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.

Thing is - being a landlord IS a business and should be treated as such.

Tenants are customers you are providing an essential service to not a convenient way to pay your mortgage.

If you cannot afford your mortgage, you cannot afford to be a landlord - what will you do if your tenant defaults? Or you end up with an urgent expensive repair.

@AnoyDad2023 You sound very bitter. But the point is the current legislation isn't going to help you. My post was about it being both disadvantageous to both potential landlords and renters the current situation.

Also there are plenty of potential landlords like me who are just trying to cover costs due to changes of circumstances. Sometimes ordinary people who let out their homes (because they have to) do get screwed over.

I've been on both sides of renting for years and also really hoped I'd be able to afford to have my own place one day. Eventually I did after much hard work and sacrifice and bought only with intention of security, but due to unfortunate life experiences I need to let out my place (rendundancy, partner leaving me while pregnant) - do you think I deserve to be screwed over?

Current legislation has made it an unaffordable business for most LLs - that is the point of the post. What if there are no LLs? Or only large corporations as LLs whose only objective is to make as much money as possible?

Just renting out a non mortgaged property which has been sitting empty for a few years. We’ll have to reevaluate when the new EPC rules come in - there’s no actual way for any further work to the Victorian building to increase/better the grading. It’s another of the government’s green policies that will most likely have to be shelved or there’ll be no rentals left🙈. It’ll only decrease supply and increase rents further. Numbskulls🙄.

There will be landlords. The problem we have at the moment is too many small time landlords, not too few. Their business models are often laughable and under capitalised, they can be woefully ignorant of their obligations and whine when they come unstuck.

We need to move to:

1 more affordbale homes to buy for young people.

1. More.spcially rented housing

1. A return to work provided accomodation for some key worker professions

1. More long term corporate landlords in the PRS.

Deregulating the sector with ASTs and BTL mortgages in the late eighties certainly flooded the market with rental properties but it also resulted in a lot of very poor qualoty landlords and inflated prices at the lower end as first time buyers found themselves competing with investors for the same properties.

Landlords are providing a life essential service to people so SHOULD be well run, well regulated businesses not someone with a half arsed plan to invest in a second property as a pension.

Why do corportate landlords work better? Surely they're even more set on maximising profit and if they have a larger market share will just crank up rents further?

Are people OK with corporate landlords making a profit or 'breaking even', do some people honestly believe that the 'hobbyist' landlords should let out their property with no return other than they may make a profit when they sell?

Corporate landlords will certainly expect to run at a profit for providing housing - is that okay then?

This is what literally makes me laugh out loud. It’s like Beyoncé brings out a candle and everybody falls over themselves to pay 10 quid for that. Your best mate you’ve known for 40 years who lives down the road from you your kids go to the same school as Theres . They start making candles and sell them for 11 quid and everybody’s being ripped off. It’s disgraceful have they got a license etc.
I’m an absolute loss to understand why people I’ve got such an issue with mum and dad owning a couple of rental properties and doing their best to keep up with repairs etc versus the big corporate faceless entity. Who if any of you have any experience of block management I can tell you the residents are taking these people to court almost weekly over repairs. And they won’t win because the block as an individual entity doesn’t have any money to carry out repairs even if the organisation as a whole does.

I also have personal experience of the block management companies calling up their mate who owns the maintenance company who then calls up the plumber who charges 100 quid to fix the leak. The maintenance company then adds their charge which will be another hundred. And the block management company add to their 20% service charge so overall we get to £240 for £100 job.

But you’re all fine with that as long as Joeann and Trevor down the road aren’t making any money out of you.

This country is gonna get exactly what it deserves.

And don’t forget the maintenance company and the block management company will both charge VAT on top of that which year Plumber down the road probably didn’t. Outright theft.

Once private equity companies and the like have a stranglehold on the rental sector, you'll all be begging for the "small time landlords" to come back.

Exactly.

Some people are just fucking dumb.

I find the argument so strange. Utilities companies - profit. Supermarkets - profit. The plumber that fixes your bog - profit. These are all essentials too.

I don't disagree that there should be way more social housing stock btw. Just that there should also be favourable conditions to allow a decent supply of private rentals so that the choice is there for everyone to find something that suits their individual circumstances.

Can't disagree!

This is the same with other sectlrs. Monopoly of giants are not always the best thing

Well, let’s be honest, deepdown people probably don’t even like that either. But again they won’t pay 10p, extra to go to the local butcher.

When the Conservatives got into power, they very quickly started rewarding homeowners and ripping apart the social housing and private rental infrastructure.

