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10:00 AM, 16th December 2022, About A year ago 7
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I can’t help but wonder what the future is for the private rented sector (PRS) when I look at the combined forces joined up against us.
It’s at these times I appreciate the French saying: ‘Plus ça change, plus c’est la même chose.’
Essentially, it means the more things change, the more they remain the same. And I get a gut feeling that despite all of the government’s efforts to improve the PRS, nothing will actually change.
We might see fewer landlords, more expensive rents but after all of the huff and puff, will we see more homes for rent? No, we won’t. Will we see better quality homes for tenants? No, because all of the responsible landlords will bail out.
It didn’t have to be this way because the 1988 Housing Act offered rights and obligations for tenants and landlords and the sector was reasonably regulated.
From what I’m told, the big issue was when rights were breached, neither side could really enforce their rights without spending money on a civil court dispute.
Even then, the costs and burden of proof were firmly with the landlord.
And, just like today, if the paperwork wasn’t perfect, then the landlord’s application was going to hit the buffers. Obviously, the tenant would be helped by a legal aid lawyer. That’s after they had sought advice from a tenant’s group, as well as Citizens Advice or the council.
Then, as now, enforcement is slow and for landlords not really adequate for what we need.
So, what has changed and what is likely to change?
Precisely nothing. That’s because the private rented sector was regulated to an extent, but the rules weren’t enforced so bad tenants and rogue landlords could carry on as they saw fit.
The downside to that is that all landlords were tarnished with the same brush, and we’ve seen more laws regulating the sector, including licencing schemes from councils, but we don’t appear to be any further forward in having a fair and balanced regulatory framework for the PRS.
Over the years, we have seen some vigorous campaigning from various representative groups complaining about the sector being ‘unregulated’ which has led to various regulations and taxes that weren’t aimed at making things better but just made life more difficult for landlords. And less profitable.
As predicted, section 24 led to smaller landlords leaving the sector because, let’s face it, why bother running a small business when you still have to pay tax when you make a loss? No other business is expected to carry this financial weight.
Larger portfolio landlords and the big corporates have thrived and lots of smaller landlords have done very well too.
But that’s mainly because these larger landlords are opting for the better-quality tenant and who can blame them because they don’t want their financial investment being trashed or have someone not pay rent.
That leaves tenants trying to find somewhere to live in an ever-shrinking pool of homes and with housing benefit not being increased for a few years means it’s even harder to find somewhere to live.
The situation also makes life easier for rogue landlords because they don’t care who they rent to, they just want desperate tenants who won’t complain about living in a sub-standard rented property.
That’s not the fault of landlords, it’s the fault of the government.
And in recent years we have seen growing numbers of landlords becoming fed up and deciding to move into the short-let sector but there’s no doubt there will be a clampdown on this too.
While short lets offer more profit but more work, there’s less chance of having a tenant not paying rent or trash the place.
One of the big issues I have with increasing regulation is over the hassle and cost for landlords, but the rules never seem to improve the lives of tenants.
While a council’s selective licencing scheme appears to be a great idea, I’ve mentioned before that they really aren’t because there is not enough stringent enforcement or checking of standards in rented homes.
Landlords pay, the council boosts its income, but tenants don’t really benefit.
And here we are, heading into 2023 facing a raft of new laws that will bring an end to Section 21 ‘no-fault’ evictions. The implementation of this bonkers law could see a tsunami of landlords quitting.
If a landlord can’t guarantee getting their property back when there are anti-social idiot tenants, or renters not paying rent, why bother?
Most of us bother because we care about our tenants but there’s the unmistakable sound of chickens coming to roost because the new rules that are aimed at protecting and helping tenants will have the opposite effect.
Less choice, higher rents, no social housing as an alternative and the ever-present rogue landlord who is supposed to disappear with new regulations will be sitting pretty knowing that their vile homes for rent will find ever-growing numbers of tenants willing to take them because there is literally nowhere else for them to live.
As they say, plus ça change – but not for the poor tenants who thought they would get better homes at a reasonable rent but actually get neither. And that really is the fault of the government who must be forced to own this mess they have created.
Until next time,
The Landlord Crusader
Previous Article
Property leaders urge Michael Gove to address PRS pressures
Beaver
10:38 AM, 16th December 2022, About A year ago
It's true that larger landlords will opt for tenants with higher disposable income. But in my experience a 'better tenant' is someone who pays the rent, gets on with the neighbours and looks after the property. Most of those people have adequate disposable income but they are by no means rich. That's my definition of a 'better tenant'; some of the richer tenants are actually very demanding and a right pain in the a**e.
