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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think rental policy is stifling the market

142 replies

Bunny44 · 26/07/2023 09:38

I'm wondering if all this rental regulation is actually doing more harm than good to the supply of rental homes. I say this as someone who rented for years before buying and definitely suffered at the hands of bad landlords, but now I think that there is maybe too much regulation and it could be putting potential landlords off. In London where I live, demand is outstripping supply and pushing up prices.

For personal reasons I'm having to move out my home which I own and I was considering putting it on the rental market to cover my mortgage. I got quotes from estate agents which sounded insanely high, but when I tabled the rough costs:
40% tax on total rent minus the below costs:
Estate agency management fees
Electricity & gas safety certificates
EICR
Inventory & Check In
Tenancy agreement cost

I was only just going to break-even (n.b. you cannot offset your mortgage anymore).

While I was weighing up this and working out, my area has introduced new licencing for landlords which costs £900 and could be denied! Now at this point I felt like it wasn't worth the headache.

There's also the consideration that other new regulation makes it hard to give tenants notice, so if I need to move back into my property or sell it then I might not be able to easily. And that's if you don't encounter problematic tenants.

I can totally see why landlords are being put off and this probably isn't helping supply.

I'm not sure if the purpose is to force landlords to sell, but for instance I can't sell as I'm in the middle of a 5 year mortgage term and I'm not ready to buy another place yet.

Instead I'm looking at doing Air bnb or something like that which I've done before and found it easy and profitable.

I rented out a flat before and think I'm a good landlord - I make sure everything is taken care of super quick and look after my tenants. My house would have made a lovely long term rental and I know there is demand, but I just don't think I can afford to do it and I'm worried about the hassle as well.

OP posts:
Parsley1234 · 26/07/2023 09:48

Yes you’re right Hampton estimate 28000 are leaving the sector now every month. It’s pushing rents prices up and demand is still outstripping supply. It’s a complete mess I’m selling mine and can’t wait to get out after being a good landlord for 25 years it’s a total mess

Cheesusisgrate · 26/07/2023 09:52

I've seen whole portfolios dumped into the market (like 5 housea same area, exact same ads, obviously 1 landlord).

It is creating issues with available stock, but quite frankly, that is what people on here kept saying landlords should do.... So they are.

Caroparo52 · 26/07/2023 09:56

If you use Air B&B or similar why do you still need a management company?
Handle the booking yourself for free.
Gas safety certificate etc only £200/ max.
Tax - yes unavoidable. But as you said yourself demand outstrips supply. Go for it. No brainer.

Original poster
Bunny44 · 26/07/2023 10:03

Caroparo52 · 26/07/2023 09:56

If you use Air B&B or similar why do you still need a management company?
Handle the booking yourself for free.
Gas safety certificate etc only £200/ max.
Tax - yes unavoidable. But as you said yourself demand outstrips supply. Go for it. No brainer.

Sorry if I wasn't clear, management company was only if I did a long term rental and that's mainly to source a good tenant and manage all the paperwork involved.

Due to personal circumstances (imminently having a baby) I need a management agency.

Air bnb my friend is stepping in temporarily and I have a cleaner/housekeeper

OP posts:
Stratocumulus · 26/07/2023 10:30

I’m a mortgage free landlord & getting to the stage where actually, it’s not worth the hassle. I’m thinking of selling. Lovely 3 bed, sought after rural village on city edge.

I have tedious tenants (7 years same family ) and am very proactive but this government is hell bent on not giving an inch to help the private rental market and reward good landlords.

I accept all the good legislation and have no compliance issues but there are some dreadful tenants out there who in real life should be charged with criminal damage when they depart and chased for all other costs attributed to their irresponsible & questionable “lifestyle.”

The government(s) don’t want small private landlords, they just want housing associations/charity projects etc. It’s a joke which is why so many of us are pulling out.

If in doubt, don’t be a landlord. It’s not worth the hassle.

squirelnutkin11 · 26/07/2023 10:37

You are totally right, 5 years ago l decided to sell my small portfolio as it was clear the reasonable profit was being eroded year on year.

