Despite demand for rental property being at an all-time high, the number of landlords planning to sell their properties has reached its highest rate on record.
Recent research by BVA-BDRC found that a third – 33% – of private landlords in England and Wales plan to cut the number of properties they rent out.
By contrast, just 10% of landlords now say they plan to increase the number of properties they rent out.
With demand for properties from prospective tenants increasing in almost every region of England and Wales, the National Residential Landlords Association is warning that the supply crisis is set to deepen further without action by ministers, and that is a viewed shared by many letting agents up and own the country, including Nicol & Co.
The company is urging BTL landlords to hold fire on plans to sell up and exit the rental marketplace.
James Gwynne, letting manager at Nicol & Co., which has offices in Droitwich, Worcester and Malvern, said: “The message for now to landlords across the sector from us is essentially, don’t fret.
“There are still huge benefits in letting your property and when a change like this occurs, a new normal will be established. The best advice I can give is that now is a good time to communicate with your local managing agent with any queries.”
As it stands, the Renters (Reform) Bill provides for:
- Abolishing Section 21 “no fault evictions”
- A move to periodic tenancies and the removal of assured short-hold tenancies
- Strengthening Section 8 grounds – particularly for anti-social tenants
- Reforming the courts process – with new digital processes to reduce delays
- A new Ombudsman and digital Property Portal
- Further legal rights for tenants to request a pet in their rental property – with tenants expected to get pet insurance or to pay for the landlord’s pet damage insurance
- Applying the Decent Homes Standard to private rented sector for the first time
- Stopping landlords and agents from issuing blanket bans for tenants on benefits, or with families
- Strengthening enforcement powers for councils
Gwynne continued: “There is a concern among agents and landlords alike that certain areas of the bill will result in more landlords leaving the sector due to tighter regulations and more complications on ending an unwelcome tenancy.
“While I don’t completely agree with the proposals, ultimately the government will need to add some incentives in at some point to keep landlords in the market.
“They do not currently have an alternative solution to social housing and if more landlords leave the sector, it will negatively impact tenants – the opposite of the government’s intentions.”
But he stressed that the benefits contained in the Bill should not be overlooked.
He explained: “As long as the strengthening of the Section 8 notice is made relatively straightforward and the court application process is not too legislatively complicated, then landlords should still be able to take comfort if needing to give notice for the more obvious reasons, for example, if they need to sell or move back in.
“The new ombudsman process should make the resolution of disputes easier, plus having a regulating body to listen to arguments on both sides might give the government a better overall view of the sector, resulting in better, more refined and balanced legislation for the sector in the long run.
“Having a ‘Decent Homes Standard’ will help to reward landlords who look after their tenants and provide well-run properties. This should also help to ease the bad ones out of the system.”
Gwynne added: “Landlords need to take a long-term view, which includes not only rental which, according to figures from JLL Predict, could see cumulative growth in rental values of 15.9% in five years to 2027, but also increased capital gain over the long term.
“We believe that the government still needs to look at how to incentivise landlords but landlords also need to look at the benefits of remaining in the market.”
Wishful thinking bordering on delusional. ‘ultimately the government will need to add some incentives’. Quite possibly, but they won’t.
As for streamlining the courts and ombudsman process, Government intervention never makes matters more efficient or straightforward.
If gross rental income is 4-6% pa, i.e. about the same as you can get from a share portfolio (without the costs or regulations) and only slightly ahead of what you can get in a low risk savings bond, where is the real incentive for BTL landlords to buy or remain in the sector?
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Capital growth?
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Here you go, it’s not that hard to incentive Landlords to stay.
Remove 3% additional stamp to stimulate new stock to market.
Consider allowing at least 50% mortgage interest to be offset against costs ( still not has attractive as a Ltd company but hey!)
Allow wear and tear up to £500 pa
Special consideration for properties over 50 years old which are EPC D – E
Invest in proper systems and processes within Courts to avoid ridiculous levels of adjournments and lengthy appeal processes
Stop listening to Shelter !
Reconsider essentially removing Capital Gains allowance.
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The only person who is likely to grant your wish is the tooth fairy.
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Have to say the story is very short sighted and misses the point why so many are or considering leaving.
Not good advice to just say hold in this current financial and political climate. Lettings for a landlord is an investment and treated by government as a business. As a consequence risk, potential and yield all come into the frame and a gut hold fire is reckless. Many landlords are likely to suffer if it goes pear shaped. BLT interest rates, taxation are just some of the hits that many consider its not worth staying put. Maintenance costs and improvements for EPC’s is going to be a big hit, which many a landlord is not prepared for, we are talking £k’s. Add in tenant defaults and a landlord can come out (as many have for decades) losing big time financially. Another missed opportunity to put things in order is to penalise tenants who breach the contract, that governments are more than happy to force on the landlord.
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So,“many letting agents up and down the country, including Nicol & Co” are urging Landlords not to exit buy-to-let en-masse. Well, they would wouldn’t they? After all, their livelihood depends on Landlords staying in business.
They then tell landlords that the RRB isn’t that bad and that Landlords shouldn’t fret about it and then produce a long list of all the things we are fretting about that are going to cost us time and money and make it even more difficult to get our property back when we want it. What can a bunch of letting agents do about it? They can waffle on about the Government needing to incentivise landlords to stay but that means nothing. The Government will ignore them just as they ignore the NRLA. It’s Shelter and Generation Rent and all the other “property is theft” merchants that have the Government’s ear especially if that property is owned by a PRS landlord who has put his life savings into it.
The media is making a big thing about how getting rid of Section 21 is somehow going to make it easier to evict tenants for rent arrears or antisocial behaviour or smashing the place up. What’s the new procedure? Will you just write to your tenant on a section 8 notice saying,” I hear you are being antisocial please arrange to leave the property forthwith” Of course not, you will need proof from terrified neighbours who won’t provide it due to fear of repercussions. When one of our properties was being used by a drug dealer terrifying the neighbours, who, while they were happy to moan at the letting agent and us, would stop short of going to the police or actually giving any evidence fearing for their safety, we just served a section 21 notice and got rid of him, job done. How can any new improved system be easier than that?
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Why would anyone run a business where you cant offset your costs against your gross income, since Osbourne introduced tax on gross rent it has not been worth letting out property unless you own them outright. Now we have ‘reforms’ that are supposed to ‘benifit’ us, just think about it with section 21 where you did not have to have a reason it took anything up to 8 months to evict, now you have to prove your moving in, or you need to sell, non payment of rent forget going to court with 2 months arrears they will just pay one month and it all gets thrown out. Renting property has become unviable for smaller landlords like me with just 5 properties. Sell up and stick it in a savings account.
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