Can landlords afford a rent freeze in the UK?

I can’t say that I am surprised at the news that Labour Mayors, trade unions and rent activists are calling for a rent freeze – not on the grounds of saving tenants a few quid, but because landlords can afford it.

The latest wheeze underlines my prediction that a rent freeze or a rent cap will come in England. Let’s see how the economy performs this year before the naysayers and critics wade in saying I am stirring things up or being alarmist.

Anyway, back to the Property118 article about an open letter calling for a rent freeze and the astonishing statistic that private landlords earn £55,415 on average before they get a penny in rent.

There are two issues with this figure:

• It’s an average and not a fact so I’m guessing that far more landlords earn much less. For example, me and my landlord friends – most of whom are hard-working people with a trade trying to provide for a comfortable retirement – don’t earn that sort of money. I’m guessing that figure might just reflect the earnings of London-based landlords
• The figure is calculated before rental income. But what rental income? Most landlords with a mortgage would be over the moon to clear £200 a month. That’s not even really profit since we still have other overheads to meet
• Actually, I have a third point. Many of those signing the letter are on six-figure salaries and a lovely gold-plated pension – including the London Mayor Sadiq Khan. No need to invest and work hard at providing homes for those who are less fortunate.

‘Cost of living crisis’

I appreciate too that renters are struggling in a ‘cost of living crisis’ – but not all of them.

There’s another broad sweep of the brush to paint all tenants as poor and struggling. That isn’t true.

And the London Renters Union says many private tenants will be made homeless as they struggle with rising bills and trying to pay rent.

Does a private landlord not have rising bills too? Those of us with a buy to let mortgage dare not look at how much the repayments will go up when we renew.

We also get treated to the canard that most homes in the rental market don’t have a mortgage so the landlord can afford to take a rent freeze.

Nope. That’s not true either.

We have invested and worked hard to buy an asset that we then rent out to tenants. That doesn’t mean we can afford rent controls.

Drive landlords out of the market in England

Let’s face facts. A rent freeze will literally be the straw that breaks the camel’s back to drive landlords out of the market in England. Don’t believe me? Look at what is happening in Scotland.

A rent freeze and now a rent cap brought in by Nicola Sturgeon and the Scottish government has seen landlords pack in and rent levels rise.

I’ve mentioned before that the Welsh government looked carefully at implementing something similar but baulked at the prospect of fed-up landlords leaving. This is an interesting scenario considering the lack of social housing.

The other big issue is that there’s never any mention of the landlords who look after their tenants. Offering rents at below the market rate, carrying out repairs immediately and making improvements. All these things have to be paid for and a lot of landlords won’t be putting up the rent to cover these costs.

Why? Because ’rent activists’ ignore the fact that most landlords are decent people who want to look after their tenants. Most of us only have one or two homes to rent out and having happy tenants makes our lives easier. I can’t speak for bigger landlords, mind.

So, while I’m predicting that controls on rental property are still likely, I’m also going to highlight another issue for the likes of the London Renters Union, Shelter and Generation Rent.

The ending of section 21 notices

You know that demand you have made for the ending of section 21 notices – which has unfairly been deemed as ‘no fault eviction’ notices, well you need to be careful what you wish for.

It does appear that the government is going to outlaw these but that will mean that lots of landlords will decide to sell up and quit. Others will have rents increase to meet their costly obligations. There will be a mass of section 21 notices being handed out before they are banned.

That’s lots of tenants being made homeless as their landlord decides enough is enough and sells. And you brought that on yourselves.

And here’s a thought: homeowners are also facing rising bills and huge hikes in their mortgage payments so why don’t we step in and help them? Why not subsidise their homes? It’s not just tenants who are struggling – lots of hard-working homeowners are too.

Demand rent caps and the ending of section 21

Essentially, it is becoming increasingly obvious that the people and organisations who sign up to these open letters and who demand rent caps and the ending of section 21 really don’t understand the private rented sector at all.

And that’s a shame because if they spent any time talking to us, they would see that we are decent people trying to do our best for tenants in a world where everyone’s bills are going up.

But, apparently, the deep pockets of landlords can afford to subsidise their tenants. I ask again: Can landlords really afford a rent freeze in the UK?

Until next time,

The Landlord Crusader

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