Landlords: Would you start in BTL in 2025 if given the choice?
1 year ago | 40 comments
My landlord vision for Christmas 2025 – it’s not good for tenants
8:26 AM, 31st January 2025, 1 year ago
44
It’s been six months since the Renters’ Rights Bill hit the statute books and the dust still hasn’t settled.
Tenants are outraged at the government’s meddling and can’t believe that evictions haven’t ended.
That’s despite reassurances from the naïve crowd in Labour that Section 21 ‘no-fault’ evictions are the ‘leading cause of homelessness’.
But we’ve since found out that wasn’t the case.
Rent arrears, anti-social behaviour and fed-up landlords bailing out of the PRS are the reasons why renters were being evicted.
Who knew?
Promise of tenant empowerment
There’s little festive cheer for the UK’s landlords after the promise of tenant empowerment has morphed into a harsh autumn of a growing PRS disaster, and frankly, it’s not a pretty sight.
My crystal ball has been working overtime to paint this bleak picture:
- The housing crisis deepens: The promised 1.5 million new homes? Still a pipe dream. Meanwhile, the landlord exodus we predicted has become a reality, drastically shrinking the supply of rental properties. Tenants, now clinging to their rented homes like life rafts, are staying put for longer, not out of choice, but necessity. The inevitable result? Rents have rocketed as landlords opt to price high to avert any legal challenge of creating a bidding war. This move disproportionately impacts those on benefits or low wages – the very people Labour claims to champion
- Periodic tenancies: The introduction of periodic tenancies has wreaked havoc on the student accommodation sector, as predicted. Student landlords take fright at the prospect of students handing their notice in after Christmas to live with parents and save cash. Overseas students face a near-impossible hurdle since they can’t pass stricter tenant checks without a UK presence, and with landlords understandably wary of accepting illegal advance rent payments, they’re left stranded. Potentially, universities could help but they don’t have the accommodation levels (thanks to years of over expansion…)
- Notice periods: The much-lauded ability for tenants to give two months’ notice from day one, while landlords remain bound by longer notice periods, has created a power imbalance. Despite the Bill having the aim of levelling up the playing field, landlords now face extended void periods and the recurring costs of finding new tenants. Grounds for possession under Section 8, requiring a year’s occupancy, further tie landlords’ hands. To me, this is no longer an investment strategy; it’s indentured servitude
- Selective licensing goes wild: Councils, emboldened by the Labour decision to remove the Secretary of State’s permission before creating a scheme have unleashed a torrent of selective licensing scams, I mean schemes, adding another layer of red tape and cost for landlords – though it’s tenants picking up the bill
- Arrears and the Courts: The extended period before rent arrears become actionable, coupled with the chronically overburdened court system, has created a perfect (predictable) storm. Tenants can effectively enjoy a rent-free period for months, potentially years, while landlords are left powerless. Lefty judges and solicitors don’t help the situation
- Guarantors: The restrictions on accepting guarantors adds another layer of risk, particularly for younger tenants. It appears that only landlords should be put at a potential financial disadvantage
- EPCs: Labour continues doubling down on the EPC C rating by 2030 despite the whole Net Zero nonsense harming the economy and putting us at a disadvantage with leading economies. There’s still no sign that this much needed measure to deliver ‘warm and comfortable’ homes will extend to the social housing sector. It’s just another nail in the coffin for landlords, driving even more out of the market.
Evidence of a landlord exodus
Housing minister Matthew Pennycook and his cronies still deny there’s evidence of a landlord exodus, but more are leaving than investing. They bury their heads in the sand and deny the damage, but the reality is clear.
The Renters’ Rights Bill, far from being a panacea, has exacerbated the very problems it purported to solve. Even the government’s late pitch to impose rent caps doesn’t play well – everyone can now see why rents are rising. It isn’t landlord greed.
For landlords, Christmas 2025 is a stark reminder of well-intentioned, but ultimately misguided, legislation.
It’s a time for reflection, and perhaps, a strategic rethink.
The PRS landscape has undoubtedly changed with both tenants and landlords losing out.
The scenario was inevitable but it’s way worse than landlords could have foreseen and there’s no sign of a U-turn since the Labour clown show government is too busy fighting the fires it started: there’s no economic growth, immigration spirals out of control, overtaxed businesses are still laying off, incomes and living standards plummet – basically, it’s January 2025 on steroids.
We’re back to the problem of unintended consequences – that is if you ignore the expertise of landlords who have been vilified and who are too beaten to say, ‘We told you this would happen’.
Until next time,
The Landlord Crusader
Tags:
EPC, landlord exodus, Landlords, Matthew Pennycook Housing Minister, periodic tenancies, Renters' Right Bill, tenants, The Landlord Crusader
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Member Since September 2018 - Comments: 3508 - Articles: 5
2:37 PM, 1st February 2025, About 1 year ago
Reply to the comment left by Michael Crofts at 01/02/2025 – 14:01
My prediction is that new mandatory ground 1A (Landlord’s intention to sell) will become the principal ground for possession. This will show up in the statistics around 2027
I see LL’s using 1A this as the ground for any possession claim after the RRB hits regardless of whatever other box is also ticked on the revised S8 and regardless if they are looking to sell or not.
We all know that any claim that ticks only the discretionary grounds is going to be purposely kicked into the long grass given the already dire state of the courts, so any LL might as well tick 1A too as he has nothing to loose (and might get possession quicker??).
What is the choice? If you have a tenant not paying anyway and you going for rent arrears on discretionary grounds only it could take months.
Add to this the T can challenge the notice at any point (disrepair/breathing space/mental health etc) and you have no idea when you will gain possession.
