To think rental policy is stifling the market

[Bunny44]

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.

Thanks OP, at least I can help others by warning them of the realities of our system.

If you want the security of knowing you can move back into your property on a certain date, you simply cannot let it out I’m afraid. The s21 notice you serve will simply be asking them to leave. To force them to leave, you will need a possession order and then a warrant of eviction and then for the bailiffs to go in. There are so many rules about things like deposit protection and gas safety certificates that it’s actually easy not to have every i dotted and t crossed, even if you use an agent, and it will mean your s21 notice is invalid.

If they owe you rent, and you serve a s8 notice, all they have to do at any time before the date of the court hearing is pay enough rent so that there is less than 2 months’ worth of arrears. If they do that, you won’t even get your possession order, you’ll be out of pocket with court and legal fees and the whole thing starts again.

The delays in the courts post covid don’t help, nor does the expense and stress of having to go to court twice (once for the possession order, and once again for the warrant of eviction).

I don’t think the system is working for anyone, and I can’t blame landlords for not wanting to let out their properties under the current framework. One set of bad tenants is enough to put you off for life.

Coping with the effects on your mental health is also challenging, particularly if this is your family home and the tenants have given you verbal and written assurances they are leaving, but these are completely useless and don’t mean anything legally. People can lie and can be extremely unpleasant, but when they are living in your family home and refusing to leave, it takes on a different complexion.

Sorry for the long, ranty post. In short, I think your instincts are spot on and Airbnb lets will be the answer in this situation.

@whirlyhead I’m so sorry to hear this, and the experiences of your friends sound horrendous and not dissimilar to what I am going through. The system seems to be completely ineffective against nightmare tenants.

I think this will all result in very few rental properties being available, and those that are being run by a few, very ruthless large scale landlords. There’s no guarantee those landlords will look after their properties either - just look at the issues with clarion and similar companies.

It has already resulted in very few properties. Landlords round here are all selling up, including my own after 14 years. There is literally nowhere to rent. I've no choice but to stay put until something comes up, however rents have increased 50% here since January are are now unaffordable to single income households like myself. I haven't slept since I found out and have never been so stressed in my life. There is a huge housing crisis and it's being completely ignored by the media. I've paid over 100k in rent on this property but they remortgaged to the hilt and are now in financial difficulty. If they'd sold last year it wouldn't be such a problem. Fortunately for me they haven't followed the correct processes so likely I can stay a good while if I need to but I really just want to find somewhere suitable and move on instead of living in limbo like this.

@clarebear111 The property was in poor condition but not deliberately vandalised apart from them spreading rubbish all over the floors of each room. It had been a pristine 3 year old new build. We needed to replace all carpets, replace the kitchen and repaint the whole house. Some replastering.
They'd also left a huge amount of junk behind (but managed to steal our lawnmower!).

We did manage to keep the deposit through the deposit protection scheme and claim for the new carpets on our insurance.

I can PM you pictures if you like.

Yep. It's way more ag than it's worth.

YANBU. There is a student housing crisis now in Scotland because of these policies. Students NEED to rent private accommodation in their uni towns and have for years, on a yearly basis or September - end of June. The restrictions on tenancies and increased burden on landlords mean that they are just not interested in this market any more. Huge competition for what accommodation there is. Masters students in Glasgow having to live with relatives in Edinburgh and commute because they can't get a flat.

I am on the fringes of rentals and manage some rentals with the support of a letting agent. Its part of my job role. I agree that the rules and policies have gone far too far. Now our council is introducing Selective Licenses. Another money spinner for god knows who. We are slowly running down our rentals because of the huge amount of work it takes and also a sizeable minority of tenants just wreck the places, or just dont pay the rent. We can serve them with various Section notices but it takes months and months to remove them.

As a PP said. Some people live completely irresponsible lives. 40% of our apartments need significant repairs after a tenant has moved out (cira £3k plus), two were sub let and one was used as a party apartment for friends to wreck and use. Tenant lost his deposit because he hadnt paid for months but the rest of it is long gone. The little scrot then moved to USA!

