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.

Refer back to my previous post regarding other costs a LL takes on.

Shelter and the like have pushed for this, problem is they don't provide any accomodation and only see the tenants point of view.
Rogue landlords and accidental landlords are the issue but all landlords are being lumped together. We've just sold one of ours to our tenants because that was our plan once we retired. Once that money has run out we're selling the next one and those tenants already know that they will get first offer so they are saving up the deposit now.
It's been worth it for capital appreciation and rental income and if you understand the business and are young enough it is still viable. Human nature means that people jump on the bandwagon in droves but when one jumps off lots of others do because they don't have their own plan and so panic. It's going to be terrible for renters, not enough properties to go round as it stands now. We have new tenants in one of ours and they were so grateful because they have a dog and we're given two months notice because their landlords decided to sell and we had 11 people wanting it.

I don't think it's about people jumping on or off the bandwagon - it's about the fact it's not really a viable anymore.

Also those saying it's private landlords that are the issue. I'm still yet to come across these 'corporate' landlords referenced - any examples of companies which do this? The other 3 houses near me are all rented out via individual landlords and the tenants are very happy - they said they fix issues quickly and keep the rent pretty low as they prefer to have long term decent tenants rather than impose high rental increases.

Also nobody has spoken about the properties being bought up by foreign investors who often aren't subject to the same rules and are happy to leave them empty.

According to stats in London alone there are 30,000 empty homes.

Thinking of the 40 plus apartment rentals we have offered where I have worked over the last 4 years at least 80% of them are either:

1. Trashed and various items left in situ. Dirty scummy duvets, food left in oven, fridge disgusting and manky marks on the beds
2. Complete pig sty when tenant moves out having never been cleaned
3. Damaged items with scrape marks all over the walls, or hair curlers left on resulting in burned carpet. One particular unit was inspected half way through tenancy and you couldnt get into the second bedroom it was so full of dirty underwear, clothes piled up in corners and the bed a complete disgrace. She was reminded to keep the place tidy and she said it was....
4. Stolen items and on one particular occasion the tenant had used the curtain as toilet paper. He then found a old towel of his and used that too leaving it for the letting agent to find
5. Yes, there is a damage deposit but that very very rarely covers the damage

Most important of all if the tenant finds they cannot afford the apartment they are told to stay where they are until evitcted which is months and months.

We are developers and we have decided not to do any more rentals. The law is just too much on the side of the tenant whether they pay their rent or not

We rented our house out as a long term let when we moved far away and had to rent there in the first instance. Setting up our house to rent out was a complete nightmare, so many things to put in place and hoops to jump through (some sensible, some ridiculous. Next they'll be asking that landlords pad the walls and remove any hard surfaces so the tenants aren't in danger of stubbing their toes or other such minor injuries!).
We weren't professional landlords with a huge portfolio, and we didn't own more than one house at any time. Luckily we ended up with lovely tenants and everything went smoothly, but I counted down the days until we could stop being landlords and just get back to normal - living in the one house that we owned. Our tenants ended up buying our house off us so we didn't have to evict them, thank goodness as they were so nice I would have felt awful doing it.
I never ever want to be a landlord again, it's just not worth the hassle.

I would never never be a landlord myself. Its just too much hassle and upset. The colleague I used to work with was a BTL landord with one 2 bed house and again she said never again!

@Tracker1234 so it looks like even professional landlords are being put off!!

Nothing is private nowadays. Your lender details are obtainable from Land Registry.

Sorry if I've missed it, but if you've been made redundant and can't afford to pay your mortgage so have to move out, why would you be paying 40% tax on the rent? Surely you can't be a higher earner in the circumstances you've described above?

The problem as I see it isn't that its regulated, it needs to be for the benefit of both the landlord and tennet.

Its that far to many people are trying to take money out of a limited financial pool.

I do find it telling that some posters are complaining about gas and electric certificates, as all properties that are renting should be safe and habitable.

What a lot of people fail to realise is that waging war on landlords, results in waging war on tenants. Without landlords, there are no properties to rent. I know lots of people struggling to find anywhere to live. They are bidding on rentals but they are going within a day of going on the market, as there are dozens of potential tenants for each property. It's resulting in homelessness, as people evicted from rentals due to landlords selling cannot find anywhere else to live. The current rules benefit no one.

