Government look to throw landlords under the bus with 3 year tenancies

Reply to the comment left by Jack Craven at 02/07/2018 - 14:41
I could understand if the Govt/local authorities had masses of money to buy up the property, effectively regaining stock they sold off…but they don’t.

Even if a flood of properties brings prices down, it’ll be those living with parents/new divorcees that buy these not the current tenants…and where do they go?

The numbers of those that are not currently OOs and need Housing is far greater than the number of people currently (visibly) renting. There’s no account taken of these ‘parents’ bedroom dwellers’!

Drafted email to my MP that I cribbed from everyone else's posts (I don't believe in reinventing the wheel). If you wish to edit to send to your own MP, please edit out my personal bits & may be add in your own experiences:-

Dear Dame Eleanor Laing

The Government released to the BBC & other selected journalists that it intends to hold a Consultation due to start this week & run until 26th August during which it will consider making the shortest term tenancy in England 3 years with a 6 month break clause for tenants.

By the Government's very own figures the average tenancy length is already over 4 years & only last October at the Conservative Party conference; Sajid Javid announced plans for a consultation on how to "encourage" longer tenancies yet it now appears a much more rigid system will be "forced" upon landlords that is reminiscent of the regulated model the current system replaced.

John Healey; Shadow Housing Secretary also said: "any fresh help for renters is welcome but is meaningless if landlords can still force tenants out by hiking up the rent".

Polly Neate of Shelter also waded in saying; "This is an important step forward as losing a tenancy is the main driver of homelessness ........if the government really wants to stand up & provide stability for renters, they can & should go beyond 3 years to provide real protection from eviction and the huge upheaval of having to move home, jobs, schools".

Added to this the threat of Labour's Private Rented Sector plans to include controls on rents & an end to no fault evictions i.e. Section 21

The reality is most landlords do not want a good tenant to leave and more often than not allow tenants to stay as long as they like, often paying below market rent.

Out of my 15 properties, I have only ever evicted 3 tenants since 1999; all 3 of which I sought possession through the Courts due to:-

i) rent arrears on 2 tenancies & the tenant's refusal to discuss a repayment plan, then absconding having intentionally caused damage to the properties (including defecation & hammers to walls)

ii) another tenant disagreed with a £5 pm rent increase after being £100 pm below market rent and on the same rent for 3 years who then threatened to cause damage if I went ahead with the increase

Besides the above 3 examples, all of my tenants have been with me for many years ranging from my two longest of 10 & 13 years with the remaining 13 tenancies averaging 6 years & all bar 2 paying below market rent.

However due to the constant headache caused by changes in e.g. mortgage interest relief & increased costs being forced upon landlords through selective licencing fees, anticipated loss of tenant referencing fees....to name but very few as the list is endless, and threatened to only get much worse, I have had to:-

i) increase rents starting last year having told my tenants I will do this piecemeal year on year with the ultimate goal of them still being 7.5% below market rent (they were between 29-32% below market rent for years, reduced last year to 17-24% having increased rents but still within their budgets, with a further reduction to 13-18.5% below market rent planned for later this year, and so on each year until they are no more than 7.5% below market rent at which point I will maintain this until they leave when I will sell unless circumstances force my hand earlier). I might add that having explained the background to my reasoning to my tenants, they fully understood & accepted this and still want to stay on.

ii) set in motion selling / downsizing my portfolio year on year for which I have created a "sell program" 1st; those that no longer yield a decent return or are unlikely to over the next few years are to go first then 2nd; sell as & when a tenant moves on and 3rd. simultaneously extend any with short leases ready for selling (2 going through now)

I have always been a highly attentive responsible landlord & looked after my tenants with due care & attention & executed my duties to the letter & beyond that which is expected of me e.g. one tenant is currently struggling as she is working less hours due to the onset of Parkinsons & I am working with her & her 2 adult children to help them get her the right support whilst meanwhile allowing her flexibility in paying her rent & will continue to do so for as long as it takes.

Although the above example is one I am only too happy to deal with, I am no longer happy to put up with the headaches being caused by imposed ever increasing legislation / regulation / practices / taxation with other additional changes on the horizon that we are being threatened with, plus no doubt yet unknown threats that given time the Government will come up with, on top of which there is the ever increasing cost of running a property in terms of time & money making the effort vs reward no longer a viable option. Yet bad or lazy landlords will continue to find a way round new rules & will always do so no matter what the Government throws at them.

