Providers or parasites? The vilification of landlords continues
1 year ago | 5 comments
Is the PRS pendulum swinging too far against landlords?
9:24 AM, 24th March 2025, 1 year ago
24
The biggest problem facing landlords is that the PRS is like a pendulum, swinging slowly from one policy extreme to the other, and there is nobody left in parliament or the civil service who remembers what the PRS was like before 1988. I do. My family has been involved with private lettings one way and another for 60 years.
Between 1984 and 1987 I took an undergraduate course in estate management as a mature student. It was made very clear that only a lunatic would buy a vacant house or flat and let it. A Rent Officer came to give us a lecture. By the end of the questions it was clear to all the students that we would never have anything to do with an investment whose performance depended on people like him, not if we could help it.
The year after I graduated the 1988 Act changed everything. It abolished rent controls for new lettings and provided a reliable method of evicting bad tenants. Slowly and tentatively investors started to consider residential property again. Eventually the rules about lending were relaxed and buy-to-let mortgages began to be available. The pendulum swung to the point where the private sector was investing vast sums to provide rented housing. The 1988 Act was a huge success.
The Renters’ Rights Bill will destroy that success. The last meaningful stage will be the House of Lords Committee on 22 and 24 April at which several interesting amendments will be tabled and then either withdrawn or voted down. The bill as brought from the House of Commons is pretty much the final form. We know what we are dealing with. It is already having a chilling effect on the PRS. And after it becomes an Act and its effects start to be seen and publicised the flow of capital will dry up almost completely.
Perhaps a few of the much-hyped Build to Rent projects will go ahead, but not many, not after rent controls are brought in. We are told there will not be rent controls. Nonsense, of course there will eventually be rent controls because the only certain way out from a letting that has gone wrong will be new mandatory ground 1A. Therefore each bad tenant will lead to another net loss from the PRS, rents will rise as the supply diminishes even further than it has already, and the pressure for “rent caps” from Shelter and Generation Rent will be overwhelming. As the years go by landlords, including the BTR landlords, will discover the hard way that the 1988 Act was brought in for good reasons.
Of course the decline in the PRS won’t mean that homes will vaporize. They will become owner-occupied. Whether that is a good or a bad thing is a political question. All I am saying here is that I am old enough to have seen the pendulum swing in housing policy, and indeed in every sphere of policy. Each new cohort of politicians, civil servants, and lawyers thinks they will solve problems with policies which, more often than not, have been tried before. So far as housing policy is concerned it is only a few old codgers like me who have first-hand memories of the pre 1988 world. The government won’t listen to us. Our views are brushed aside as being out of date, or anti-social(ism).
Those who predict that the Renters’ Rights Act will have an instant effect are wrong. It will take time for things to change. Its effect will be seen whenever there is a draconian penalty charge, or a trashed house, or a tenant won’t pay their rent and the landlord’s mortgagee forecloses. The effect will be that another home will move from the PRs to owner occupation.
But at some point, perhaps in about 30 or 40 years’ time, some bright young politician will bring forward a new piece of legislation, very like the Housing Act 1988, and the pendulum will start swinging back again. That’s what we are dealing with, a pendulum.
What do other landlords think will happen?
Thanks,
Michael
Tags:
Buy to let, generation rent, Landlord rights, Landlords, Private Rented Sector, PRS pendulum, rent controls, renters rights bill, Shelter
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Member Since October 2013 - Comments: 1630 - Articles: 3
3:13 PM, 24th March 2025, About 1 year ago
OpNot one mention of the impact of what is effectively uncontrolled immigration.
This government says it will build 1.5 million new homes in this Parliament, but we are already 7 months in and the signs aren’t good. 300,000 migrants every year will need housing somewhere, and it’s the councils who will provide it, pushing the more deserving indigenous population onto the PRS. Except, the PRS will have been decimated at the lower end, leaving those who want and can afford to pay in the BTR sector.
I don’t know what happens then. They should house migrants in large camps until they can be moved offshore, but the lefty lawyers aren’t having any of it.
