Hardships tests, EPC ratings and a Section 21 ban – is this the death knell of the PRS?

Hardships tests, EPC ratings and a Section 21 ban – is this the death knell of the PRS?

9:23 AM, 16th August 2024, About 2 months ago 15

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Apologies in advance if this article appears to be ‘whiny’ but I feel that the Renters’ Rights Bill is about to turn a landlord’s world upside down.

There’s obviously no appreciation of a Landlord’s Rights Bill, it’s all one-way traffic and landlords always pay the price.

So, what do we make of the latest notion that Labour will bring in a hardship test to see if they can take possession of their property?

Not the hardship of the landlord who doesn’t get possession naturally but only of the tenant.

I’m dumbfounded but then I have highlighted that the Renters (Reform) Bill would have passed control of a rented property from the landlord to the tenant.

I also highlighted that among Labour’s amendments to that bill were moves to prevent possession for two years from the start of a tenancy.

Plus, I highlighted the housing minister’s bid to prevent possession in cases where the tenant would face hardship.

Since the Telegraph story highlighting this appeared, we’ve had various organisations and lawyers on LinkedIn disclaiming this was ever a thing.

So, shame on the National Residential Landlords Association for questioning this when the evidence is still on the list of RRB amendments put forward by Labour.

The naysayers all have one thing in common – they know they can’t defend this move so they have to question the dubious nature of why this has come about.

What is in the Renters’ Rights Bill?

I’ll tell you why this has come about, it’s because the Telegraph has more journalists working in Parliament than you do.

Those reporters are privy to conversations about upcoming legislation, and this is almost certainly on the agenda.

But the real issue for me is what else is in the Renters’ Rights Bill?

What if this is a kite flying exercise designed to gauge public opinion?

There’s no way that Labour’s claim to want the private rented sector to be fair for everyone will hold up.

They don’t want fairness, they want to punish good, decent hardworking people who have opted to invest in property for a better retirement.

That doesn’t make us bad people.

It doesn’t make us bad if we want to sell that property to fund a retirement and the ‘hardship’ test shouldn’t be relevant.

It isn’t our fault if a tenant cannot find another home to rent at a price they can afford.

It’s the government’s fault.

Prospect of a mass landlord sell off

Let’s not dwell on the prospect of a mass landlord sell off when the Bill is published, we’ll have to see the law first.

But don’t be too upset if landlords are put at a deliberate disadvantage because they own someone else’s home.

It is a tenant’s home, but it’s our property.

Let’s not dwell on the prospect of the buy to let mortgage market vanishing overnight when lenders realise they won’t be able to evict the tenant either.

So, they’ll be left with a landlord who can’t pay their mortgage and are lumbered with a tenant who cannot be moved out.

What is the likelihood that many of these tenants who win a hardship test case then stop paying rent?

Why not – the courts have confirmed they can’t afford to rent anywhere.

A landlord’s assets don’t belong to them

My big worry is that the Renters’ Rights Bill will make clear that a landlord’s assets don’t belong to them but to the tenant and, ultimately, the government.

We’ll see the erosion of the PRS as more landlords sell and more big firms move in.

Big firms, if you haven’t realised yet Labour and Labour voters, don’t care for those who don’t earn a lot.

They want tenants who can pay the rent.

That means tenants on benefits or UC will really struggle to find somewhere to live.

Will that lead to the government compulsory purchasing landlord homes? In other words, begin confiscating them.

Why not? It’s going to be a quicker and cheaper way to provide social housing than actually building it.

EPC ratings for rented homes

Along with the hardship test, Labour also wants the EPC ratings for rented homes to be A-C and a Section 21 ban will come in.

I can’t believe that I’m still reading in the media that a Section 21 ban will end homelessness.

It won’t. It’s mad that this issue doesn’t get the fair debate it deserves.

It’s really not that difficult that when a landlord wants possession they will naturally opt for the quickest route.

That’s using a Section 21 notice.

It doesn’t mean homelessness will end; it means you’ll have to call for another eviction process to be banned.

People investing in the PRS

Despite all this, and I can’t believe that this is true but there are people investing in the PRS.

It’s not quite like the 90s when a financial advisor would call you an idiot to your face for not seeing how easy BTL was for making money.

