Local Authorities Buying Tenanted Rental Properties from Private Landlords: A Growing Trend in the UK

Local Authorities Buying Tenanted Rental Properties from Private Landlords: A Growing Trend in the UK

0:01 AM, 19th September 2024, About 2 months ago 19

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As more private landlords decide to exit the rental market, local authorities across the UK are stepping in with initiatives to purchase tenanted properties. These moves are aimed at both preventing homelessness and increasing the availability of social housing in an increasingly challenging market for tenants. Here’s an overview of some key local authority initiatives that could be of interest to landlords considering selling their rental properties.

Why Are Local Authorities Buying Tenanted Properties?

The UK’s rental market has seen a significant shift in recent years, with more landlords choosing to sell up, often due to changes in tax regulations, increasing compliance costs, and uncertainty over future legislation. For tenants in situ, the sale of their rented property can lead to the threat of eviction, potentially adding to the homelessness crisis many councils are already struggling to manage.

In response, some councils have developed strategies to purchase tenanted properties directly from landlords, helping them retain secure housing for existing tenants while also expanding their stock of affordable or social housing. Here are a few key examples of these initiatives in action.

Examples of Local Authority Initiatives

  1. London Borough of Lewisham
    Lewisham Council has been actively purchasing tenanted homes from private landlords as part of its broader strategy to increase affordable housing. This initiative aims to ensure that tenants are not displaced when landlords choose to sell. For landlords, it offers a straightforward route to selling their property without forcing tenants out. The council has positioned this approach as a win-win solution, providing stability for tenants while boosting social housing.
    Further Information: Try a Google search for “Lewisham’s Housing Strategy”
  2. Greater London Authority – Right to Buy-back Scheme
    The Greater London Authority (GLA) launched a £152 million “Right to Buy-back” scheme in 2021. This scheme provides funding for local councils across London to buy homes back from the private market. Although not exclusively focused on tenanted properties, the scheme allows councils to purchase homes where tenants are in situ, maintaining them as affordable housing and avoiding tenant displacement.
    Further Information: Try a Google search for “Mayor of London – Right to Buy-back Scheme”
  3. Bristol City Council
    Bristol City Council has implemented a proactive strategy of purchasing homes from private landlords, particularly where tenants are at risk of losing their housing. This initiative ties into Bristol’s broader goal of expanding its council housing stock while protecting tenants. For landlords, this creates an opportunity to sell their property while ensuring their tenants can remain in place under the council’s management.
    Further Information: Try a Google search for “Bristol City Council Housing Strategy”
  4. Leeds City Council
    Leeds City Council has been actively buying properties from landlords as part of its homelessness prevention strategy. Leeds’ approach focuses on providing long-term security for tenants who may otherwise face eviction and becoming part of the social housing system. The council’s purchases are often linked to its wider efforts to meet housing demand and address the ongoing housing crisis.
    Further Information: Try a Google search for “Leeds City Council Homelessness Prevention”
  5. West of England Combined Authority (WECA)
    The West of England Combined Authority, which includes areas such as Bristol, Bath, and North East Somerset, has been working with local councils to consider the purchase of private rented homes. This initiative is designed to expand the social housing stock in the region, providing more secure tenancies for tenants at risk of eviction. WECA’s strategy also looks at reducing the pressure on the private rental market by retaining these homes within affordable housing schemes.
    Further Information: Try a Google search for “West of England Combined Authority”

What Does This Mean for Landlords?

For private landlords considering selling their rental properties, these initiatives offer a viable alternative to putting the property on the open market, which could involve evicting tenants and potentially facing a more complex sales process. Selling directly to local authorities not only ensures continuity for tenants but also simplifies the sale process.

In most cases, local authorities are willing to purchase properties with tenants in place, often at market value or slightly below. For landlords who may be concerned about the impact of a sale on their tenants, this provides a route that avoids forced evictions while supporting the council’s efforts to provide affordable housing.

The Benefits of Selling to Local Authorities

  • Security for Tenants: Tenants are able to remain in their homes under secure council tenancies.
  • Simplified Sale Process: Selling to the council can avoid the need for vacant possession, streamlining the sale.
  • Contribution to Social Good: By selling to a local authority, landlords contribute to addressing the housing crisis by keeping the property within the affordable housing stock.