I remember saying to my DH that whilst we and other LL could sell up, it would be catastrophic for tenants as supply would drop, rents would go up hugely, and the much mooted flooding of the market for FTB to get on the ladder would not happen as a result.
I so wish l was wrong, but sadly not. This Government are idiots with people in charge of sectors they have no knowledge of.
The Residential Landlord Association lobbied hard to warn Gov that this would be the outcome of their ill thought out policies and yet they failed to listen.

mumda · 26/07/2023 10:52

If 28000 landlords leave each month, who then lives in those houses?
Are they left empty?

CeciliaMars · 26/07/2023 10:55

When you say 'only just break even' what you mean is that someone else is covering all of your costs and you will still profit at the end as you will own the property and it will almost certainly have appreciated.
I think it's completely right that you can't offset your mortgage against tax; the previous arrangement encouraged people to buy multiple rental properties on huge mortgages, taking housing stock away from people who didn't own a single home, who then hardly had to pay any tax.
You are still in a good position if you do all of the above in my opinion.

Spirallingdownwards · 26/07/2023 11:21

Add in that soon rentals need to be a level C on an EPC when even my own Edwardian home isn't and is unlikely to ever be....

Original poster
Bunny44 · 26/07/2023 11:24

CeciliaMars · 26/07/2023 10:55

When you say 'only just break even' what you mean is that someone else is covering all of your costs and you will still profit at the end as you will own the property and it will almost certainly have appreciated.
I think it's completely right that you can't offset your mortgage against tax; the previous arrangement encouraged people to buy multiple rental properties on huge mortgages, taking housing stock away from people who didn't own a single home, who then hardly had to pay any tax.
You are still in a good position if you do all of the above in my opinion.

@CeciliaMars house prices are currently falling where I live and I only bought 2 years ago so it's not correct that it will have appreciated and moreover, they are predicted to fall further. I'm in my 30s so I'm not part of a generation who has benefited from huge house price increases or anything like that.

As for encouraging people to buy more than one house, again not applicable to my generation; with the 2nd house stamp duty, other additional rate taxes and increasing mortgage fees this is enough in itself to make it completely unfeasible for most people.

I think it's good to prioritise people owning their own home, but the current policies have gone so far they are just driving up rental costs so private renters become even further away from being able to own their own home. My point is, these policies just don't seem helpful to any of us.

For reference, I am temporarily going to be out of work and with little income (laid off while pregnant, poorly paid mat leave) so I'm moving out and in with relatives because I can't afford to cover my mortgage. I also can't sell due to the 5 year mortgage term so I'm am only doing this out of necessity and nothing to do with profiteering. Also only just 'breaking even' very much matters in my case.

I would have liked to put my property on the rental market, but I'm unlikely to due cost and regulation. Instead I'm offering it as a holiday let as this is much more flexible. Point is, I wonder how many other potential landlords are doing what I'm doing which further squeezes renters.

OP posts:
YouHaveAnArse · 26/07/2023 11:59

Stratocumulus · 26/07/2023 10:30

I’m a mortgage free landlord & getting to the stage where actually, it’s not worth the hassle. I’m thinking of selling. Lovely 3 bed, sought after rural village on city edge.

I have tedious tenants (7 years same family ) and am very proactive but this government is hell bent on not giving an inch to help the private rental market and reward good landlords.

I accept all the good legislation and have no compliance issues but there are some dreadful tenants out there who in real life should be charged with criminal damage when they depart and chased for all other costs attributed to their irresponsible & questionable “lifestyle.”

The government(s) don’t want small private landlords, they just want housing associations/charity projects etc. It’s a joke which is why so many of us are pulling out.

If in doubt, don’t be a landlord. It’s not worth the hassle.

What is this "irresponsible & questionable "lifestyle"? They can't all be turning your homes into cannabis farms, surely?

RudsyFarmer · 26/07/2023 12:02

Mumsnet absolutely loathes landlords. So I’m guessing there are lots and lots of delighted people on here.

Parsley1234 · 26/07/2023 13:05

@RudsyFarmer they will until they realise there are no private homes to rent and no choice of what there is as the rents are insane

DriftingDora · 26/07/2023 13:41

YouHaveAnArse · Today 11:59

What is this "irresponsible & questionable "lifestyle"? They can't all be turning your homes into cannabis farms, surely?

Use your imagination, it's not too difficult...

there's always one...🙄

Bananasandcorn · 26/07/2023 13:51

No fan of BTL landlords but the removal being able to off set mortgage interest payments against tax is stupid, as is the EPC C change that might happen.

