As 2021 draws to a close it’s the time of reviews and this time I’m looking at the residential lettings market. What times we live in!
My first lettings business started not long after residential lettings had been deregulated and the market opened up following decades of severe restrictions – protected rents, never enduing tenancies, succession rights, etc..
The Housing Act 1986 brought freedom for parties to agree rents and the ability for landlords to end tenancies without reason (s21). The minimum tenancy term was 6 months. The key requirement for landlords was to maintain the structure and provide sanitation, water and space heating.
Over time, of course, legislation has piled up to the extent that prior to a tenancy starting, the landlord has to provide the following:
- How to Rent Guide (a Government document)
- Energy Performance Certificate (EPC) – minimum Band E.
- Electric safety certificate
- Gas safety certificate
- Deposit prescribed information
The landlord also has to verify that the tenant has a right to be in the country (Right to Rent).
The deposit is capped at a maximum of 5 weeks rent – no uplifts for pets or any unusual situations. It is now also unlawful to charge tenants administration fees.
A landlord holding property in their own name (as opposed to a limited company) now cannot claim full tax relief on their interest, thereby artificially inflating profits and creating a higher tax burden.
Now as a responsible agent (and landlord myself) I will not argue against protection for tenants and agree totally that safety issues must be given a priority. However, the Government has, in my view, taken a sledgehammer to the problem, when perhaps a smaller claw hammer would have done. I do feel that tenancy legislation of the last decade has been London centric, or at least city centric. I know there are problems with rogue landlords and huge fees that some agents were charging, but these laws impose a massive burden on those landlords who run decent property businesses out in the sticks.
The result has been an exodus of private landlords from the market. Besides the factors outlined above, the continuing rise in house prices has made it a good time to sell.
There are those who say that an exodus of landlords is a good thing and the social media bots love to give a good landlord bashing. That’s fine if the slack is being met by social landlords (it isn’t) or the exodus is driving down prices so that tenants can buy houses (it isn’t). So we have a policy failure.
Whenever we get a property available to rent at Oakwood, demand goes through the roof. Tenants have to be financially astute and ready to move quickly if they are to find a new home; so many people cannot move, especially as the situation is leading to rising rents. Those tenants who maybe struggle with income or have health issues, for example, are losing housing and there is no proper safety net.
As I said, there are those who wish ill on landlords, which is such as shame as I have seen the good that landlords can do. Whilst I don’t doubt there are some who take advantage, the majority are offering decent quality homes that are safe and compliant.
It is worth remembering that although some tenants cannot get onto the buying cycle, many rent by choice – family reasons, flexibility, trying new areas, etc. – and the range of properties offered by the private rented sector (PRS) is huge. Everything from bedsits, through family homes to large country houses.
Some landlords let not as a business, but to provide flexibility within their own lives. Perhaps working away for a year or so, maybe lettings granny’s cottage whilst the family make decisions. If the lettings sector is made more challenging, then the opportunity for these genuine owners will be much curtailed. The wealth of properties available will be even more reduced.
I won’t get drawn into the debate about provision of social housing and right to buy council houses as that needs more than one cup of tea!
We wait to see what 2022 will bring, but there is much to suggest that more compliance will be with us before too long. The Government seems to have lost the will to support the PRS, despite the gaps being left in the market. From a landlord’s point of view, there are some good opportunities, especially as rents have been rising (arguably covering some of the extra costs) and mortgage rates remain very low.
At Oakwood we are keen to expand our management portfolio and offer a free lettings appraisal. In particular we specialise in the more unusual properties such as rural houses and those with land and outbuildings. Take advantage of our local time-served experience. Give the team a call today on 0161 941 4228.
Graham Bowcock
Chartered Surveyor
Managing Director – Oakwood Valuation Surveyors Ltd
