11:33 AM, 6th January 2023, About 3 weeks ago 26
As the headline says, landlords who want to explain just how difficult life is right now to their tenants should give them this article. For tenants who believe we should have a rent freeze and all landlords are evil, then be prepared for a shock.
It’s a new year and we can expect critics to start lining up again to give all private rental sector (PRS) landlords a kicking. But hold on! I think you’ll find that landlords want to compromise and offer quality homes at a reasonable rent.
And if you think that every penny you pay to rent your home is sheer profit for the landlord, then you are sadly mistaken. Let me count the ways that highlight just how wrong you are:
Your landlord probably has a mortgage on your home and needs to pay it. Interest rates are going up and so is the mortgage (which tends to be dearer than residential mortgages). This is an expense few landlords can avoid but many will not want to increase rent for this reason alone. See ‘Inflation’, below.
Your boiler has broken? There’s a leak that needs fixing? One of the benefits as a tenant is that these are bills for the landlord. You don’t have to organise and then pay for repairs. Your landlord does and this will come out of the profits that he or she expects to make every year.
Yes, that horrible word. Did you know that landlords pay tax on their earnings (or turnover)? That’s not on the profits – minus their running costs – like other businesses. And some landlords will be pushed into a higher tax bracket, so they’ll pay more tax on their work earnings too. Basically, should your landlord make a loss, he will still have to pay tax on the total earnings! Crazy, right??
Hopefully, you have paid for contents insurance, so your belongings are protected. Your landlord will have to pay for the buildings cover and may have extra insurance such as paying the rent when no-one is living in the property.
If you don’t contact your landlord directly when you have an issue, then it will be the letting agent. They need paying.
You have a Gas Safety check carried out every year to ensure that you and your family are kept safe. If there is a problem, the landlord must fix it. This certificate also needs paying for. Landlords also have to carry out electric checks on your home too every few years.
A real bugbear for landlords is for councils who introduce licensing to ‘improve standards in the PRS’. There are two problems that tenants need to understand: a) there will rarely be any checking of properties so no-one will ever know if you live in a sub-standard home, so a scheme has effectively been created to employ council staff. And b) who pays for this license? You do! The council may say that the landlord will pay – which they do – but this is a cost that is passed onto the tenant with higher rent.
Have you wondered when you watch the news about rising inflation and prices whether your rent will increase by the same amount? Probably not. Rising prices affect all of us, landlords included. It’s likely that if you do get a rent rise it will be at a rate BELOW the official inflation rate. That means you benefit.
I could wax lyrical about Section 21 – also known as the ‘no fault’ eviction notice. This is a misunderstood way for a landlord to get their property back when they need it. It doesn’t mean that landlords will evict you should you complain. Let’s put it this way, if you owned a home and trusted someone to pay rent and look after it while living there but they didn’t, what would you do? Would you think it would be OK for the tenant to live in your property rent free? Lots of people think this way and it is driving landlords out.
Sounds great, doesn’t it? A rent freeze will mean you won’t have to pay more in rent while prices rise. But the landlord’s outgoings don’t just stop rising. A rent freeze damages the sector and will see landlords selling up to avoid being told by the government what they can and can’t do with their rental property. That means fewer homes to rent.
Did you enjoy the two years you spent at home while the government (AKA the taxpayer) paid your wages? Great. Landlords got no help.
Did you know that finding tenants and checking their references is a costly and time-consuming exercise? We can’t pass these costs on.
If you do have an issue with rising rent prices and fewer homes to choose from, don’t blame the landlord. Blame the government for not building enough homes in recent years – especially social housing.
I’ve left this favourite of mine until last. EPC stands for energy performance certificate, and we need one for a tenancy. There are plans to make all rented homes have a minimum rating of ‘C’. That means more expense. It might also mean that you have to move out while the improvement work is carried out. It might also mean your landlord decides not to bother and will sell-up instead. By the way, there is no legal deadline for this to happen – it is meant to be 2025 but the government has gone quiet which means they may have calculated how many landlords will quit!
Why is any of this important to you? Because The Deposit Scheme carried out a survey recently and found that awareness of rental reforms planned for this year are unknown by 60% of tenants. Surprisingly, 26% had heard about the reforms but had no idea what the proposals are.
The big change will be the end of Section 21 notices – see above. Look at the problem this way: If you had a valuable asset that you had no guarantee of getting back, would you run that risk? I know this plan plays well with the likes of Shelter and Generation Rent but in reality, it will force lots of landlords from the sector.
And other landlords who are fed-up with the proliferation of laws and regulations and more taxation will follow them.
But that’s good right? There will be fewer landlords left to exploit the poor tenant. Landlords not getting rich on rents that people like you work hard to pay.
Well, it’s not quite like that. With fewer landlords and rental properties available means that demand will increase, and rents will rise too.
When rents rise you might find yourself locked out of the market and need to find social housing instead. Good luck with that.
This situation isn’t getting easier for landlords or tenants, but don’t worry, with lots of landlords leaving there will be lots of homes for you to buy. Oh, wait…
So, when you read or see a news story about poor tenants being evicted for no reason, or that rents are rising, just for once spare a thought for the landlord involved. Most of them are decent, hardworking people who want to provide a quality home for rent.
The constant flow of negativity and criticism is also another reason why landlords are packing in.
As your mother might have said, be careful what you wish for.
Until next time,
The Landlord Crusader