There is little point forcing LLs to sell or increase rents if there is no viable choice for renters, most of whom cannot afford to buy additional properties (no matter how much prices fall) put up for sale, all that happens is cash buyers pick them up and benefit from the increased rents.

ProseccoOnTap · 26/07/2023 14:02

This is already happening in Scotland - no-fault eviction has gone, there is LL registration & rent/eviction freeze in place at the moment. Also a "repairing standard" so you can't rent out a shitty property - and rightly so.

And guess what - it's a bloody nightmare here.

The Scottish govt are introducing a ban on airbnb as well - effectively you will need planning permission & wont get it unless you have a separate entrance/detached house.

You'll even need a licence to rent a room out.

So of course LL are selling up. And no-one will touch students, low incomes, etc

Parsley1234 · 26/07/2023 14:06

@ProseccoOnTap hence the 200 people viewing a flat in Glasgow this will happen here and all the people hating landlords will be regretting their words when there is fuck all to rent

Mirandathepandaisontheverandah · 26/07/2023 14:08

mumda · 26/07/2023 10:52

If 28000 landlords leave each month, who then lives in those houses?
Are they left empty?

Some will be left empty as a result. Some will become short term lets / air bnbs.

Rental properties also have higher occupancy on average compared to owner occupied properties.

Fewer rentals adds up to less capacity in UK housing stock.

LlynTegid · 26/07/2023 14:11

I think air BnB and other holiday lets are a bigger issue to be honest, especially in coastal areas. I think there should be proper regulation and even in some areas a ban on them.

Second homes also contribute to the issue.

buckingmad · 26/07/2023 14:11

FYI you can deduct your mortgage interest but the way it’s calculated has changed and is limited to 20% relief rather than at your marginal rate.

2bazookas · 26/07/2023 14:13

mumda · 26/07/2023 10:52

If 28000 landlords leave each month, who then lives in those houses?
Are they left empty?

LL's don't "leave".

Either the tenants leave and it's not re-let. Or the LL sells the property and who knows if the new owner intends/ continues to let it.

That's not the seller's business.

TeenagersAngst · 26/07/2023 14:15

There's a common refrain during these debates that a LL leaving the PRS doesn't mean the house ceases to exist, implying that there isn't really a problem, just a greedy LL not liking the status quo. Which I think is what @mumda was getting at.

There's also an assumption that renters can afford to buy - well, obviously some can, but many many more can't - or they wouldn't be renting in the first place. The facts of the matter are that there is a rental crisis in the UK - too much demand, not enough supply (meaning either rental stock is decreasing or the number of renters is growing). Since this problem has only really escalated since 2016 with the introduction of S24, it's likely that it's the former (LLs leaving the market) rather than the latter.

YouHaveAnArse · 26/07/2023 14:16

DriftingDora · 26/07/2023 13:41

YouHaveAnArse · Today 11:59

What is this "irresponsible & questionable "lifestyle"? They can't all be turning your homes into cannabis farms, surely?

Use your imagination, it's not too difficult...

there's always one...🙄

I'm using it, usually when I see the word in inverted commas it normally means something homophobic, which is why I'm confused.

Original poster
Bunny44 · 26/07/2023 14:20

LlynTegid · 26/07/2023 14:11

I think air BnB and other holiday lets are a bigger issue to be honest, especially in coastal areas. I think there should be proper regulation and even in some areas a ban on them.

Second homes also contribute to the issue.

There is already a lot of regulation. In London its limited to 90 days to the year unless you have a license.

A lot of people use Air bnb to essentially take on lodgers to keep up with mortgage increases- not sure how that's an issue?

OP posts:
2bazookas · 26/07/2023 14:21

RudsyFarmer · 26/07/2023 12:02

Mumsnet absolutely loathes landlords. So I’m guessing there are lots and lots of delighted people on here.

My I correct you?
Some people on MN who have no clue about private letting law, regulations or tenancy agreements, have a very uninformed view of how they affect landlords.
Some of them are uninformed because, apparently, they didn't read the tanancy agreement they signed.
Other people on MN are experienced LLs who are demonstrable well aware of every legal requirement AND the terms of tenancy agreements, and long experienced in both good and bad tenants.