What will happen to the York Buy To Let Market if landlords can’t evict their tenants?

Anyone who has any particular interest in property will have undoubtedly heard the news last week surrounding Section 21 notices. My initial reaction was one of shock. As if landlords haven’t had enough legislation and financial burden thrown their way over the last few years.

Just in the last four years alone, there have been changes to Fair Wear and Tear allowance, changes to Mortgage Interest Relief landlords are able to mitigate against their tax liability, The Right to Rent Act, Deregulation Act 2015 (superseded by Deregulation Act 2018, Minimum Energy Efficiency Standards 2018, The upcoming Tenant Fee Ban, Banning Orders, hefty fines for non-compliance.

With talks about rent capping and the Labour Government alluding about mandatory three year tenancies, it feels like landlords are getting hit from all sides!

Landlord Indicator

So imagine my surprise when first thing Monday morning 15th April 2019, I log into my BBC News app to read S21 notices to be banned in the UK. The impression I seem to get is that there are a number of organisations out there and a certain amount of media sensationalism portraying landlords as avaricious, power-hungry and ruthless beings evicting tenants left, right and centre.

Let me put this on record that in my eleven years in the industry, I’ve never had a landlord serve a notice on their tenant/s without good cause.  That’s not to say that there are landlords out there who lack a duty of care to their tenants and where this has happened, I empathise, but quite frankly, not all landlords should be tarred with the same brush.

I’ll take this opportunity to get off my soapbox and get to the point which means I may need to get a bit more technical here. The Section 21 is the landlord’s ‘no fault’ notice to get vacant possession of their property and officially end the tenancy. This notice was borne from the 1988 Housing Act with the Assured Short hold Tenancy.

Eviction door

Prior to this notice tenants had significantly greater security of tenure, especially following the Protection From Eviction Act 1977. Interestingly in my article last week I shared a graph breaking down the different levels of tenure as percentages from Owner/Occupier to Social Housing to Privately Rented accommodation. Unsurprisingly, the late 70’s and 80’s saw some of the lowest proportion of Privately Rented Homes in the UK (on average 10%) of which I am confident, a majority of this can be apportioned to the lack of control for landlords.

So what is the impact on the York Buy To Let market with the abolition of Section 21?

Are we reverting back to pre-1988 Housing Act tenancies?

Are landlords going to exit the market?

Is a resultant lack of buy to let property going to inflate rents in the Greater York area?

Consequently, due to less rental stock, are some tenants going to find themselves homeless hence negating what the government are trying to stop in the first place?

Well after a fair amount of consideration, I actually believe the impact won’t be as significant as first anticipated. There are currently two ways landlords can gain vacant possession of their property, via Section 21 and Section 8, the latter being more related to rental arrears or nuisance tenants causing clear breaches to the Tenancy Agreement. Suffice to say certain grounds for vacant possession are granted, namely landlord selling, landlord moving back in, landlord refurbishing etc, I don’t expect there to be a culling in the Buy To Let Sector in York.

Close up hand of man signing signature loan document to home ownership. Mortgage and real estate property investment

When I look back over my time in property, I have probably served on average, three to four Section 21 notices per year. In all cases, it would have been down to rental arrears, landlord deciding to sell or landlord moving back in. Categorically, none have been because of retaliatory eviction.

With all the talk of tenants being made homeless, bear in mind, landlords actually prefer longer term tenancies as do Letting Agents as when a property is vacant, the landlord suffers the burden of a void period, having no rent and paying for utilities and rates accordingly and is required to pay marketing fees when the property is re-let.

Houses of Parliament

Ultimately, the government need to take serious consideration of how much more the buy to let sector will stand and any more political ‘Knight to B6’ manoeuvres could present dire consequences to the sector.

If you have any concerns about the impact of these changes on your investment, feel free to get in touch, I’d love to help.


2 thoughts on “What will happen to the York Buy To Let Market if landlords can’t evict their tenants?

  1. At last I have finally heard someone explaining the facts.
    You will know more than me but why would any landlord evict a tenant if they are paying the rent and keeping the property in relatively good order.
    Listening to a spokesperson from the Landlord Association on the radio he didn’t once mention these points. Amazing and he was supposedly representing Landlords.
    Ministers need to be told this as they and even it seems the Landlord Association don’t know.
    Why do they want to increase the tenancy agreement to 3 years? Surely, after 6 months it just rolls on to a statutory agreement. I have a tenant who has only been in my property 4 months and wants to leave due to work transfer. Will he give me the 2 months rent that will be outstanding? So imagine a 3 year agreement and the tenant wants to leave after 2 years will they pay the landlord the third year? Obviously not.
    Why do ministers not like the idea that landlords are running a business just like M&S yet any problems are civil not criminal that M&S benefits from. Taking without paying from a shop is theft not paying your landlord although there is a written agreement unlike buying from a shop it is not classed as theft. Why not…?
    Another point if there were no landlords where would people live as different governments have failed to construct houses for poorer people.
    Sorry for the rant but I can’t understand why we don’t hear from landlords and their side of the story.

    Like

    1. Hi Janis,

      Thanks for your message. Other than landlords who wish to move back in to their properties or those who wish to sell their property, there should be no reason why a landlord would serve notice on their tenants. In my experience, 95% of the time it’s the tenant which serves notice on the landlord. There are a minority of landlords out there who give the rest of us a bad name. Think about it, the media will never centre in on the good landlords who looked after their tenants and dealt with maintenance in a timely manner as it doesn’t sell papers.

      Again as for three year tenancies, quite frankly, one of the many facets of the Assured Shorthold Tenancy is its flexibility, for want for a better term. If the government went through a consultation process and perhaps a straw poll, they would find that tenants would prefer to move around in case of work relocation etc.

      Ultimately the banning of the Section 21 notice will be a retort to the three year tenancy as per part of Labour’s manifesto. The party that suffers is the landlord. I still feel there is good money to be made in property but there is only so much landlords will put up with. As they exit the market, this will potentially exacerbate the level of homelessness. Simply put, the government need to fully understand the cogs that drive the Private Rental Sector.

      Don’t worry, I’ve been ranting about all these changes for the last three years as the PRS has come under increasing scrutiny.

      I’m happy to have a conversation about it in greater detail if you’d like to meet up for a coffee or you can give me a call.

      Best wishes,

      Ash

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s