Landlords face crisis as government reforms loom large

Landlords face crisis as government reforms loom large

9:40 AM, 25th March 2024, About 3 months ago 17

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“The Renters (Reform) Bill looms over most landlords like the Sword of Damocles”, is how one legal expert describes the current situation in the rental market.

Gina Peters, head of landlord and tenant at law firm Dutton Gregory, says many landlords are on the verge of throwing in the towel as the Renters (Reform) Bill makes its way through Parliament.

She tells Property118 that landlords face a variety of challenges.

Many BTL landlords will struggle in the coming months

Mrs Peters says legislative changes are having a huge impact on the industry.

“I think the real challenge for landlords is staying put if they possibly can.” she said.

“Associated with that is making a reasonable profit because many landlords feel they have been beaten by the government through tax measures which have removed relief for landlords, such as Section 24.

“There’s the challenge of encouraging landlords to stay in the industry and to ride the regular economic storm, with markets going up and down and interest rates doing exactly the same.”

Mrs Peters adds many buy-to-let landlords will struggle in the coming months when mortgages come up for renewal.

“There are problems still ahead for landlords hoping to make any reasonable profit from being within the lettings industry.” she said.

“Many buy-to-let landlords with mortgages are going to have their mortgages coming up for renewal very shortly.

“That’s going to cause problems because they are going to be back on a variable rate that is much higher than they were used to, or perhaps they were even on a fixed rate.

“It’s not just about capital increase, either, because a lot of property just naturally increases in value but at some point, that bubble has to burst, and it has to stop.

“Most landlords do not simply want to cash in because there are tax implications for doing that.”

Rent controls will not be at all well received

Mrs Peters says introducing rent controls in England would be a huge mistake and claims many landlords would leave the sector as a result.

The Scottish government recently announced the end of its emergency rent cap.

Introduced in 2022, the Cost of Living (Tenant Protection) (Scotland) Act, aimed to protect tenants from rent increases and ban evictions.

She tells Property118: “It feels like interference from the government by the back door.

“We’re supposed to live in a free market, and I don’t think this will be at all well received by any landlord in the country.

“There are just other ways to stabilise the market, and I appreciate that there is always another side to something as significant as rent control.”

“And that, of course, is to bring stability to the tenant, to bring something that is seemingly unaffordable because of the rent increases to something that’s steady and affordable.”

Mrs Peters says it’s important to remember that the cost-of-living crisis also affects landlords not just tenants.

“Every one of us, whether we own a property or rent a property, is subject to the cost of living rises.” she said.

“So that still reflects on landlords who may be stifled in terms of being able to put their rents up to cover, for example, the huge increases that some of them are experiencing through their mortgage lenders, raising their interest rates.

“It’s a really difficult balance, but usually with rent controls they have pushed landlords out of the sector rather than stabilise the market.”

Abolition of Section 21 will cause huge problems for the courts

Mrs Peters says the million-dollar question is whether the Renters (Reform) Bill will pass into law before the next election.

“This has been like the Sword of Damocles hanging over most landlords for quite some time.” she said.

“Nobody quite knows why the Bill has stalled. Is it because of certain elements such as the abolition of fixed-term tenancies, a lot of backbenchers seem to be fighting that element at this moment in time?

“It’s going to be very tight, and nobody knows what is going to be in the Parliamentary business books at the moment, but it doesn’t seem to be the Renters (Reform) Bill.”

Mrs Peters adds the abolition of Section 21 will cause a huge problem for the courts.

She explains: “The judiciary system is such a mess at the moment. Any new government whether it be Labour, or the Conservatives will still have the same problem with the courts, especially with the huge court backlog.

“It’s going to be an interesting ride but Section 21 at the moment is still the preferred notice being used by most landlords.”

A difficult situation

Mrs Peters hopes the future of the private rented sector will continue to thrive and play a vital role.

She tells Property118: “I hope in the future the private rented sector will be as vital as it is now. It’s a massive part of our housing market and the economy as a whole. I don’t think it will ever diminish in its importance.

“What will happen, however, is that there will be landlords who have to seriously consider if it’s for them, unless the government can start supporting landlords with how they can conduct business.”

Mrs Peters adds: “It’s the difficult tenants and the small minority of bad landlords who are actually making the problem for the entire industry.”

“We have got a difficult situation, but we have to hope that landlords ride the storm and that they are in it for the longer term.”

Book for landlords and agents

Mrs Peters also tells Property118 about her book which she has published about lettings law for landlords and agents which includes some of the more unusual questions that come with renting out a property.

She said: “It was a really interesting process writing a book. It was more about just getting a message out there to as many people who are interested to just understand where their gaps might be in their learning and the understanding of the legal process associated with renting a house.”

