Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

Is this the “phoney war” period for landlords; a time when nothing seems to be happening before the major onslaught – it certainly feels like it to me.

The government’s three pronged attack on small-scale buy-to-let landlords looks like a politically motivated strategy to encourage more home ownership that could easily back-fire on the Tories: with swinging new regulations and tax changes, and a move to encourage the “Tescoisation” of the private rented sector (PRS), who could blame the substantial cohort of largely Tory voting landlords for feeling they’ve been cut-off at the knees.

Even the Treasury’s own select committee has published a report into last year’s Autumn Statement questioning the wisdom of the Chancellors’ tax changes on buy-to-let and second homes.

The chancellor’s policy of prioritising homeownership over the buy-to-let market has previously received a warning by a committee of MPs and now Andrew Tyrie MP, chairman of the Treasury select committee and Conservative member of Parliament for Chichester, has warned that a number of economists have pointed out that the problems in the UK housing market stem from a lack of supply.

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Mr Tyrie has said:

“The measures taken to curb buy-to-let will come at a cost, not only for those who will now face higher rents, but for the wider economy.

“A failure to ensure that individuals have access to a well-functioning, affordable rental market will inhibit labour mobility and reduce economic activity.

“The chancellor’s attempts to resolve what he calls a ‘home ownership crisis’ should not come at the expense of the private rented sector.

“Housing policy in the UK has been in a mess for a long time – caused by the policies of successive governments over decades and, often, their unintended consequences – sooner or later, more thorough reform will be essential.”

The committee’s report shows their concern that the Chancellor may be making a big mistake when it says there is “high” uncertainty surrounding the costing. They say that available data on second homes purchase transactions is poor, and they are anticipating “possible negative behavioural effects”.

The conclusion appears to be that the committee fear that the measure may backfire on the Chancellor making the overall housing situation worse, not better.

The measures introduced in the Chancellor’s Summer Budget are the most worrying for landlords as they reduce the amount of mortgage tax relief a landlord can claim quite dramatically. What’s more, the maximum lower rate (currently 20%) relief after 4 years cannot be charged against rental income, which will be added to other income, but only afterwards as a “tax credit”.

Meanwhile the media hype surrounding the PRS continues with The Residential Landlords Association (RLA) accusing Shelter of “playing to people’s fears” when it issued a recent press release claiming a “record rise” in the number of calls its helpline has received from tenants at risk of losing their home.

Shelter says that the helpline in question received 7,600 such calls, a number it claims has doubled in two years. However, the RLA has hit back, warning that “public policy must not be based on the opinions of problems which could be distorted.”

For example, the RLA says, with a booming private rental sector consisting of 9 million tenants, the 7,600 which Shelter refers to are a mere 0.08%, whilst just 9 per cent of tenancies in the sector are ended by the landlord. The reasons for most landlord evictions is overwhelmingly rent arrears and anti-social behaviour and surveys show that 83 per cent of tenants are satisfied with their property in the private rental sector, compared to with 81 per cent of social sector tenants feeling the same.

Government ministers must be as frustrated as hell, as are the more responsible landlords in the industry, (and many MPs are landlords themselves), constantly reading the negative media hype about “that evil bunch of landlords” evicting their saintly tenants at the drop of a hat.

Making more laws to drive out the rogues is well meant but largely ineffective if not thoroughly enforced, and they just make the lives of responsible landlords and agents so much more difficult, to the point that some will just think it’s not worth the hassle any more.

With all the new regulations introduced last year, and the roll-out across England of “Right to Rent” checks on the 1st of February, landlords are going to have to be much savvier about their management and documentation of a tenancy if they are going to stand any chance of dealing with a tenancy that goes wrong. Good quality documentary evidence will be a prerequisite to any successful eviction – and that’s a landlord’s only recourse when tenants can’t or won’t pay rent.

Contrary to what the homelessness charities would have us believe, many evictions are at the behest of tenants: some tenants want to be evicted because they think it will lead to a council house tenancy. Most are deluded in this as the chances are very slim, but at least they may achieve temporary accommodation, or financial help into another private tenancy.

However, in the meantime they are told to “stay put” until they are evicted, often going right to the wire with a bailiff eviction.

This has major cost implications for the landlords involved. But to be fair, the councils are in a bind as well. On the one hand the guidelines say tenants are not classed as homeless and are to be re-housed if they meet the strict criteria, and when it is clear an eviction will succeed without court or bailiff action.

On the other hand many councils are inundated with claims, don’t have the resources, and are under extreme pressure from central government targets not to take on more evicted tenants. So they have tenants going to the wire, running up unnecessary court and bailiff costs, with potential claims against the tenant for landlords’ cost. It’s a catch 22 situation.

We live in an age of increasing government bureaucracy and promised social benefits which are simply unaffordable. Government agencies muddle through as best they can and private landlords pay the price. It’s unlikely to change any-time soon.

Tom Entwistle is Editor of LandlordZONE® and an experienced landlord of residential and commercial property.

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.
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