As expected, the Government has reconfirmed its commitment to reform in the private rental sector during the State Opening of Parliament.

Although not mentioned specifically, Her Majesty promised to ‘enhance the rights of those who rent’. This undoubtedly means that the Renters’ Reform Bill, which will scrap the use of Section 21 evictions, will happen soon.

Even though this is inevitable and has been for some time, the scale at which the pandemic has accelerated rent arrears is really quite frightening and I am deeply concerned what this will do to the rental market if it goes ahead too early and without greater thought and detail into strengthening the Section 8 process.

That said, the government has now confirmed that it plans to wind down the evictions ban from 1st June onwards, allowing bailiffs to evict tenants once more, Covid safety rules allowing, and will also soon reduce the six-month notice landlords and agents had to give tenants before the evictions process can start to four months, with a further reduction due this Summer.

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We’re now more than a year on from the start of the pandemic and the strain on the private rented sector is starting to show. In a recent poll carried out by Client Money Protect (CMP), nearly a third of letting agents (32 per cent) said that more than 50 per cent of their portfolio of tenants have fallen into rent arrears:

  • 21 per cent said between 30 and 50 per cent are affected
  • 19 per cent of agents said it is 15-30 per cent of their portfolio
  • 28 per cent have between 0-15 per cent of tenants affected by rent arrears.

Obviously, the pandemic and the current eviction ban is playing a huge part in these rising rent arrears, but it does not bode well for when things start to go back to normal, only for tenants to be faced with the end of furlough and landlords to be hampered by the removal of Section 21.

The vast majority of landlords and letting agents are working hard to keep the lines of communication with their tenants open and be accommodating wherever they can.

In some instances, mediation has helped to successfully reach a way forward, whether that involves the tenant looking for another property, being offered a rent reduction or implementing a repayment agreement. 

In my view, there needs to be a significant amount of time, post-pandemic, for the market to readjust.

Back to normal

Landlords and tenants need time to get back to normal and see if they want to remain in their current tenancy contracts, courts need time to clear the backlog of repossession cases, which are currently stacked up, and significant consideration and alterations must be put into making Section 8 fit for purpose. The government’s evictions winding down roadmap will help.

Reporting on the extent to which tenants are in arrears, 21 per cent of letting agents reported to CMP that arrears have reached six months or more. A further 18 per cent reported tenants being between three and six months in arrears.

If this is a taste of what landlords can expect, then it is inevitable that more landlords will start to leave the market, particularly at a time when prices in the sales market are at record highs.

Many landlords will be looking at this right now and considering their options. We even know of landlords selling their properties with tenants in situ just because they want out.

Devastating

I know there are many tenants who have been badly affected by the pandemic, unable to work or had their wages/hours cut and for these people building rent arrears has been unavoidable, which is devastating for all involved.

Unfortunately, there are also a lot of tenants who have played the system to their advantage and avoided paying rent simply because they know there is nothing their landlord can do about it. No landlord wants to make someone homeless, but more has to be done to check the tenants’ viability to pay rent.

Without Section 21, landlords will be much more exposed to these kinds of serial rogue tenants who know how to use the system’s loopholes to remain in properties for free. This will also have a dramatic knock-on effect to referencing, making it even more difficult for honest hard-working tenants to find properties.

Affordability problems

Affordable rental properties are difficult to come by and many agents are already inundated with enquiries every time a new property comes available. All that is going to happen, is the majority of tenants won’t even get a look in, as landlords and agents will be forced to cherry-pick only those in the very strongest and proven financial position.

In Bristol, for example, 30 percent of households are privately rented, and rents have gone up 52 per cent since 2011, but wages have only risen 24 per cent. This is only going to get worse if the pool of rented properties is reduced because landlords do not feel supported in the sector.

Tenant charities are calling for the Renters’ Reform Bill to be brought forward but I would urge government to consider such a move very carefully whilst there is so much uncertainty following the pandemic.

As I have said before, when it comes to tenants and landlords, one does not work without the other, so we need a PRS which is fair for all. 