For us, as well as the break even, it was now being forced to allow pets. We had one tenant whose dogs chewed the place up. The max deposit did not even touch the damage. So yes, another property off the rental market.

I'm going to take the risk knowing my neighbours, but thank you :-)

Because I am still earning the rest of the year, first 6 weeks mat leave @ 90% + the gross rental income is very high (but so are the costs as I live in Zone 1 of London). I will have around 4 months where I'll be taking home £400 after tax (yes you still get taxed on statutary maternity pay), whereas my mortgage + bills is around £2000 and this is why I need to rent out my place.

Got it - thanks for explaining, was confused by that!

Didn't know you can be forced to allow pets? What legislation does that come under?

Here is the pets stuff.

Thanks! Luckily my shared freehold prohibits pets so I have this to cover me:

"There are situations where it will always be reasonable for a landlord to refuse a request – including where their superior landlord prohibits pets. We will provide guidance to landlords and tenants to support decisions."

My son is buying atm and pretty much every house he looked at was a previous family rental
i think out of maybe 15 odd houses that he looked at over a few months only 2 had not been rented out

so that’s a fair amount of people who will have to find new accommodation or try and get rehoused via the council

We live in a village in south east Cornwall and have just inherited MILs house in the same village.

We have not yet decided what to do with it. A lot of friends have suggested Airbnb, or else we would sell it. At a pinch we could keep it for friends and family to stay when visiting, it is possible that we might need to move my elderly father in there to be nearer us.

One thing is absolutely certain, and that is that there is now no way on god's earth that we would rent it out longer term, furnished or unfurnished.

I've done a bit of Air bnbing my home already when I've been away and had a very positive experience so far. I only accept guests with good reviews and they've been really lovely and it's been an enjoyable experience. Had all 5* reviews myself as well :-).

Aware you can have bad guests but there are things you can do to avoid that.

I live in SE Cornwall.... real shame the house wont be rented out to a local family, there is huge need for locals to be able to live in their communities, esp if we went carers, teaching assistants etc etc

But i know what you mean, some tenants are arseholes and the law (because of delays in the court process) protects them.... but it is a minority, i know loads of trades folk who have a BTL as their pension and have had no problems, they bought years ago and can do the mtce themselves.
Worryingly, the EPC C thing is making a few consider selling up.

I'm in the process of buying a property to rent to my best friend who is being evicted, its a gamble but i ve the money and its business decision which i ve explained to her, a 6% return, yes i could get nr that with todays interest rates but they are set to go down fairly soon & this way i help her out too.

It's not just the EPC rating - it's much more than that, such as the retrospective taxes and legislation. It's pretty much unfeasible given the new taxes and restrictions as is and you never know what else is coming round the corner.

Even if a tenant is good, there are lots of other issues. It's a shame as there are a lot of properties being kept off the market due to all the regulation.

I say this as someone who has been a tenant until recently and who agrees some legislation is correct and right: anything relating to safety, such as electric and gas safety, deposit protection schemes, abolishing tenancy fees for the tenant. But some things are unnecessary and don't benefit the tenant and disincentivise LLs such as - the new licensing (don't understand what they're for?), not being allowed to offset expenses against tax (I know people who hate landlords think this is good, but it just pushes rents up ultimately).

And then there are people in my case who let out their home temporarily as a necessity - I think in those cases there should be some ease of restrictions if it is your ONLY home.

I understood that expenses that are not covered under insurance are tax deductible?
ie i spend out 3k on a new gas boiler that 3k is an allowable expense?

Is this incorrect?

@Bunny44 I really think if you just want to let your property out while you're on maternity leave then forget using a letting agent and do it yourself. You'll probably only need to do it once and it's actually quite simple - you'll save yourself ££££.

The gas safety check is annual so around £200, but the EICR is only every five years, and cost us about £300 last year.

I've rented a property out in a South East city for years and never needed a letting agent. I've had about ten tenants to date and I always just pick the ones I like the best - they've all been wonderful. I advertise on OpenRent, which is really helpful in showing you exactly what you need to do next and recommending tradespeople in your area to do it.