I think everything you say is true but you missed the forthcoming proposed changes to oblige landlords to move from Band D to Band C. At the moment, as far as I can tell, much of the expense required to upgrade properties wouldn't be deductible against income but would be improvements and therefore capital expenditure. That all has to be financed; cost of financing is going up and for the small landlords finance costs cannot be deducted from income anyway.
Many landlords will evict rather than having work done whilst tenants are in the property. If the properties are rented again that will be to the higher disposable income tenants who can afford the upgraded properties. Many 'better tenants' are actually going to get kicked out of the homes they rent.
This is a failure of government and tax policy. Section 24 and the proposed EPC changes are a blunt instrument. When the UK's various governments (and that includes the regional governments) swing the big stick at landlords in an attempt to gain short-term votes inevitably landlords will duck. When landlords duck it's tenants that get hit in the face. And many of those people getting hit in the face by the big government stick will be 'better tenants'.
Jerry stone
11:41 AM, 16th December 2022, About A year ago
A very well written article.
I am writing to my M.P. would you mind if I used some of your texted?
I am also writing letters for my tenants to write the there M.P.'s FYI.
Thank you
Jerry
Paul Chetwyn
11:44 AM, 16th December 2022, About A year ago
Reply to the comment left by Beaver at 16/12/2022 - 10:38I also agree with all above, another problem is though CAPITAL GAINS TAX
I have sold two properties belonging to my children because of section 24 they have good paying jobs so obviously just not worth it, I have sold two properties in Wales due to all the new regulations, I sold one this tax year due to the possibility of the new EPC regs coming in, and that was going to be it for now BUT now I will be selling another one due to capital gains tax🤷♂️
The property will need a boiler upgrade to bring it up to a C which I was prepared to do BUT now I will sell in the next tax year while we have £6,000 each allowance each, as the tax payable on that particular property will be less than the cost of boiler upgrade 🤷♂️ so once again another property sold from the PRS and more tenants out on the street or into poor property/landlord as they will not be able to afford the latest RENTS
When will the government wake up and start supporting both tenants and landlords?
Just stop working against us.
Please can we have some top business people in the country running it, instead of politicians, the country needs to be run like a business, if we could cut out the money wasted in this country we would be a wash with cash and not in the state we are in today.
Beaver
14:23 PM, 16th December 2022, About A year ago
Reply to the comment left by Paul Chetwyn at 16/12/2022 - 11:44
For those of us who aren't incorporated and have small portfolios we're going to be making a change, like you (and me). And that change is going to be driving rents up. But that's not our fault; we didn't come up with the crazy policies that restrict tenants' choice. It seems likely that the future the various UK governments have painted for the PRS is restricted choice for tenants, an incorporated PRS and high rents.
I think for some of us for now we still just have to be grateful we don't live in Scotland. The SNP have just raised income taxes again in Scotland and they have already acted against the PRS. Although their 'rent freezes' are clearly pointless because they just drive up rents later.
So I think if you were a Scottish person investing in the PRS right now you'd be better off investing in the PRS in England. And if you were a corporate body either based in Scotland or with links to Scotland such as the Bank of Scotland or the Royal Bank of Scotland, if you wanted to do the right thing for your shareholders then you'd also be better off investing in the PRS in England.
Because it seems the SNP is going to keep on attacking private landlords. There was a glimmer of hope from Wales when Mark Drakeford decided that a rent freeze would make things worse; but you clearly decided that a property in Wales wasn't worth the risk or the effort.
Mick Roberts
12:31 PM, 17th December 2022, About A year ago
We all know Licensing makes the good houses worse. Council has got £900 now that could have been spent on the house.
Tenants are waking up & no longer shouting Yes glad Licensing is here.
Steve Hards
9:12 AM, 18th December 2022, About A year ago
Reply to the comment left by Beaver at 16/12/2022 - 10:38
I so agree with Beaver: we want our tenants to 1) pay the rent 2) not trash the house 3) not annoy the neighbours. If they follow those principles we will get on well - we look after the property and they make it their home.
I also agree with the thrust of the article. In a nutshell, tenants depend on landlords and anything which hurts landlords hurts tenants. Or, the other way around, if the Government wants to improve life for tenants it should be aiming to make life less financially risky for landlords.
Mick Roberts
17:29 PM, 18th December 2022, About A year ago
Reply to the comment left by Steve Hards at 18/12/2022 - 09:12
Brilliant Steve what you say:
tenants depend on landlords and anything which hurts landlords hurts tenants. Or, the other way around, if the Government wants to improve life for tenants it should be aiming to make life less financially risky for landlords.
I've been saying this last 5 years or so Hurt the Landlord, u Hurt the tenant.