Many of us accepted this and have had trials and tribulations over the years.

But you know what? It was worth it all because we were going to get a bumper pension pot to enjoy for all that hard work.

Critics say we don’t do anything, but they’ve never tried. (Envy, much?). We did and have been proud to house families.

Hamptons says there are around a third fewer rental homes than five years ago.

The Ministry of Justice also says there are fewer rented homes and RICS says landlords are disappearing.

Landlords are calling it a day

I get why landlords are calling it a day or are bailing out to cash in for their pension.

With the prospect of higher CGT rates (God help us) linked to income tax, we really could be on the losing side.

There are some of us too who see our rental income push us into a higher tax bracket.

That’s always a joy when then the self-assessment goes in.

But these new landlords, mainly young people, have seen the capital growth in property and think it’s easy money.

It isn’t, it’s hard work, there’s a lot of inconvenience and the returns aren’t what you expect them to be.

Plus, here’s some free advice: Be prepared for that moment when you think the ruined weekends and late nights resolving simple issues have been worth it for a government that 20% of the population voted for takes it away from you.

The PRS boat hasn’t quite sailed if you want to invest in buy to let – over the long term it’s probably still a good punt. Unless Labour’s utter recklessness ruins it for us all.

Again, it’s always the tenant that pays the price because Labour will deliver real hardship for those who can least afford to lose out. Sir Two-Tier Keir will hurt everyone in the PRS!

Until next time,

The Landlord Crusader


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Reluctant Landlord

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10:39 AM, 16th August 2024, About 2 months ago

bang on!

JB

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11:05 AM, 16th August 2024, About 2 months ago

Totally agree. Even tenants are beginning to get it

Binks

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11:16 AM, 16th August 2024, About 2 months ago

With regard to the hardship test, let’s also acknowledge that it would create a disincentive for landlords to keep rents below market, as many do for their long standing, good tenants. Doing so would place the landlord in more danger of not being able to serve a notice if they need to sell, as indeed, the tenant may be unable to find a property for the same rent. Yet another perverse unintended consequence, leading to what? You guessed it, higher rents. Mind boggles!

Stella

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11:26 AM, 16th August 2024, About 2 months ago

Reply to the comment left by Reluctant Landlord at 16/08/2024 - 10:39Spot on!
IMHO if laws like these that are so heavily skewed in favour of the tenant were enacted it could potentially be even worse than the bad old days of the protected tenant.
On top of all the legislation/compliance which we have already got to comply with this could be the final nail in the coffin.

Frank Jennings

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11:34 AM, 16th August 2024, About 2 months ago

The train due to arrive at platform one is the RRB. After its arrival will all LL's please refrain from exiting their carriages, and hold on tight for the legal rollercoaster ride once the train starts to move on. Any cash or valuables held should be handed in to the guards as soon as possible.
All other passengers (Tennants) will not need to purchase any more tickets, and seats will be severely restricted, including standing room only passengers.
The next stop will be chaos central, where
Passengers will need to push the train along the tracks to save energy and lower carbon emissions. The LL's will need to exit and lay in front of the train to be run over in the intrests of allowing more passengers onto the train, and to ensure proper lubrication of the tracks.
Finally when the train runs off the tracks at the end of the line, passengers may then freely disembark and pick up the pices of their lives, homes and prepare to get on the next train to Here we go all over again!
This service has been provided by your Govenment, funded by your taxes, and your stupidity in voting for them. We hope you have a pleasant journey, and enjoy the ride.
All complaints will be ignored, and complainants punished financially.
Thankyou for travelling with Marxists trains. We know best for you!

Steve O'Dell

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11:36 AM, 16th August 2024, About 2 months ago

The NRLA needs to stand up to them, but I don't think they have it in them. I suggest people cancel their membership as I have done. My managing agent has asked for a sit down with our local Communist MP to discuss Landlord concerns, maybe others could press for local industry figure heads to do the same? RICs need to amplify their voice, as do other significant organisations that interact with the PRS - Mortgage providers could state what their position would be re lending with 2 year rules and hardship rules in place.
Don't do nothing. Act of get someone to act. Without massive PRS descent, they will get away with murder.

