property. So 5 families looking for somewhere else to live. Just thank Scottish government i tell them.

Mister B

22:30 PM, 10th March 2023, About 12 months ago

The reality is that after the demise of S21, more people will be deemed to have made themselves homeless and councils will have no responsibility to rehouse them as landlords will default to S8. So where will they go? A reduced number of private landlords will not be interested in taking a rent defaulter. So the kids and one parent end up in hotels, BnB etc and the other parent becomes estranged from their family.
Are we as a society just pushing a snowball down a hill that gets bigger further down the hill?

The Forever Tenant

8:33 AM, 11th March 2023, About 12 months ago

One of the biggest issues is public perception and you are fighting against so much to improve three look of landlord in the public eyes.

The vast majority of landlords are providing homes at reasonable prices and there is no issue. The problem is that there is nothing newsworthy about things being exactly as they should be. It's only the actions that are different to the norm that are noteworthy. News like that is not mentally appealing to humans. Seeming something saying things are working as they should just leads to a thought of "well of course it should be" and pay it no further attention.

So what the public gets to see is what others are choosing to make publications available. This has become a problem due to social media and the grift nature you find there. You have hundreds and thousands of content creators making videos saying how you can make stupid amounts of money by renting property at the maximum possible rent. That you can earn all this money for no work each month.

It's rare you will see the full truth from one of these creators, it does happen but as above, because it's someone describing the normal way of things, it's boring to the viewer.

So it feels as if the idea that landlords can afford it may stem a bit from this.

You have the public who have been exposed to videos like this. They have seen house prices rise out of their affordability making them think that landlords will have that extra money from the asset price increase. It would be an extremely hard sell to convince them that landlords cannot afford it with little evidence to the contrary.

I know the truth of it, but that's only because I read websites such as this and go hunting for the actual data. It's trying to convince everyone else of this.

Then you get to the issue of kneejerk reactions. Again, I know why you would want to issue S21s and sell up, but to everyone else is going to look retaliatory; that you are taking it out on tenants because you are greedy.

I suspect that only overt generosity that the media is happy to publish will be the thing to sway public opinion. I cannot see many being in the position, or willing, to do that.

Freda Blogs

20:40 PM, 11th March 2023, About 12 months ago

Reply to the comment left by The Forever Tenant at 11/03/2023 - 08:33
Many landlords did exactly that during Covid, by giving rent reductions to tenants, whilst we didn’t qualify for a penny of grant money or furlough cash, so it was a net loss to us.

However, I don’t recall that gesture ever being acknowledged or appreciated. I do recall the conversations about the so-called mortgage holidays though.

I think that the anti landlord sentiment is now so pervasive and ingrained that there is nothing we can do to establish or redeem a good reputation - there needs to be a receptive ear for that, and there isn’t one.

Many landlords, including me, are so tired of the constant struggle and negativity that we can’t be bothered to stay in the game. Well done government - in trying to get a political soundbite and grab the odd vote here and there, you have decimated the PRS and made things far worse for landlords and tenants alike.

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