6 COMMENTS

  1. Word is already spreading round between landlords and would-be landlords that BTL is now so risky that it’s not a good business to be in. I know of at least a couple of would-be landlords who bought properties to let but have now decided to flip them and invest elsewhere, and people who have intended to invest in BTL but have also decided to invest elsewhere. I’m one of them and I’m very glad I made the decision not to buy a further two houses to house people who, more than likely, will now end up on a very, very long social housing list.

    The tighter the government pulls the noose around landlords’ necks, the fewer landlords there’s going to be. There just isn’t enough social housing. There have been quite a lot of new houses available where I live (and that doesn’t seem to have had any affect on the huge number of applicants I’ve had recently for an available property), but people have complained that there’s nowhere to store stuff in these tiny houses. My newest tenant is one of them. She was so pleased to have a cupboard under the stairs to store the vacuum cleaner.

    We also need more properties for physically disabled people who need wider doors etc. The builders of new properties aren’t obliged to build such properties and this needs to be addressed by the government who seem to have forgotten about the need for such properties.

  2. Totally agree with everything said….

    2 years ago I was looking to expand the portfolio, that has all changed. I have actually reduced the portfolio, getting rid of anything that doesn’t have EPC C or an easy fix to get there like a new boiler, I have also moved my best tenants around into properties I intend to keep and let go of the others. But

    I’ve done what I can to reduce the risk in the portfolio including raising rents to price out benefit claimants. But there are a hardcore of “Professional” scammers intent on living rent free at everyone else’s expense and for me that is simply unacceptable yet the govt / council action encourages it.

    I’ve earnt a crust over the last 20 years but personally I’m heading out….
    As each of my best tenants move on I think I will sell and take the profit and wander off into the sunset.

    The place to watch will be the Guardian… once the business columns in that rag suggests that the sun is setting on the PRS then you will know its time to get out of dodge.

  3. Imagine living in a country where the decent hard working individual finds the law does not back them up…and their drive to better themselves is deemed “too risky” because the playing field isn’t fair. All the legislation is for the tenant and you’re lucky if there’s any fir the LL. it’s deemed acceptable that the LL takes a hit for their rent for up to a year. The tenant can walk free without paying a years rent and can, if they so wish, wreck the LL house with no reasonable repercussion.

    Why am I always dumbfound this is deemed fair and reasonable for such a country as ours. The mind boggles…

    • I believe that the current eviction ban and massive rent defaults have bern a massive wakeup call for many LL.

      They have finally realised that the repossession process is NOT fit for purpose and NEVER will be!

      Many LL will therefore sell up or diversify away from single household lettings.

      FHL and serviced accommodation avoids tenancy regulations.

      There will be another pandemic and the Govt will impose another eviction ban.

      Govt knows how dependent it is on poncing off LL assets.

      Govt can’t afford to not ponce off LL.

      £9 billion a year rent defaulting cost LL and that is just on standard rent.

      If Govt needed to house all those in TA it would cost Govt far more than £9 billion.

      That is why the Govt imperative is to ponce off LL.

      LL have to decide whether they are prepared to allow Govt to ponce off them.

      Can’t see the point myself.

      Surely the point of being a LL is to make PROFIT!!

      No point in being a Govt patsy which results in making no profit and does involve losses.

      Effectively being a social LL but not being paid even a social rent!!!

  4. The worst of this is, Shelter and Generation Rent continue to barrage the Government for further tenant empowerment, without thinking, that it will drive more Landlords out of the market, leaving less and less properties to rent. If they are so clued up on what a tenant needs and wants, then perhaps they should get off their backsides and start up their own Housing associations? I am still keen for a representative of their organisations to be invited to the Landlord show, so we can hear and question their rationale behind some of their ridiculous claims.

  5. Do we not think that the long term plan of government is to weed out the smaller landlords , leaving the door open for large corporate entities?? The PRS is propping up the Housing Market. Totally agree that Shelter need to step up. Rather than just continually lobbying . I worry that if BTL leave where does that leave the rented sector

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