David Nichols

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14:52 PM, 16th August 2024, About 2 months ago

Hardship test will only mean those on benefits or insecure employment will be sidelined and a home owning guarantor becoming necessity .
This will indirectly discriminate a lot of tenants as landlords cannot risk losing their property and future pension provision.

So simple

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8:33 AM, 17th August 2024, About 2 months ago

This PRS industry was created for a reason in 1988. Its not a complicated reason.

There was massive homelessness, especially in big cities in the late 1980's.

Councils had stopped building council housing.

Inversters were not investing in residential property because they had very few powers to get their property back if they wanted it back pre 1988. REGULATED tenancies gave all the rights to tenants pre AST. There was a critical lack of property available to rent because LL had lost their rights to their own property.

The result was the 1988 housing act, creating a more positive environment for private landlords investment, with the introduction of AST's.

The result of that AST creation was that in the following 36 years, some 11 million people are now housed in some 4.5 million homes, provided by the likes of me with 20, with zero help from any part of successive governments.

By far the greater proportion of which WERE good quality affordable houses.

That sounds like a good news story for the vast majority of LL and Tenants alike.

Then enter people who were not born in 1988, who have no recollection of the uk homelessness in the 1980's.
Their aim is to once again strengthen tenants rights and remove landlord rights. Forget whether you agree with that aim for now, that is the stated aim of the likes of GR and Shelter. To strengthen tenant rights. Thus inevitably weakening landlord rights.

Now, read again the first 8 sentences of this post above. SOUND FAMILIAR?

Why is anyone surprised that, given the attitude of successive governments to the PRS, there is a lack of supply of rental housing in the whole of the uk? When the governments removed the attractiveness of the residential housing sector that created the 4.5m homes currently in the PRS since 1988, what did they think would happen to supply, and the inevitable subsequent rise in rents.

The harder you hit private landlords, the more you will find that they leave the sector, and that far fewer new landlords will replace those leaving, because the sums no longer add up. YOU, LABOUR, will end up exactly where the UK was pre the 1988 Housing Act. I remember it well. It was not good for tenants. My first tenant moved into her home in June 1992. She has lived in her home since that date. I have given her 1 year to find somewhere else to live so that I can access my own money. She has been evicted by the Tories actions, and the future fear of what Labour are talking about doing to the PRS.

LABOUR, If you do want rid of the PRS then please make sure you get an alternative in place FIRST. 11 million people in 4.5m houses are relying on you. That's 16% of the entire population of the UK who live in the PRS, that you are taking back to the pre 1988 system of regulation that failed so miserably.

It's not rocket science. The PRS is not a charity.

Stop biting the hand that feeds you.

1987 and 2024 are beginning to look increasingly similar from where I sit.

Ade.

Neil P

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10:59 AM, 17th August 2024, About 2 months ago

Reply to the comment left by So simple at 17/08/2024 - 08:33
Ade, well said but my take-out from your post is the innocent tenant being evicted after 32 years, that’s really harsh. It’s exactly that kind of story that’s fuelling the RRB. As you rightly say it’s your property but it is her home. I hope you’re trying to sell with tenant in situ, even if it means a small hit.

I’ve been investing since 1993 and am still buying, despite the anti-landlord rhetoric. Short lease properties are my current purchase of choice…leasehold reform will aid leaseholders, and that will surely have to include landlords.

I have no intention of exiting, so CGT is irrelevant…though IHT is when they pass to the kids. That needs more thought…and I’m burying my head in the sand on this tbh.

BTW one of my best properties has had the same tenant since 1941, when she was 2! I got it at 2/3rds of vacant OMV at auction. Rent is set by the Rent Officer every two years and paid direct to me by the council, and is a great yield, though the model does eat capital (last time I looked, max 50% LTV, if you can get it). I have little responsibility for maintenance except gas safety etc. so it’s not hard work. And the tenant is lovely. Not all bad!

Stella

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11:13 AM, 17th August 2024, About 2 months ago

So simple
You are spot on!
This was exactly the situation that I remember in the days before section 21
We have massive homelessness today and instead of this government encouraging investment in the PRS in order to solve the homelessness problem they are hell-bent in demolishing it.
Pre 1987 all over again!

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