@David122 It seems to me that if you are giving up then there really is no hope. I thought that you of all those on here might grit your teeth and carry on.
Are you planning to serve s21 notices now, or wait for the Bill to pass and then use new mandatory ground 1A (‘the landlord who is seeking possession intends to sell the dwelling-house;’)?
In Sch.4 clause 3 provides for s21 applications for possession which are commenced (or have not become time barred) before the extended application date* to be valid - but for this to work it will be essential that (1) the s21 notice is served in good time, and (2) if possession is not given voluntarily within the notice period the application for possession must be made promptly. All our tenancies are currently running as statutory periodic tenancies and I am considering giving our tenants informal warning now, and then serving s21 (1) (b) notices in July with the usual 2 month notice period expiring in September and (if necessary) applications for possession being made immediately. I think this timing is safe.
I have never evicted anyone in my life until now and I wouldn’t be doing so now were it not for the blasted politicians.
*The extended application date is the date when the Act will apply to existing tenancies - to be made by a regulation which will be published we know not when.
After being in this business so long you will understand what it was like before 1988. I grew up in a privately rented house in the 1970s and we seemed stuck in a stand off when the landlord would never be able to increase rent, so never did any maintenance, so the house was falling down, but he could never get posession either.
How you respond will depend on your portfolio. If you have a single property I don’t think it matters much as you can always take repossession by selling it, and it isn’t too much trouble. If, however, you have a portfolio then it would be a lot of work and a big capital gains tax coming due at the highest rates. Also if you specialise in letting to “marginal” tenants that aren’t squeaky clean then you will be incentivised to clear decks now and whilst there is a lot of demand quickly get rent up and get better quality people in.
@perrygrovefarm , if ultimately you intend to sell your properties you may as well remain as you are until the bill is passed which may not be for 2 years. Instead of issuing S21 you’ll be using the mandatory ground of selling to regain possession. In the mean time if a tenant gives notice you could then consider selling at that time.
Yes, I agree with @David79. I think it might take more than a year from now before the final bill becomes law, so I will probably use s21. I will give the tenants plenty of notice and be flexible about their arrangements. Im also hoping to split the sale across this tax year and next to benefit from cgt allowances in each. However, I realise things may not go entirely to plan. For one thing, the market seems pretty slow. The property I have for sale at the moment has had only a handful of viewings and no offers as yet.
@Graham - Yes I remember the 1970s well. My mother started in the rental business in the1960s and made a success of it for some years because she had a single tenant, the Housing Officer of the United States Air Force at RAF Bentwaters. This counted as a letting to a corporate tenant and therefore the Rent Acts did not apply. Eventually the whole thing came to an end and we became interested bystanders, watching as the conditions you describe gradually reduced a large part of the UK housing stock to dilapidation. I went to college as a mature student studying estate management from 1984 to 1987 and we had a lecture from a Rent Officer who unintentionally made it clear that the way controlled rents were set was nonsense (they were based on a theoretical rental value if there was no shortage of houses to rent ). On my course we were taught that private rented housing was mostly owned by large landlords who valued purchases using actuarial tables to assess when they might gain vacant possession. They wanted to know about the tenant and anyone with rights of succession and the tables predicted when they would die. In a large portfolio some houses became vacant every year and these were sold immediately. The introduction of Capital Gains Tax in 1965 was not such a problem as it might have been because there was an indexation allowance - gains which were due to inflation were not taxed (Alistair Darling abolished that allowance in 2008).
I think I can predict what will happen now. If landlords like David122 are selling then there will be a bigger exodus from the PRS than I expected. I wonder if it might reach 50%. This will increase the shortage of rental housing and rents will rise. Eventually, perhaps 3 or 4 years from now, the political pressure for rent controls will become enormous and they will be introduced, so we will have gone full circle back to the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915. It would be wryly amusing if the cycle lasts exactly 100 years. Labour’s Lisa Nandy has said that Housing isn’t a market, it’s a fundamental human right. Perhaps Labour will nationalise the PRS after rent controls have reduced the capital values of rented houses to a fraction of what they are now. I also expect them to remove the new mandatory ground of ‘Landlord intends to sell’.
To be fair, its only brought my plans forward about 4 years. Im part of that generation thats now reached a certain age.
@David122 , I imagine a large number of PRS landlords are all thinking the same. I’m in it for a few more years but definitely have no intention of continuing with rental property in to my retirement years after I finish my full time job. I don’t want the hassle, phone calls on Christmas day, texts at 11 pm in the evening etc.
