Tenants could struggle to find a home as landlords sell up as a result of the Covid-19 crisis. The National Residential Landlords Association (NRLA) has warned a supply crisis is looming without a financial package to help landlords and tenants.

Here NRLA Chief Executive Ben Beadle says Chancellor Rishi Sunak must introduce positive tax changes in next month’s budget to allow the sector to get back on its feet.

It has been a tough year for us all, but as the vaccine rollout continues and the Government prepares to reopen the country, we look at the positive steps that we believe could make a huge difference to the landlords providing vital homes to let –  and the tenants living in them.

The NRLA has used its submission to Government ahead of the budget to call for a comprehensive package of financial support for landlords and tenants to avoid a rental arrears crisis.

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We will continue to lobby for this and to make the case for this to help landlords and tenants through this crisis.

Landlords have gone above and beyond to support tenants through the Covid-19 crisis, but this is not sustainable long-term.

Urgent package of support needed

A package of interest-free hardship loans and grants is needed as a matter of urgency. To expect landlords and tenants simply to muddle through is not acceptable.

Research shows 840,000 private renters in England and Wales have built arrears since lockdown measures started in March last year and we need to help these people continue to pay their rent and stay in their homes.

If the pandemic has taught us anything it is the value of home and, with that in mind, we at the NRLA have joined forces with other landlord and tenants’ groups to amplify this call for help.

This includes proposals for interest free loans for tenants affected by Covid-19, to allow them to continue to pay their rent and remain in the home that they love.

This has widespread sector support, from groups including Shelter, The Big Issue, Crisis, Citizens Advice, Propertymark and debt charity StepChange.

We also need the sector to get back on its feet, moving away from the emergency measures introduced by the Government to start function as normal as the country reopens, promoting confidence in the rental market.

Rising rents

RICS has already warned rents will start to rise because of the increasing demand for properties at a time when new instructions from landlords are dwindling.

And Rightmove revealed that outside London asking rents increased in the fourth quarter for 2020 for the first time since 2011, to a record average of £972 a month.

In the increasingly popular suburbs, towns and villages, the level of available housing is lower than normal for this time of year, whilst demand is higher.

This situation could become more acute, with our own research showing a third of landlords are looking to sell some or all of their rental homes, with 56% losing cash as a result of the pandemic.

“If we are to ensure there are sufficient homes to rent we want to see positive action by the Government.”

To this end we believe landlords should be exempt from the 3% stamp duty surcharge on additional homes if the property they are buying will add to the net supply of housing. 

This new exemption would apply to landlords developing new housing, converting large properties into affordable units, changing the use of a property from commercial to residential or bringing one of the almost 650,000 empty homes in England back into use and would be a real shot in the arm when it comes to supply.

When there is a desperate need for more homes to rent the last thing we need is to have a tax on developing new homes. It makes little sense and we have made our case to the government.

Where capital gains tax is concerned we believe the Government must resist calls to make changes or risk diminishing confidence and supply even further.

It is our belief that the Chancellor should use tax more smartly to create a healthy rental market.

We hope he will support these proposals which we believe offer sensible, workable solutions to help us create a vibrant and dynamic PRS that we can all be proud of.”

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Ben Beadle is chief executive of the National Residential Landlords Association (NRLA), the UK’s largest trade body for landlords. A landlord himself since the age of 20, Ben started out as property manager before working his way up through the ranks at Tenancy Deposit Scheme. He was then Operations Director at property management business Touchstone before overseeing the merger of the National Residential Landlords Association (NLA) and Residential Landlords Association (RLA) to create the new trade body earlier this year. His key aims as head of the organisation are to strengthen the voice of landlords in Westminster and Cardiff, to improve the reputation of landlords in the media and to support members through information, training and accreditation.

18 COMMENTS

  1. Reasonable points but I think they miss the real issue. Landlords need protecting from tenants that won’t pay rent and won’t move out, this is the real issue. Where tenants are genuinely struggling I think generally the PRS has been really supportive and sympathetic to this situation. The reality is that many Landlords are in a position they never anticipated, where they are forced to support unpaying tenants indefinitely. This has massively exposed highly levered Landlords and will lead to a mass exodus from the sector.

    • I don’t think it’s only highly-leveraged landlords leaving. I’ve sold one of my two fully-owned properties and have the other, previously let for around 25 years, on the market. It’s empty but in current circumstances won’t be having tenants back any time soon even if it takes a little while to sell – the hassle, risk and costs are too high. I’m sure many small landlords feel the same.