The only option will be to rely on the 1A to at least know that it is a mandatory ground. You do not have to provide any other evidence although YOU CAN STILL list the rent arrears/asbo or whatever else IS CAUSING you to evict – this will show up very clearly on the S8 form and then can be totally related to the reason why the 1A mandatory ground has also been chosen.
If I have to evict after the RRB, I will be literally listing each and every AST breach that is relevant and which the T has not complied by on the S8 relevant to each and every ground as the notice allows…. plus ticking the 1A mandatory ground.
Want to know the reason why LL’s want possession Shelter et al? All will be shortly revealed,…
Member Since January 2024 - Comments: 341
3:15 PM, 1st February 2025, About 1 year ago
I will be giving notice under s8 to all my tenants as soon as I know when the Bill is likely to be enacted in its present form. I am not risking my assets and income.
It is a shame, because the majority of my tenants have been no problem at all. But there is no insufficient return from BTLs for a 40% taxpayer, I may as well stick the money on deposit and in tracker funds, reducing my risk, time and stress levels dealing with all the nonsensical regulations, etc.
Member Since January 2016 - Comments: 235
3:54 PM, 1st February 2025, About 1 year ago
“Student landlords take fright at the prospect of students handing their notice in after Christmas to live with parents and save cash”
Good luck with getting accommodation after pulling that stunt. I get a lot of requests for references, and strong referencing will become the norm after the RRB.
AGENT: and would you rent to little Johnny again?
ME.: no, don’t touch him with a bargepole
LITTLE JOHNNY: Doug, are you saying horrible things about me? I’ve been rejected from 20 flats so far. I can’t get anywhere to live.
ME: consequences Johnny, consequences.
And if Little Johnny is in Year 2, he’ll find that no-one will touch him in Year 3. Interesting times.
Member Since October 2013 - Comments: 1630 - Articles: 3
4:51 PM, 1st February 2025, About 1 year ago
Reply to the comment left by Grumpy Doug at 01/02/2025 – 15:54
If you still believe there is a strong demand for rentals, but don’t want the hassle of owning at the low(er) end of BTL, invest a few £’s in BTR. It’s where the big money and government support is.
I did so last year and my return is 17%.
Member Since March 2024 - Comments: 281
5:28 PM, 1st February 2025, About 1 year ago
Reply to the comment left by NewYorkie at 01/02/2025 – 16:51
Yes, I did similar. Uk REITs are obliged to pay 90% of rental profits as a dividend and of course £20k worth can be put in an ISA each year.
Member Since October 2022 - Comments: 200
10:09 PM, 1st February 2025, About 1 year ago
Reply to the comment left by Reluctant Landlord at 01/02/2025 – 14:37
Mandatory ground 1A (Landlord’s intention to sell).
Does the landlord have to follow through on his/her “intention to sell”?
Member Since August 2016 - Comments: 1190
11:05 AM, 2nd February 2025, About 1 year ago
Reply to the comment left by Peter Merrick at 01/02/2025 – 22:09
From my understanding yes you really do have to follow through. If you rent the property again within 12 months then there will be a substantial penalty.
If you’ve gone down the Section 8 1A route and have no intention of selling the real reason is likely to be rent arrears or anti social behaviour. These are valid reasons for wanting to sell up. I would image most landlords would be sick of the arrears or anti social behaviour issue and want to sell up anyway after all the stress and grief. Maybe exiting the PRS altogether if it’s your only rental property, or exiting this particular property and reducing your portfolio.
Member Since October 2013 - Comments: 1630 - Articles: 3
1:02 PM, 2nd February 2025, About 1 year ago
Reply to the comment left by Dylan Morris at 02/02/2025 – 11:05
One BTL is a significant risk. You have no coverage if your only tenant stops paying. The RRB significantly increases a landlord’s risk.
I had two remaining rentals when one tenant stopped paying and started committing serious ASB in 2020. The loss by the time I could evict him was £20k+, but my relationship with other occupants in the block had become really bad because I was powerless to remove the tenant. At one point, the police arrested him for downloading child porn using another tenant’s Wi-Fi! I had plenty of coverage from past rental sales, but felt I needed to sell up. But if it had been my only BTL, and I was totally reliant on the rent, it’s likely the property would have been repossessed.
Why would anyone put themselves through that sort of stress for the benefit of a delinquent tenant?
Member Since September 2018 - Comments: 3508 - Articles: 5
5:05 PM, 2nd February 2025, About 1 year ago
Reply to the comment left by Dylan Morris at 02/02/2025 – 11:05
All you have to do is state the intention to sell to issue the notice. You are giving notice because you want vacant possession in order to sell.
At the same time you can’t realistically put the property on the market UNTIL you have gained vacant possession, because by default you cannot give a potential buyer a date of when this will be – because you have no idea how long its going to take possession!
The other issue is even though you might have ticked the mandatory 1A clause, the reason for it will probably be due to a combo of the other grounds like rent arrears etc which more than likely are continuing. Make sure that every single breach is listed on the new S8.
I have not seen any more clarity about ‘reletting’ after possession is gained, but a serious own goal of the government really believe that yet another house unoccupied is going to help the crisis.
Assuming the VOA will be inundated with requests to remove properties from the listing for that 12 months, if correct? If you are legally banned from allowing anyone to occupy it by statute, and it is therefore ‘uninhabitable’ then zero Council tax applies?
Member Since March 2019 - Comments: 16
7:31 PM, 4th February 2025, About 1 year ago
Reply to the comment left by Keith Wellburn at 01/02/2025 – 17:28
Hi Keith, how can you invest in Build To Rent sector with such % as you mentioned? Will some stock dealer (like Interactive Broker) has such funds for sale? Sorry for the basic question, but I’m not sure where to look for it, so would appreciate some guidance 🙂 Thank you, Joanna