The focus is wrong. The response to the housing crisis shouldn't be deregulation or not introducing reforms, but instead a more holistic approach to housing. The number one priority should be a huge amount of house building for social housing. This would free up private rentals to those who can afford it, and mean that the most vulnerable in society are not always at the bottom in bidding wars for properties.

Agree with more social housing - this makes sense on lots of levels. Still think there is too much regulation on private rentals though and like I said, not sure who it benefits.

Landlords and letting agents have been warning about the impact of legislation for a long time.

They were told that good quality landlords would be delighted with all the changes, designed to protect tenants and improve quality of rental stock, and that it would be great news if landlords started selling up - more starter homes on the market for buyers.

Looks like they got what they wished for to me, but with the unintended consequences that everyone else could see coming.

And where is all this private/social housing being built????

It's one thing to introduce all this legislation, if there's already something in place.

But there's not.

And there's plenty of people who need to rent, don't want to buy.

I despair of our politicians, especially in Scotland

There is also a large group of renters who don't WANT a long term rental property, especially in cities. Students are the obvious group, but also people who are in their first job and finding their feet before thinking about buying, people who are on secondments and don't want to be in a hotel for 6 months, visiting academics etc etc etc. Those groups don't want/need social housing. They don't want a tenancy which will be theirs for years and years. They want to be able to access private rental accommodation for 6 months to a year, and then leave. That is becoming increasingly difficult for them to find.

DD is starting university in a couple of months in a Scottish city. She has university accommodation for the first year but this is not guaranteed in subsequent years. It's a real worry.

I rented for 5 years when DP lost his job & became self-employed so could t get a mortgage.

As PP said, there are plenty of us who want decent private accommodation temporarily.

The NLA have been highlighting this for months. I know quite a number of landlords who would rather their property sat empty for weeks in the winter months to capitalise on easter and summer short term holiday bookings. They make triple what they’d get on an AST without all the compliance and the risk of a non paying tenant.

You do know what " break even" means?

It means that the LL has an asset which is probably increasing in value, and they are not losing money on it

@Tatzelwyrm - no LL I their right mind will keep on a property if they are running at an annual loss in their tax return.

Even in the days of a rising market.

And especially not now where the market is perhaps falling or unpredictable at best.

More so with rent/eviction freezes as there is here in Scotland.

Don't forget that the property also attracts tax when selling. If I check mine, rented for a year at market rate after all tax, I would be in loss most likely

The reason for all this regulation is to inflate house prices. No rentals means no choice but to buy.

I am struggling to understand why people wanted controls on rented homes and landlords, could they not see it would make things worse, not better?

When I was in Uni 20 years ago, I could literally open the back of the student rag, phone a number, and move in THAT day. Yes, it may well have been a converted garage, with questionable plumbing, but it would be cheap! And would be a mine.

Can't do that anymore.

What's the point of having all these standards around insulation and shit, when nobody can afford the rent?

Fucking self-defeating, or what!

I'd rather have a dodgy, cheap flat than be homeless of living with parents.

The problem is that the dodgy flats aren't cheap anymore. If you're paying 50% of your income on your housing, or more, and you have something with mice/mould/water dripping through the ceiling AND the possibility of having to move within two months and/or face a rent hike, then standards are great.

There are a lot of landlords who have taken advantage of cheap interest rates and what's effectively a captive market to increase their wealth/investments, but not realised or acknowledged that they are also providing a service and need to take on the responsibilites that involves. These types of landlords treat tenants as a terrible inconvenience and not as clients or customers, which we all somehow accept despite this being something that would fail quickly in any other business. Imagine a restaurant where they never cleaned the dishes or refrigerated the food properly and if you were to complain the response would be 'well, you still get to eat, right? We're actually taking a risk in letting you sit in three inches of water during the meal and people don't acknowledge that. Oh, and when you come tomorrow it's going to cost you twice as much.'

Not all landlords, obv. And nobody expects a landlord to be a charitable concer. But if you've ever rented you know exactly the kind of people I mean.