All the Government is doing is forcing out the good landlords ultimately leaving only the bad & lazy landlords who are smart, devious & brave enough to continue finding a way round whatever is thrown at them & make money out of it.

Those who choose to remain as landlords (I'm talking about the good one's - not the bad / lazy ones) will become more choosy about the tenants they take on e.g. no more housing benefit tenants (of which I have 9 out of my 15 London/home counties properties) & those without steady jobs will suffer, as will families as landlords may prefer to rent houses to sharers who tend to stay for shorter periods (these risks were highlighted by the LSE report in 2016).

The vast majority of tenants who pay their rent on time & look after the property stay as long as they like as evidenced by the fact that over 90% of tenancies are ended by tenants not landlords. The current Section 21 system provides a well needed get-out when things go wrong which in turn allows / encourages landlords to be more flexible on the rent they charge.

Good tenants including those on benefits, do not need gimmick laws which smack of a political move aimed at the renter vote rather than a genuine effort to improve how the rented market works for all those involved.

Tenants need more choice, more rented property and until an adequate supply of property is built, tenants need more good landlords who respectfully look after their tenancies & properties (most landlords are like this but are never commended).

Instead of punishing all landlords, why not reward those who deliver? The carrot is always better than the stick.

In Europe rentals tend to be longer term but eviction is easier, thus also encouraging tenants to look after the property & landlords to be flexible on rents.

Added to which nearly all European countries allow deduction of all mortgage interest, have most generous depreciation allowances and most importantly have generous capital tax rules e.g. in Germany sales at the 10 year plus point attract nil CGT.

If only the Government stop cherry picking only the pro-tenant bits from other countries systems & instead also consider the pro-landlord bits which would result in a much more equitable balance between supply & demand than in the UK where we have an under-supply, rising rents, lack of choice with good landlords planning to exit.

Yours most sincerely

Laura Delow

Reply to the comment left by Jack Craven at 02/07/2018 - 14:41
Jack

At the moment demand is very strong in most parts of the country so anyone selling will more than likely be able to sell quite well. It is unlikely that the landlord exodus will lead to a flood of houses, it's more of a drip drip. This means that the local markets are not too badly upset when new properties come onto the market.

It may be tougher for portfolio landlords, for example those with block of flats of a lot of houses in one location, although if these are sold as investments there will no doubt be some interested buyers.

Reply to the comment left by Marsland2000 at 02/07/2018 - 10:02
As a portfolio landlord with some leveraged properties, this idea is only good in parts. Most of my tenants are long term but 1 property is the exception. it is close to a hospital & always has just 6 month tenancies. It is also the only property that I have had problems evicting tenants due to anti-social behaviour.

I still feel we should all 'write' direct to those MPs involved, trouble is, I don't know the post code for people that live on other planets! I'm having to deal 'again' where tenants have left the place in filth, fleas, (they had cats), many bin bags full of something very smelly with no forward address to return their worldly goods. All new carpets required again at £650 a go! I've said it before, "you give them a palace, they give you back a ruin" so what's the point and if Labour get in, well I'll say nothing?

Reply to the comment left by Whiteskifreak Surrey at 02/07/2018 - 09:53
It's not a symmetric tenancy - the student can leave after a year; it's just that the landlord can't kick them out (until three have passed)

Reply to the comment left by Simon Williams at 02/07/2018 - 09:56
> Landlords will become ever more choosy about who they take on ... landlords will no longer take the risk
So there will be a magical new supply of high-quality tenants to fill all flats, leaving low-quality tenants out on the street? I don't think that adds up quite literally numerically.

I think that families and house sharers tend to gravitate towards different areas, in general. Do families want to live amongst all the partying students and 20-somethings? No. Do students want to live in boring, lifeless suburbia? No. So I don't think that this adds up either.

Reply to the comment left by Marsland2000 at 02/07/2018 - 10:02
> the unintended consequence of your policies will be a dramatic contraction of the private rented sector
Who will live in those houses? I suspect that someone probably would. Perhaps an owner-occupier who buys into a fallen market where they can afford again. I don't think that this causes any problems for tenants.

Reply to the comment left by Jim at 02/07/2018 - 12:14
You're gonna keep it through Brexit? That's pretty brave.

Reply to the comment left by Paul Shears at 02/07/2018 - 12:25
The tenant can give 6 months notice - it's just the landlord who can't.