Just a thought on the national register of landlords that the bill proposes, presumably this may help when referencing prospective tenants as previous addresses will link directly to previous landlord actual and full contact details, so making it easier to assess the suitability and character of the applicant. Also I’m hoping the pet insurance situation may actually dissuade tenants from thinking about getting pets, as they will have to really consider the cost of my chosen insurance which they will have to pay, although, I’m well aware that may be just wishful thinking. When the bill does become law, my understanding from an article I read is that the government will give a notice period of 6 months to implement it for new tenancies, followed by a further 12 months notice for existing tenancies so if that is correct it’s still probably at least 18 months to 2 years away for existing tenants.
@David79 - The only people who will have access to the database are the following (s.43)
- lead enforcement authorities
- local housing authorities
- local weights and measures authorities in England
- 30 mayoral combined authorities, as defined by section 107A(8) of the Local Democracy, Economic Development and Construction Act 2009
- the Greater London Authority.
S. 44 does give the database operator permission to make other disclosures but reading this I doubt PRS landlords will be able to use it for the purposes you suggest. PRS landlords will not have access. They will have to pay the fees for registering on the database but will get no benefits from it. Your idea won’t work.
As for implementation (referred to in law as Commencement), see S.67 - I cannot understand why anyone thinks they can read Michael Gove’s mind sufficiently well to have the slightest idea what commencement dates he will specify. It is completely in his gift after the Bill is passed and becomes an Act. The internet and other media are stuffed full of people who think they can predict things like this and they are all just guessing. And most of the commentary I have seen so far has been written by people who do not seem to have actually read the Bill.
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Thanks for the clarification. Good points and all duly noted.
I am new to Open Rent and just starting to understand how goverment’s steps can have an impact on my earning. I have not read the bill yet. My point is also that many of us genuinely get the only income through letting our property to others. So the need goes both way. We are part of the housing industry and as such we should be “equally” protected by the government. Anyhow i would be up to talking to my local MP… but i need to have your help… something like a letter template what you (more experinced landlords) want me to lobby… zi also suggest we potentially start a pettition with Change.com and petition.parlament.
If 10,000 signatures are collected Government will have to respond to the petition. At 100,000 signatures, this petition will be considered for debate in Parliament
Could this be way of shortcutting the noncommited MPs? It will defintely be more powerfull rather than watered down approach by our MPs who look at their own interest… and the goverment MUST respond as well as parlament… hopefully this might be helpful…
This recent research explains why so many landlords are selling up now, (apart from the other obvious drivers).
@David122 The article is worth reading, thanks for the link. It gives two principal reasons for retirees selling PRS investments. One is low yields and the explanation for that is long-term tenancies at rents which have not increased in line with capital values. The other is simply demography - that many PRS investments are owned by people who bought them many years ago and are now retiring.
Neither of these reasons explains the decision to sell. Why would an owner not increase rents, perhaps gradually, to maintain a yield competitive with other investments, instead of selling? After all, rents generally are rising because supply is reducing. And why would a retiree whose Buy-to-Let mortgage has been redeemed choose to sell at the very time in their lives when they need investment income? If they sell they must pay CGT, without any indexation allowance, so their capital will reduce and therefore their income too when the proceeds of sale have been redeployed.
I think this piece of research needs to be extended to try and get to the bottom of why retirees choose to sell PRS investments. I suspect the principal reasons are (1) fear of the effects of the current and proposed rules, and of what rules might be introduced in the future, and (2) a complete lack of interest in managing PRS investments by their children. I wonder if part of the problem is that the retirees’ children (and grandchildren in some cases) have no wish to inherit their parents’ properties and that family conferences have led to a decision to sell, pay the CGT, and put the money in other investments. Of course in many cases the proceeds will be invested in annuities which are beginning to look a bit more attractive if you think the current rates of inflation are temporary, and this means the beneficiaries will get nothing in the end, but perhaps that outcome is acceptable to some families.
Actually, while all this is interesting, it does no more than add to the indisputable fact that the supply of PRS dwellings is reducing, and will probably reduce further, and perhaps the reduction will accelerate. Market forces will then cause rents to increase even faster and as I have said before the predictable outcome of that is rent controls.
years ago i would have been happy to leave property to my children, but it has got so complicated being a landlord they will not have the experience. Better to leave a wad of cash ?
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Yes, its interesting research, but I dont think the income is a factor for retirees selling. In my case I had always planned to do it for 15 years only and then sell up and enjoy spending the money without the hassle. I suspect most of the other retirees are similarly motivated.
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