Periodic contracts – financial nightmare for landlords?

I am in exactly the same situation with my remaining BTL. It's in an excellent inner city location, and since we acquired the RTM, the quality and security of the development has improved significantly. Our block insurance increased by just 4% last year, and has actually decreased this year. So, why haven't the valuations increased in 16 years?
Firstly, a single investor bought a number of flats off-plan in 2007 and lost everything in the crash. He had to sell them all fast and dropped the price. This set the level for everyone and it never recovered, because we were then hit by the leasehold and fire safety scandals. Add to that the problem with Mortgage Express selling its book to a vulture finance company, and it's easy to see where the problems lie.
Someone would get a great deal if I sold now, but I would take a 30% hit, and still have an outstanding debt. Not really a problem; my SIPP and ISA can go up and down by that much almost every day, and I would have a significant CGT loss to use going forward. But I'd rather stick it out and see if valuations will improve this year. We now have our EWS1, and no fire safety issues, which will help.
Meanwhile, I've now increased my rent by 9% for 3 years in a row, and am now just about at the market rate. But the mortgage is the killer. Just when we hoped rates would drop quickly, we get landed with Rachel from Complaints!

Tenants might give two months notice and landlords will have to give twelve months initially. Just another example of the 'level playing field' that Genuine Rant and Shelter keep pushing..
It's probably easier to sell up and buy shares in build to let platforms which will be the governments new darlings...

Reply to the comment left by Jo Westlake at 17/01/2025 - 11:13
You are right Jo and most tenants will stay for longer. Unfortunately, no landlord and no lender can be confident of a rental stream. That said with my HMOs, a lot of the tenancies are periodic and so the tenant can leave on one month's notice. I appreciate it's not the same as a whole property becoming vacant.

Reply to the comment left by Jack Jennings at 17/01/2025 - 16:28
I've been dabbling in BTR for about a year, and am up 16.6%. How I'd like to see that from BTL!

I've always given tenants the option of 1 month notice even from the very beginning of a tenancy, on the basis that their circumstances can change any time. After all, the whole point of the PRS is its flexibility, which you simply don't get with institutional providers like social housing or corporate.
However, in my experience it's quite rare for people to leave that quickly, and indeed the average length of stay has gone up dramatically in the last 10 years. Also, accommodation is in such demand practically everywhere that there would have to be something seriously wrong if you couldn't replace the tenant within two months, quite possibly at a higher rate if market rates have gone up in the meanwhile.

Reply to the comment left by Peter Merrick at 17/01/2025 - 17:38
I think you may have been okay in the past as virtually all tenants knew that there was a fixed minimum term of six months so, when looking for a place to stay, would not consider the tenancy being anything less than six months.

Under the RRB, tenants will know that the minimum required stay is only two months. This could encourage those seeking short-term accommodation to sign a tenancy, stay for two months, and then leave. If a tenant were to leave after just one month or less, it’s unlikely that you or anyone else would pursue them for the remaining rent owed.

It may be easy to rent but there are costs involved such as cleaning, repainting, recarpeting, etc all of which could be considered as normal wear and tear.

Reply to the comment left by Peter Merrick at 17/01/2025 - 17:38
It's not the impossibility of replacing a tenant. It's the void, the extra work i.e. cleaning again, cost of advertising, immense amount of time vetting tenants and finally making sure you get the lowest risk tenant. It's all time and money

Reply to the comment left by Cider Drinker at 16/01/2025 - 09:54I think the risk will be high. When I'm trying to let out a flat it's not uncommon for people to approach and request 3 months. I always do a 6 month tenancy and then move to periodic but the new RRB periodic will definitely cost money. I vet prospective tenants and question their previous living circumstances it's actually quite amazing how many people move a lot. Some people seem to move every 6 months I always avoid them. I also get a lot of people wanting to move from Airbnb properties who seem to only stay places for 3 months so again I avoid them. Also I've had a lot of people who state they only want the place short term as a stop gap for personal reasons. So it will happen and may be impossible to spot them.

Not a problem for me, I would be happy for my tenants to give me notice as I could then sell the properties

If your rent is right your tenants will stay. Just under cut the competition