      • Yep like you I’m desperate to get out of the AST PRS.

        Govt clearly intends to use LL private assets to subsidise feckless rent defaulting tenants whenever the next crisis hits.

        I certainly don’t intend to be used by Govt as free social housing anymore.

        Many other LL will be doing as tou are and I intend to do.

        Hopefully this will result in a massive homelessness crisis as lots of LL sell up.

        This has already happened in Ireland.

        Then Govt might realise the idiocy of their bonkers anti-LL policies.

        But many LL like you and I realise that the AST BTL business model is broken while the Govt has it’s ridiculous eviction ban etc.

        We are choosing to leave it for logical reasons.

      • It has become more like a JOB = Just Over Broke…like they say in property seminars and Webinars. The people who truly own the asset=property are the banks (if you have a mortgage)…these chaps get paid no matter what- if you take a mortgage holiday- you pay more interest. The foolish chap being the LL is the operations manager running around, making sure mortgage is paid-from rent and if not paid then it comes out of the LLs pocket- always ensuring the banks/lender sleeps easy at night while the LLs loose sleep and rack up stress- cutting their lives short in the process- confronting unpaying tenants who knows you cant evict them-the Law is on their side. Being a LL is a Sin and may become a crime as more LLs get prosecuted by Councils, etc…it is no longer an option for the smaller LLs…..may be the people in power=unelected officials who make the rules want a Great Reset – you will own nothing and you will be happy…..?

    • Define at what percentage you consider a LL is overleveraged?

      Most BTL lenders consider 75% is OK.
      Personally I consider anything in excess of 50% is overleveraged.

      Even on 50% LTV a rent defaulting Tenant can have catastrophic detrimental financial effects on a LL.

      Based on the useless eviction process a LL should have finances to cover costs for at least 2 years and remember if those finances are ever used then the LL will need them again for the next rent defaulting tenant as it is highly unlikely that RGI will be achievable on most tenants

  2. At last the terrible situation some landlords are in is being recognised as well as the support many landlords have given tenants which in many cases has resulted in interest free loans at a time when landlords are having to find extra money for increased tax as well as electric certs.
    I totally agree with Gtim – landlords need protecting form tenants that won’t pay and won’t move out.

  3. The situation with non- paying tenants has been created and supported by the Government.
    The solution is in its hands. If it provides any assistance, the payment should be made direct to landlords and the government can claim it back from tenants.

  4. The govt simply fail to understand that the PRS is dominated by landlords with a handful of properties. When Ursula von de Layen described the EU as being like an oil tanker and countries like a speed boat the same analogy applies in the PRS.
    Landlords are not huge corporations therefore can very quickly offload problem properties and as individuals they also cannot sustain non-paying tenants for long.
    It is inevitable that some landlords will leave the sector.
    HMRC has classified us as investors not trade and therefore, we have no access to any covid related govt support. Investors will move capital to where the risk is lowest and the return the highest.
    Currently the risk factors associated with owning rental properties is through the roof.
    Over the last few years I have been in the process of rationalising my portfolio, moving out of houses and into flats as generally the returns are better however the capital that I have received from properties I have recently sold and the ones that are on the market will NOT be reinvested in property until and unless the market stabilises and some equilibrium is brought to bear.
    Sure the money sitting in the bank is earning very little but with inflation very low its almost a zero sum game and 100% risk free.
    Anyone that has a tenant not paying is losing thousands.
    There is anecdotal evidence that tenants are being just kicked out illegally. I don’t condone that action but I do understand it if the property owner is facing bankruptcy and feels that there is no alternative.
    If over time no equity is returned to the PRS then I for one will look to other types of investment.
    Flipping properties is one avenue of course. Simply buy cheap, improve the property and sell with no risk to exposure of non-paying tenants but I’m perfectly happy to leave the property sector altogether if alternatives become available.
    Increasing EPC requirements will also deter landlords from older properties. For the last 5 years I have only invested in properties built after 1980’s whilst I have divested myself of older stock. Currently I only have one property listed as D rated the rest are C or above and I can see that the blight that already affects listed buildings will only increase with landlords not prepared to even consider them for investment in the PRS.
    With many high street properties boarded up and unlikely to ever re-open as shops, ordinarily landlords would have looked to re-purpose those buildings and return them to the PRS however only a fool would take the risk with the way the PRS is currently set up with eviction bans etc etc.
    The govt has shown itself prepared to take these measures like evictions bans so many will be very wary that they may well consider that again at some time in the future (Presuming they are ever lifted in the first place)

    Currently in the area where I live and do business there is a huge shortage of rental property. For every 20 properties advertised for rent pre-covid there is now just 5. Rents have already increased accordingly and some properties are on the rental market for just a single day!!! Divorce and relocation from the cities are the two biggest drivers but even with increased rents I will not re-invest until the govt recognise and remedy the current imbalance between risk and reward.