I was working in social housing at the time and it was horrific to see social cleansing being rolled out in front of their greedy eyes.

There are children growing up in a single room with a bathroom they share with other families and others whose parents have been forced into private rented where there is mould and damp and their tenancy could end any moment when the landlord has to sell up due to new restrictions.

Breaking even for a landlord is not ok - they need a way to fund repairs. Breaking even means no repairs.

Families who will never get social housing will now struggle to find private rental.

Little children's lives blighted by greedy people.

Makes me really fucking angry.

I literally have no issue with small or large landlord making a profit out of renting out property. It is a business after all.

I have an issue if they are shit and sadly too many small time landlords are just shit. Often they don't mean to be but because they are under capitalised or don't see it as a business but a pension etc..

You’re completely right, even though that’s a very unpopular opinion these days. It doesn’t make sense to do it anymore - and of course you become somewhat of a hate figure too! I’ve rented my place out a couple of times while working abroad and I would never do it again. On top of everything you mention you need to factor in a large capital gains tax bill when you come to sell because rental relief has been taken away (retrospectively too) so I as a not high earning single mum was landed with a bill for thousands because of rental periods that at the time were exempted.

of course there are terrible landlords and perhaps the entire sector needs a complete reform so that it something that people invest into but run by say a social entity. I don’t know. But if you take the existing system and just make it much more difficult and costly for landlords, of course it is going to strangle supply - and that is exactly what we are seeing right now. Unintended consequences etc…

I've requested a consent to let which my mortgage provider allows. Doesn't allow Air bnb but to be honest I'm not sure how they'd find out. Sure their priority is me not defaulting on my mortgage anyway.

Disgruntled neighbour hating the noise and disruption?

And if they do find out they could require immediate repayment of your mortgage.

Apparently also breaching your mortgage conditions will also invalidate your insurance (https://uk.virginmoney.com/brighter-money/does-airbnb-break-your-mortgage-rules/ )

@CeciliaMars I think it's completely right that you can't offset your mortgage against tax

you never could. You could offset the interest - so you were always paying the capital off yourself, it was the cost of servicing the loan that you could claim.

regardless of what you think about this, a large proportion of landlords in this country are private owners renting out their own home, not a second home, and do actually need to cover their costs if they are to do so. You have to pay your mortgage, so if the interest cannot be offset, you often end up paying money to HMRC that you have never actually received. If you need to rent elsewhere as I did, you come out way worse off than if you’d stayed in their mortgaged home.

If it’s a buy to let that’s just an investment and you are a limited company then that’s slightly different - but the irony is that those people actually can still get the interest offset!

I know many people who have needed to rent out their homes for a period recently - divorce, care for parents, need to move location, can’t sell right now etc - and none of them are doing it because of all the costs and barriers.

When you say "break even", presumably you mean in terms of covering your mortgage payment. That's not "breaking even" - you're still building equity, and that equity is your profit.

I don't actually have a problem with small-scale landlords, I've rented from several and they've been great, but they all took a long-term view of the finances, not a short term one.

When you say "break even", presumably you mean in terms of covering your mortgage payment. That's not "breaking even" - you're still building equity, and that equity is your profit.

There's still their time though - people in any other industry rightfully expect to get paid for or making a profit on that.

Regardless of whether you think that’s fair @bingoitsadingo , small scale landlords do actually have to live still! If they’re making a massive loss on a monthly basis, long term equity is kind of irrelevant as to whether they can continue to do it. You’re assuming they are well off day to day in their own right and can take the hit short term. If they can’t, they’ll just have to stop and take any equity they have now (and that’s not a given at all these days, especially where Capital Gains Tax doesn’t actually recognise a lot in terms of the money you may have put into a property).

You may think that morally that is right, and that’s a matter for debate, but the reality is they are leaving the market and supply is on its knees. Maybe small time/accidental landlords should be pushed out and the whole system should be transformed top to bottom, but nobody is doing that, so doing the former without the latter is just going to make matters worse for renters - and it is, we can all see that.

The EPC requirements are going to have a crazy impact, while an admirable goal most of our housing stock does not meet a C standard, my owned house does not, nothing I saw when looking for my home did. If it’s going to cost 20,000 or so to upgrade, where is that money going to come from, particularly if landlords are making a loss day to day?

I'm good friends with my neighbours and they're very nice people so they'd just message me if there was an issue. Also they don't even know who my mortgage provider is.

Tbh I don't even know any properties not run by private landlords? What is a corporate landlord?

You seem quite fixated on this - what's your expertise in this area?