What will happen when Labour re-introduce the Renters Reform Bill?

What will happen when Labour re-introduce the Renters Reform Bill?

9:47 AM, 3rd June 2024, About 4 months ago 17

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This is purely hypothetical at the moment but just imagine what could happen when Labour introduce their own version of the Renters Reform Bill. Imagine a scenario.

Labour have got in to 10 Downing Street, and Angela Rayner decides that all private renters should benefit to the same extent as she has, and landlords can no longer sell their tenanted houses. Judges no longer award possession to the landlord, but allow the tenant to pay back their arrears at £1 per week. Landlords wanting to sell their properties is no longer a valid reason to seek possession.

Now imagine a frustrated landlord. He has a £200,000 property, with an awful tenant who is destroying it, and causing more in repair bills than they pay in rent. The new RRB and the Courts won’t let him have the property back. He bought it 20 years ago for £50,000 with a £10,000 deposit and still has a £40,000 mortgage on it.

If he was ever able to sell it he will have around £120,000 left after CGT and the mortgage being paid off. But he can’t get at that £120,000 as the law won’t let him have his own property back.

But suppose he re-mortgaged it. That he had taken out another £120,000, bringing his mortgage to £160,000, i.e. 80% LTV; a perfectly plausible idea. And suppose that he had created a trust fund for his children, and given away that £120,000 to that trust fund, and indeed he had done the same with all of his own wealth. Or maybe moved it offshore, or some other tax efficient, inheritance tax planning strategy, designed to look after his children in the future.

On paper, the landlord is now penniless, apart from his pension or employment income. But he doesn’t need credit again as his wealth is now secured in these trusts or other tax efficient ventures.

But there is still the problem of the tenanted property. He is making no money from it as it is all disappearing in interest and repair bills. He can’t sell it as the law won’t allow it so long as the tenant won’t leave. So he decides to stop paying his mortgage. That’s it, simply decides to stop paying it. The mortgage company are going to want their money back; they can’t get their money back from the landlord as he has shifted all his wealth out from his own name.

They will want to sell the property, and sell it under market value, just so long as they get their £160,000 back.

Would banks be able to seek repossession of a property in an easier way than the original landlord, under any revised RRB? Other than the inability to ever get credit again, what would be the downsides for such a landlord?

Thanks,

Jessie


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Cider Drinker

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10:23 AM, 3rd June 2024, About 4 months ago

Whatever laws the government brings in, there will be unintended consequences.

There will always be ways to deal with problem properties. Just as now, some will be legal and some will be not so legal.

Neilt

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10:34 AM, 3rd June 2024, About 4 months ago

A Short History of Rent Control. It happened before and it may well happen again under Labour. Take a look here;
https://researchbriefings.files.parliament.uk/documents/SN06747/SN06747.pdf

PH

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10:34 AM, 3rd June 2024, About 4 months ago

Reply to the comment left by Cider Drinker at 03/06/2024 - 10:23
"Dave" will be busy!

Downsize Government

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10:53 AM, 3rd June 2024, About 4 months ago

Let's hopefully not got the path of Venezuela.

LaLo

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11:41 AM, 3rd June 2024, About 4 months ago

A lot of this is already in Labours Renters Charter which includes ‘rent arrears’ as not a reason to evict! So does this mean I can have property rented out but I have no where to live as I’ve no money/income. But there is a positive side - the ratio of homeless LLs compared to homeless Ts will be a lot less which will suit the government and save a lot of money!! Write to your local Labour candidate quick!

Judith Wordsworth

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12:12 PM, 3rd June 2024, About 4 months ago

Reply to the comment left by LaLo at 03/06/2024 - 11:41
You will likely be told by the Court to rent a property, others already have been told to do this.

BUT you wont get any housing benefit as you already own a property irrespective whether the tenant is paying you your rent or withholding it.

Sell up now, invest the money, and then think about getting back into property when prices are at rock bottom?

Reluctant Landlord

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15:56 PM, 3rd June 2024, About 4 months ago

Reply to the comment left by LaLo at 03/06/2024 - 11:41
can't wait for the Labour candidate to come knocking at my door...they are going to really regret doing so.....

Reluctant Landlord

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16:34 PM, 3rd June 2024, About 4 months ago

Reply to the comment left by PH at 03/06/2024 - 10:34
I certainly think that some LL's will be going down this route...what's the real chance that T will take it further when they also have to prove illegal eviction actually took place, not that they just upped and left without proper notice of their own accord....

They will be immediately housed by the council anyway as 'homeless' more than likely (so they wont need to pay anything) and they will sit and wait until they are moved on.

PH

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16:59 PM, 3rd June 2024, About 4 months ago

No chance the tenant will take it further. Proving anything will be highly unlikely but most likely laughed out of the police station . There is a lot of animosity amongst landlords and I feel Dave is getting ever closer because WE'VE HAD ENOUGH OF THE BS IN THIS COUNTRY !

LaLo

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18:37 PM, 3rd June 2024, About 4 months ago

I’ve read somewhere Angela Rayner has stated S21 will be abolished on the 1st day in office. I thought it would have to get through the House of Commons/Lords first! I’ve also read non compliance with the LL register will be a criminal offence? I like to look on the bright side - at least LLs won’t go to prison, they are full!

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