To find out about the unusual questions that come with dealing with property and more on Gina’s analysis on the private rented sector including the Spring Budget then watch the video below.

If you would also like to win a copy of Gina’s book ‘Lettings Law for Property Professionals’, then answer this question by no later than the 5th April 2024 when the draw will be made:

Which is the new Section 8 ground to be introduced to help student lets?

Send your answers to Nikki Wright (n.wright@duttongregory.co.uk) and be sure to provide your contact information to enable us to notify you if you are a winner!


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Comments

paul robinson

10:15 AM, 25th March 2024, About 3 months ago

Meanwhile are LA finances not being crippled by emergency housing costs as decent landlords quit the sector and serve S21 notices to their longstanding decent tenants - to say this government is clueless & corrupt is being polite!

Caley McKernan

10:28 AM, 25th March 2024, About 3 months ago

Reply to the comment left by paul robinson at 25/03/2024 - 10:15LA are led by people with no clue of the issues.
They just want to stay in power.
My borough the leader wants to blow up a building as he believes it has failed planning permission. It can be seen from the council buildings and had been cleared on paper 12 years before. No planning officer visited it during construction or before people moved in. Some how that was the governments fault??? Cuts!!!! But CEO still gets 200,000 a year.
So, you blow up a building in the middle of a homeless crisis.Making people homeless. State that none are"vulnerable" . However, do not realize under legislation you still have to support non vulnerable homeless people. Even, if it is advice. And are you not vulnerable by the pure fact. You blew up their home.
Paradox is the new word.

John MacAlevey

10:40 AM, 25th March 2024, About 3 months ago

`..to say this government is clueless & corrupt is being polite!`

Gove is a clever & coniving politician..he & HMG are difinitely trying to wrench away property ownership by landlords in the PRS to complete the conspiracy (yes, that word) to control along with corporations/pension co`s. a massive market that affects everyone.

It`s about the money honey.

moneymanager

10:43 AM, 25th March 2024, About 3 months ago

Reply to the comment left by paul robinson at 25/03/2024 - 10:15
LA Finances will be even more cripples when Westminsterstops housing migrants in hotels, they won't be moved out, just paid for by the Council. In 2018 the UN pontificated on the scale of likely irregular 'migration',later that year numerous governments and yes,you guessed it, declared they would regularise it, it's an organised transfer.

moneymanager

10:46 AM, 25th March 2024, About 3 months ago

Reply to the comment left by John MacAlevey at 25/03/2024 - 10:40
When Gove talks about levelling up, he doesn't mean impoverished Northern England with Kent, but the southern hemisphere with the north, in effect a mass levelling DOWN for those already here.

Reluctant Landlord

11:12 AM, 25th March 2024, About 3 months ago

“We have got a difficult situation, but we have to hope that landlords ride the storm and that they are in it for the longer term.

Sorry - I can't run a business on 'hope'... there is no long term outcome if the continued attack on the PRS continues. Lack of supply, and the proliferation only of large corps providing 'rent-a-coffin' sized flats will dominate...

New World Communism.

Neilt

11:30 AM, 25th March 2024, About 3 months ago

"Mrs Peters says introducing rent controls in England would be a huge mistake and claims many landlords would leave the sector as a result".
What Mrs P is missing out is that hand in hand with rent controls comes security of tenure. So LL s won't be able to leave the sector! History repeating itself.

Cider Drinker

11:57 AM, 25th March 2024, About 3 months ago

Please allow me to fix the headline…

𝗧𝗲𝗻𝗮𝗻𝘁𝘀 𝗳𝗮𝗰𝗲 𝗰𝗿𝗶𝘀𝗶𝘀 𝗮𝘀 𝗴𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁 𝗿𝗲𝗳𝗼𝗿𝗺𝘀 𝗹𝗼𝗼𝗺 𝗹𝗮𝗿𝗴𝗲

Landlords are simply the middlemen that are taking the government beating and passing it on to their tenants. It’s like when a school bully bullies a smaller kid and that kid bullies an even smaller one.

Caroline Mayger

13:03 PM, 25th March 2024, About 3 months ago

I am appalled at the behaviour of LA. I need to sell as I need the money for medical care. They have told the tenants that if they cannot rehouse with 60 days of section 21 issued they must wait for eviction through the courts and balifs. This means I cannot put the property on the market as the court process could take many months. This will mean an increase in mortgage ( end of fix) and tenants who can't afford to pay. Every cost dumped on to the landlord.

Stella

14:19 PM, 25th March 2024, About 3 months ago

Reply to the comment left by Neilt at 25/03/2024 - 11:30
Yes and hand in hand with rent controls and security of tenure comes a BIG DROP in the value of the property.

Just what this blinkered government need to solve the housing problem!!!???

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