@GenieGenealogy exactly. That choice and flexibility is gone.

I've rented out flats twice for short periods in Edinburgh. The first time I rented out my home and when I needed it back the tenants did move out with no trouble. The problem is when I moved back in it turned out the boiler had stopped working at some point and they had stuffed up the air vents on the windows presumably as they were freezing. The flat hadn't been vandalised or anything but I moved back into a broken boiler, windows that had aged more rapidily that I would have expected (don't really know why), broken toilet button and just lots of other irritating small items. I was mad as hell as to why they hadn't just contacted me and told me things were breaking so I could resolve it but it turned out they had 3 people living in a tiny flat (really only suitable for one person) so I suspect that was why.

The second time I rented out a different flat the first tenant was fine. No issues. The second tenant was a lovely polite american young man who seemed ideal. He was...if you ignored the fact he kept all the curtains and windows shut 24/7. I got so worried about the place I asked him to leave so I could sell it (I was done being a landlord by this time). When I got flat back all the floorboards had swollen up with the lack of ventilation and when I opened all the windows etc and they went back to their normal size there was gaps between all the floorboards. This was an absolutely immaculate flat furnished to a really high standard that came with absolutely everything the tenant could need. I even bought them a coffee machine and provided sheets /duvets etc. I gave them lovely dishes and a expensive sofa. I wanted them to enjoy living there and was happy to provide a really lovely flat in return for good tenants. It just didn't work out. I sold it at closing date with 7 offers within a week of it going on the market as it was a lovely flat.

I know my tales are minor and in landlord terms these are probably not really awful stories but the point is even the 'nice' people who I interviewed and seemed suitable and took references up etc just didn't look after the place.

I would never, ever be a landlord again. It was stressful and very time consuming and everything seemed stacked against the landlord.

You know... after reading all of these responses... its amazing how many property owners are so out of touch with reality.

You can't possibly expect people to be happy with landlords "profiting" off a nessecity. People aren't going to roll over and kiss your behind when you're taking half of their wages, while you profit. Even if you don't profit cash, you have an asset that will one day be paid off at somebody else's expense. You have still profited.

You can talk about nightmare tenants all you want. I'm sure there are plenty. Most people are model tenants. They look after the place they live.

And yes. People want secruity. Renting is considered someone's permanent home. Yet you can throw them out with 8 weeks notice without so much as a thank you.

Don't pretend you are hard done too. You aren't the victim in this transaction.

To the landlords that are genuine, caring people.. I salute you. There isn't enough of you.

Let the rental market go mad. House prices are dropping and I might actually be able to afford to buy my own....

Treat housing like a business and you deserve everything that comes your way.

If only the anger about "profiteering" from a business was directed at supermarkets, energy companies etc. as well.

Apart from they are "allowed" to make huge profits for bare essentials too, like heat & food.

But god forbid if a LL views their property as a business.

@Tatzelwyrm but I'm not really 'breaking even'. As mentioend houses are depreciating in London and on top of that the LL is landed with the cost of:

-Stamp duty when buying
-Legal fees to buy and sell
-Capital gains tax
-Estate agent's fees
-Maintenance

All of this cost me last time around £30,000. If It was a LL buying a 2nd home it would be closer to £50,000. All considered if I'm only just breaking even, as in to cover my mortgage and service charges, I'm actually making a loss.

Another huge consideration is the deposit an owner puts down. I put in ALL my money as a deposit and it remains tied up there. That is money that I cannot access to either invest or support myself and my baby until I sell and it's also money I have risked in the property game. I run the risk of losing this money if the market crashes and that would essentially be my life savings.

Renters have none of the risk, time or stress of maintaining, buying or selling a property. And yes, appreciation is not guaranteed so you are always taking on a massive risk - people can and do lose tens of thousands of pounds in the property market, and sometimes much more.

As several PPs have mentioned, there is a need for shorter term lets and many tenants would actually appreicate greater flexibility & reduced cost, but current legislation is stifling this/making it impossible for both LLs and renters.