Questions Landlords Might Have

  • Would selling to a local authority result in a fair market value sale?
    While many councils aim to offer competitive prices, landlords may wonder whether they can achieve the same price compared to selling on the open market. Would the stability of the sale and the benefits for tenants outweigh any potential difference in price?
    What are your thoughts on accepting a potentially lower sale price for the sake of tenant stability?
  • How long does the process take when selling to a local authority?
    Selling to a local council might have different timelines compared to selling on the private market. If you’ve sold a property this way, how long did the process take from start to finish?
    Have you found the process slower or smoother than working with private buyers?
  • Are there any tax implications or advantages when selling to a local authority?
    Landlords may wonder if selling to a council has any specific tax benefits or drawbacks, especially considering recent changes to property taxes in the UK.
    Does anyone have experience or advice on the tax side of selling a tenanted property to a council?
  • How secure is the sale when dealing with a local authority?
    One of the benefits might be the security of the sale compared to the volatility of private buyers.
    For those who have sold to a council, how reliable did you find the process in terms of financial security and sale completion?
  • What impact does this have on tenants’ rights?
    From a tenant’s perspective, being transferred to council ownership might offer greater long-term security. Landlords who care about their tenants might be keen to understand this more.
    Do any landlords here have experience with how their tenants fared once the council took over the property? Were they satisfied with the transfer of management?

What Next?

If you’re a landlord looking to sell and want to explore the option of selling to a local authority, now might be the perfect time to investigate whether your council is offering similar schemes. Given the current pressure on the private rental market and local councils’ push to secure more affordable housing, selling to a local authority could offer a way to simplify your exit from the market while ensuring your tenants have a stable future.


Have you sold to a local authority before? What was your experience like? Or are you a landlord considering this option but unsure of what it entails? Let us know in the comments – your insights could help other landlords make informed decisions!


For more details on these initiatives, see the resources linked above, or contact your local authority to see if they are running similar schemes. ft you come across a scheme we have not mentioned, please tell us about it.


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Cider Drinker

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7:15 AM, 19th September 2024, About 2 months ago

I’m selling mine to FTBers from local families. Doing so has exactly the same impact on homelessness as selling to the LA.

By selling to locals, I get some say in who is not homeless.

Reluctant Landlord

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8:42 AM, 19th September 2024, About 2 months ago

with rising GCT on the horizon, selling to a LA is even less attractive that it already is if they are only offering below market rate. Probably better to gain possession and be in control of your own destiny and sell when you want and to who you choose.

Jo Westlake

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10:00 AM, 19th September 2024, About 2 months ago

It depends how much below market price they are offering and how that market price is determined. Recent sale prices of similar properties is probably more accurate than any figure an estate agent suggests.
If the amount below equates to the equivalent of estate agents fees and maybe 3 months rent it's probably a deal worth considering. We need to remember whatever the discount is comes off the chunk that is liable for CGT, so we're only actually losing 72% of the price cut.

As a method of offloading some properties without needing to evict tenants I'm in favour of this type of scheme. However, I can't quite see how it helps with the housing crisis if the existing tenant remains in the same house. Or if the Council then feels obliged to charge Social rent instead of the market rent the tenant has been paying.

Reluctant Landlord

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10:52 AM, 19th September 2024, About 2 months ago

Reply to the comment left by Jo Westlake at 19/09/2024 - 10:00
if the council then only charges social rent, it makes no sense for the LA to offer to buy the property in the first place (seriously at market rate???) just to maintain the tenancy. In fact I doubt if the tenants had the rent dropped they would probably never move, so the idea that this would help homelessness is incorrect as T in situ is never 'homeless' to start with.

The other issue is maintenance of the property and also actually being a LL. Councils can't cope with either commitment as it is. Inevitably this will just mean lower rental standards for T's in such properties...

DPT

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10:57 AM, 19th September 2024, About 2 months ago

No doubt the Councils will want to pay similar prices for an encumbered property as other investors, ie about 80% of market value. Those offers may also start to reduce once ghe RRB starts restricting landlords other options to sell.

