Lettings agents within The Guild of Property Professionals think that the Renters Reform Bill could cause many landlords to get out of the game, sighting the ban on Section 21 as the straw that broke the camel’s back.
Graham Wood, Managing Director at Home Sales & Lettings, who has been involved in lettings as a landlord for 20 years and the owner of a letting agency for more than 15 years, says: “The outcome of the long-anticipated Renters Reform Bill is to have sufficiently frightened numerous landlords into selling their rental properties. Landlords feel that one way or another they have been under constant attack for the past five years. Previously, borrowing through a buy-to-let mortgage had income tax advantages for landlords. However, from 6th April 2017 phased changes have resulted in finance costs no longer being deductible against income on long term let residential properties. Additionally, there has been the threat and now the reality of the abolition of Section 21.”
Wood believes that as a direct result of the constant attack on landlords, agents throughout the UK have experienced a surge in rental properties being sold. “Within our own agency the most common reason for tenants enquiring about newly listed properties, is that their landlord is selling. Approximately 10% of our managed properties have been sold in the last 18 months. We anticipate this will increase to 15% by the end of 2023. We know that from speaking to other letting agents this trend is common throughout the UK. And because the number of available properties is becoming smaller and smaller, the law of supply and demand has caused rents to increase sharply. Once again it is tenants who are having to pay the price of this badly thought through legislation,” he adds.
According to Simon Davies, Branch Manager of Norman F Brown in Bedale, Hawes and Leyburn, the Renters Reform Bill has been portrayed as positive for tenants and negative for landlords. “As ever the devil will be in the detail which unfortunately hasn’t been announced yet and this is scaring landlords. Personally, I actually think there will be positive outcomes for both landlords and tenants. The main issue landlords will have will be over the scrapping of Section 21. While this sounds very scary, there will still be mechanisms for taking back possession of the property quickly, such as a sale, anti-social behaviour and if the landlord wants to move back in, and that is just for starters. Unless the Government announces the detail soon, I fear some landlords will be scared by the uncertainty and sell up. This will reduce the supply of property for tenants and ultimately push rents even higher due to market forces,” he comments.
Alex Umut Sevinc, Head of Operations at Filey Properties, says that a lot of the landlords he has spoken to relate the Renters Reform Bill as mainly a banning of Section 21. “Many landlords feel that they will not be able to remove tenants when they require the property back, some even go as far as to coinciding this bill will also enable the tenant to buy the property off the landlord. This for now seems untrue but there is a lot of speculation,” he adds, “A lot of landlords have begun to panic about the mention of a freeze on rent or limit of rental increase. This is on the backdrop of raising interest rates, maintenance cost and also Tax implications.”
According to Sevinc, most of his landlords are particularly worried about the duration it currently takes to remove a tenant and how this may be lengthy process if they are removed by what is known as ‘accelerated possession’, which currently often takes up nine months. He notes that landlords are apprehensive of how long the new style eviction will take and if there will be sufficient grounds.
In conclusion, Sevinc believes that the new Property Portal for Landlords is deemed by many as another potential increase in charges to the landlords, as most landlords have seen the introduction of a selective licence within the last five years in the boroughs they operate. This will be another punishment for abiding landlords.