    Organisations like Shelter that talk of rent holidays etc are actually creating more homelessness and working against the very principles from which they were founded. They should actually be imploring tenants to pay their rent in order to avoid people building debt and facing eviction rather then trying to discredit landlords.

    • Insightful, excellent post, but I think you may be wrong about the Govt not understanding the sector being dominated by landlords with just a few properties. You may be right, but I think there’s a strong case for thinking they do understand it but they want to force such landlords out, to be replaced by large landlords they believe will be more ‘professional’. Landlordzone has featured a few recent articles about a few such large landlords, and they haven’t looked like the sort of people I’d want as my landlord. The Govt is in danger of shooting itself in the foot, as well as unfairly treating many excellent landlords who can offer a solution rather than a problem.

      • Good point John. Most definitely feels like they want small private landlords out but I don’t think they do. I think they’re a bit simple and without real-world experience.

        Firstly I think they think that if we sell up it will release more houses on to the market. Yes, it will but shucks to the people who can only rent and will find themselves having fewer and fewer rentals available to them – and maybe none. Not really got the renter in mind there have they? Yet this is not hard to understand.

        They cannot do the costings for all the things they now require. If you rent a Victorian house, what are the costs of bringing that up to EPC C? …if it can be done at all. That kind of house is apparently not going to be good enough for the rental market but will continue to be plenty good enough for people queuing up to buy houses for their own use. So these will drop out of rental circulation too. Their green whatever thing is supposed to be an enabling strategy but is, as usual, very, very badly thought through.

        All this stuff is very well meaning but not anchored in real life and with zero foresight.

        They have loading the gun which turns out to be a double barrel shotgun, the landlord can have one and the renter too.

      • Good Point John, but I am agree with Dave,
        My Tenants not paying rent from last 11 month and no one can understand the way I am struggling, Now I work 7 days and weekend i work 12 hours to support mortgage for Tenants who doesn’t want to pay, maybe there are Tenants who are struggling but there is difference between who doesn’t want to pay and those who can’t pay.
        and Tenants threatening me that I can’t do anything because Government banned eviction. I even asked my Tenants to pay me as little as they can but simply refused and whenever i go he is busy cleaning his super Luxury car which i can’t even afford and his words are mate go and evict me if you can but I have no choice.

  5. I suspect we’ll see a cyclical situation, the government make the PRS an unattractive investment, landlords exit the market in droves. Councils don’t have the capacity to step in and fill the gap and homelessness increases significantly. The government may then recognise the need for a successful PRS and will potentially need to offer incentives to investors to enter the market.

    I really cannot understand the short sightedness from the government, Shelter, Generation Rent etc in their continued demonisation of landlords . These actions will lead to exactly what they don’t want, fewer properties for tenants to live in and higher rents

    • In my view a lot of the current legislation etc is politically motivated and certainly not driven by the data. Tenant advocacy groups tend to have a left-wing, socialist agenda and the Government seem only to willing to concede to their demands because they see renters as voters, nor do they want to be seen supporting the nasty, greedy slumlords we have all been characterised as. For the Government it’s win-win; they can play to the gallery for votes and leave landlords to foot the welfare bill Government should be on the hook for by banning evictions. End of the day, no one with any clout will stick up for us and they (the Government) know it.

    • Govt is devoid of all logic.
      This is because they are driven by a most ridiculous ideology that by removing small private LL forcing them to sell up will magically result in tenants buying those ex-LL properties to become homeowners who will then vote Tory.

      It just shows you how stupid the Conservative Party is to believe such tosh.

      Unfortunately their stupidity translates into misery for LL and tenants alike.

  6. Govt is devoid of all logic.
    This is because they are driven by a most ridiculous ideology that by removing small private LL forcing them to sell up will magically result in tenants buying those ex-LL properties to become homeowners who will then vote Tory.

    It just shows you how stupid the Conservative Party is to believe such tosh.

    Unfortunately their stupidity translates into misery for LL and tenants alike.

  7. The Government, or its civil service advisers still believe that Shelter is a housing charity. It has no houses, hostels or any other way of providing shelter. It still receives about £17 million of taxpayers’ money each year. All it does is act as a politically motivated anti-landlord lobbying group.

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