I have one rental left and my tenant has just given notice. Currently, my rent covers my costs and it’s EPC C. But as a retired old sod, do I really need it?
Member Since December 2023 - Comments: 1573
6:58 PM, 24th March 2025, About 1 year ago
1. The Treasury needs massive income to fund Labour’s plans.
2. Not enough people are working and paying tax.
3. The total value of all homes across the UK now stands at £8.678 trillion (£8,678,000,000,000), according to new research by property firm Savills.
The government needs to suck some of this money out of the market.
Whenever a house is sold for £400k, the Treasury takes £10k in SDLT alone. If it’s a BTL property, they take £30k.
When landlords sell, the Treasury benefit from CGT – a tax on inflation.
House prices will crash before Labour are finished.
Member Since February 2025 - Comments: 4
9:21 AM, 25th March 2025, About 1 year ago
Reply to the comment left by David100 at 24/03/2025 – 10:13
Exactly what I think..Wipe out the small man..Corporates take over and then tenants will deal with them just as we deal with energy companies or insurance companies with no face no recourse and most of the times a very difficult way of contacting. But hey at least the evil landlord would have gone 🙂
Member Since July 2024 - Comments: 112
2:52 PM, 27th March 2025, About 1 year ago
Reply to the comment left by Northernpleb at 24/03/2025 – 10:33
Exactly .. I am suddenly getting a flood of new tenants for my final room.. I am so picky and I just emailed the employer to confirm salary details and told the tenant I need bank statements. I refuse to take high risk tenants. its’ my asset and my choice, don’t honestly care what the Gov or Regs say.
Member Since October 2013 - Comments: 1630 - Articles: 3
7:58 PM, 27th March 2025, About 1 year ago
Make sure the bank statements aren’t fake. Try to set up a payment to the name and account and then check it’s real.
Member Since April 2023 - Comments: 174
4:04 PM, 28th March 2025, About 1 year ago
Reply to the comment left by Cider Drinker at 24/03/2025 – 18:58
CGT makes my blood boil. We have owned our building which houses 5 flats for so long that the CGT is crippling. In real terms taking into account inflation if we sell we will make a loss after paying the CGT. Years ago I wanted to sell our building and buy 2 ordinary easy to look after houses in our home town so we could leave 1 to each of our children when we died. However with no rollover relief it was impossible to do this. So we have felt trapped for many years. In real terms if we sell we could only buy one ordinary house. I don’t understand how it can be called an investment property.
Member Since May 2014 - Comments: 616
8:52 PM, 28th March 2025, About 1 year ago
Reply to the comment left by Slooky at 28/03/2025 – 16:04
CGT is crippling I am in a similar position. We bought our first property in 1975
Member Since April 2023 - Comments: 174
6:48 AM, 29th March 2025, About 1 year ago
Reply to the comment left by Stella at 28/03/2025 – 20:52
I really feel for you. I don’t understand why such an unfair tax exists. If they made the tax fair or even scrapped it many landlords would sell up which is what they want. But at this point despite wanting to sell for the past 10 years I won’t be cause the benefits are not there
Member Since January 2015 - Comments: 1431 - Articles: 1
10:06 AM, 29th March 2025, About 1 year ago
The pendulum is swinging so far, atm, that we will see tent cities, as the numbers of PRS landlords vacate the sector, to house people who cannot get social housing/cannot afford to buy or cannot afford the resultant higher rents to rent/ if no-one will rent to them.
The young will have to go back home after Uni until they can afford to rent or until they have a relationship or get married. Those not going into tertiary education will likely also have to remain with parent(s).
Member Since October 2013 - Comments: 1630 - Articles: 3
10:47 AM, 29th March 2025, About 1 year ago
Reply to the comment left by Judith Wordsworth at 29/03/2025 – 10:06The tent cities are already here, and will only get worse as more and more immigrants seek housing which isn’t available. Have you see the state of the streets in Central London and Dublin?
We are seeing more and more people living at the side of the road in camper vans.