LaLo

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11:05 AM, 19th September 2024, About 2 months ago

Where is their money coming from? I thought councils are broke!

Robert M

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12:13 PM, 19th September 2024, About 2 months ago

We are a not-for-profit provider of supported housing. We lease properties from private landlords. When one of our landlords needed to sell their property at the end of our lease term they decided to sell to the Council.

We were required by the council to evict 4 residents from the property we leased, so that the council could buy the property from the owner with vacant possession.

We did ask the council to buy with the residents in situ, but they would not do this.

We asked if they would buy, and re-lease lease to us so that we could keep the residents housed and supported, but the council would not do this.

We did ask the council to rehouse our four residents, as it was the council that was requiring them to be evicted, but the council initially said they would, but then reneged on this and failed to house them.

We were left with no choice but to evict our four residents, effectively at the council's insistence (as they would only complete the purchase once the property was vacant).

At the last moment we did manage to rehouse one of the four residents, but the other three became street homeless (rough sleepers), as the council refused to even provide emergency accommodation for them.

The council now own that property, and I believe it has stood vacant ever since (from March 2023).

richard fuller

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17:42 PM, 19th September 2024, About 2 months ago

14 rate rises section 24 losing10 k monthly and it’s my fault

Mick Roberts

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19:11 PM, 19th September 2024, About 2 months ago

I discussed this with Nottingham MP Alex Norris about 5 years ago. We both agreed Nottingham Council should start doing this with tenants in. To get them some houses back. I'd discount em 10k or 5 to 10% if they promised new tenancy keep tenants in for 5 to 10 years. They get houses back, I get time back. Tenants get to keep their homes.

Here is draft I started to send to Council and Housing Associations.

Mick Roberts

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19:12 PM, 19th September 2024, About 2 months ago

Dear Longhurst,

Are you looking to buy good houses with good long term tenants in, many been there over 20 years, who wish to stop in their homes, with latest combi boiler, UPVC, decent kitchens & bathrooms etc.? All in decent areas, no bad troubled areas.

I note u have several houses for rent around my area.

I’m Biggest Benefit Landlord in Nottingham & had enough of all the retrospective changes/regs/rules, which we know ends up hurting tenants with extortionate rents & reduced supply.

I wish to sell a lot of my houses with long term tenants in of 24 years/20 years/15 years etc.
All good tenants. I unfortunately had to evict the really bad ones when Selective Licensing came in, in Aug 2018.

I’d give a 10% 14kish discount if you can give assurances ie. new 1+ year tenancy etc. to keep existing tenants in.

I have many offers/Landlords offering to buy the whole portfolio or single houses, but I don’t trust them to not increase the rent largely & if tenant can’t afford, don’t trust them to not evict the tenants after a short while. And even some of my Landlord mates who wish to buy, they don’t do repairs quick enough & my long term tenants whom I loyal to, will think I’ve crapped on them.

I know I could evict myself & sell, but I can’t do this on good tenants that have done nothing wrong. I am however talking to them saying I can’t carry on with all these retrospective regs as I get older ie. I go prison if they take battery out smoke alarm.

My initial plan 24 years ago was to sell as tenants moved out, but as you are aware, tenants can’t move any more, no Landlord is taking Benefit tenants any more cause of Selective Licensing & Universal Credit. And also, rents elsewhere are shocking, considerably more than mine.

Should you not be looking to buy at moment, please save my details & pass on to other reputable Councils/Associations/Groups that are looking to buy decent houses with decent tenants in with decent yields for yourselves.
A good return from day one.
All modern with latest combi boiler, UPVC, composite doors a lot of em, lot of new kitchens.

I recently did an article on this trying to get existing tenants to buy, but most of mine aren’t working enough hours or daren’t take the plunge.

https://www.landlordzone.co.uk/news/exclusive-leading-landlord-offers-to-pay-tenants-ftb-deposits-to-get-them-on-property-ladder/

Please ring me with any idea’s or suggestions you may have.

Yours sincerely,

Mick Roberts

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