Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a540992

Outdated rental rules fail tenants and landlords

With more people renting for longer, the market desperately needs reform to give tenants more protection and landlords more clarity.

 
Outdated rental rules fail tenants and landlords

Unrealistic house prices, tight lending and demanding deposit requirements mean that many people in their twenties and thirties are being forced to rent for much longer than they’d planned.

Long-term renting, however, is not something the UK is set up to cope with. 

Increasing demand has been met with a seriously subdued supply of rental properties, and as a result landlords are pushing rents higher and higher. For many tenants, the worry is: how high will rent go?

Lack of regulation

The problem is that aside from a few rules – such as the right to remain in a property for six months, a two-month eviction notice and some deposit protection laws – there is very little regulation of the market.

Landlords effectively have free reign, so if they want to bump up their prices, you either agree to pay or move out.

There are still a handful of regulated tenancies floating around from the pre-1989 days, which provide some protection against ‘unfair rents’, but if like the majority of tenants you have a standard assured shorthold tenancy (AST) agreement, you’re on your own.

Although we obviously don’t want to go back to days before deregulation – when the rental system was littered with so much red tape that landlords didn’t want anything to do with it – right now we’re at the other extreme. Landlords hold all the cards and renters have virtually no protection.

Rent caps

So, what are our options?

One of the more controversial options is to introduce rent caps, which prevent landlords increasing rents above a certain threshold. Labour's Ken Livingston recently promised Londoners he’d introduce a New York-style cap on rents if he is returned to power.

Landlords are understandably completely against this proposal, and have all but threatened to desert the market should rent caps ever come to pass. Housing minister Grant Shapps has similarly ruled out rent caps, claiming history proves that excessive regulation drives up rents for tenants, reduces choice and shrinks the sector.

For Shapps, the answer is to build more homes. But these new homes will take time to build, so what is the plan in the short term? What about people struggling to pay their rent now?

If rent caps are a definite no, what about linking rent to inflation, wages or interest rates to help protect tenants? Or allowing landlords to use market prices to set starting rents, but then limiting increases once a tenancy agreement has been signed?

Sign in / register to view full article on one page

54 comments so far. Why not have your say?

LANDLORD X

Nov 09, 2011 at 18:17

"Very little regulation of the market" above

What????!!!!

Letting residential property is a HIGHLY regulated sector - there are dozens of sets of legislation that landlords have to comply with

Just highlights the ignorance of the author of the article

If tenants want to stay longer, they will have to persuade the banks to accept this as most lenders with BTL mortgages insist on 6 month AST contracts

I would love to offer longer contracts but cannot. Also tenants want the flexibility to leave if their needs change rather than being tied in to a contract

People keep referring to Germany as if it is all fine there. As a tenant you will be able to have a longer contract but you will have to supply all your own furniture and fittings as apartments are rented in a bare empty shell finish without even a kitchen - just bare pipes sticking out of the wall. Setting up in a rented flat there can cost thousands as you will have to fit your own kitchen, flooring, decor, carpets, curtains, blinds, light fittings, the lot. And clear it all out or sell it and redecorate to German standards when you leave. And in apartment blocks you will have to clean the commonways and even clear snow and leaves off the pavement. All in all much more onerous for the tenant. And don't even think of making noise or dumping rubbish or being anti-social as you will have the full force of German bureaucracy on your back. Flood the flat below with your washing machine leaking and guess what - it's the tenant's fault and the tenant below will sue you. So good luck with bringing German practice here - be careful what you wish for

report this

Robert Court

Nov 10, 2011 at 08:33

'With private rents now unaffordable in 55% of local authorities in England, according to Shelter'

If the above were true then landlords would reduce their rents as I am sure that they do not wish to have empty properties.

So - 'poppycock' to the above and those landlords who are prepared to take on tenants who are on housing benefit or unemployed have the right to be careful (as with any tenant) who they attract; if the rent is higher than the maximum allowed under local housing benefit limits the tenant either has to pay the difference or accept lower quality housing elsewhere.

When I was unemployed after graduating as a mature student I had to share multi-occupancy accommodation for over a year; something I didn't expect I'd have to do after being in shared student accommodation for the prior four years.

It is absolutely fantastic to have your own home if you can afford it; if you are a single person without children then you have to bite the bullet until you are able to pull yourself up vy your bootstraps and improve your standard of living.

I do not believe that unemployed people have some God given right to live in 'luxury' accommodation at tax payer's expense; i was very grateful to receive housing benefit when I was entitled and even more pleased when I nolonger needed it.

I HATED living in multiple accommodation having to share a kitchen and a living room and a bathroom, but it was a lot better than I'd imagine living on the streets.

What if I'd been provided with my own nice appartment paid for by everybody else?

Would I have been so motivated to get back into employment as soon as possible?

report this

rashmi vyas

Nov 10, 2011 at 13:07

I have seen no movement in rents in the last 6 months and actually have had to accept less rent on a recent letting. The market will always level out where affordability becomes a issue.

As for protecting the Tenant's there are already enough rules and I have had tenants who have occupied my property for 10 years and you know what, if the landlord has a regular paying tenant who is looking after his/her property then they are not likely to increase the rent.

All this people who think legislation can sort out all problems are living in a make believe world and if their was less regulations maybe the rents would come down.

The new proposal to licence landlords is just another way of raising revenue for the local councils and will add to rents going up. Do the councils care- They don't.

report this

sK

Nov 10, 2011 at 15:07

Oh dear, dreadful article Victoria Bischoff! I feel so strongly that I logged in to comment. And agree with the sentiments of all the landlords who have commented here.

"Lack of regulation", "Landlords effectively have free reign"... please do your research first so that you can present a more balanced argument in future.

Really dreadful article.

report this

colin wilson

Nov 10, 2011 at 16:30

Well as a saver who is subsidising the BTL brigade via the cheap mortgages which are available to them, I do feel that rents should be pegged in some way to the cost of the money being borrowed.

report this

Chris - 1

Nov 10, 2011 at 16:47

Dear Victoria,

My only piece of advice is to do some serious research before penning such an article. Having watched this blog for the last couple of years or so I am always amazed at the lack of understanding many people have regarding the 'letting of property' as a business. Some seem to think it is a breeze and all we do is 'rake the cash in'.

The level of legislation we comply with is very significant and the vast majority of landlords comply. It is a shame that programs such as Channel 4 on landlords that was recently presented by Jon Snow could not have given a balanced view rather than purely concentrate on the extreme and disgraceful landlords who should all be prosecuted and sent to prison.

Finally in response to your comments about 'rent increases' I can only assume that you live in the London area.

report this

whitegates

Nov 10, 2011 at 17:52

I am not a BTL landlord but I note in this article the lack of detail on bad tenants who abscond with rent arrears and damage property. Why isn't there a register of approved tenants so landlords can check them out? Also bad tenants would find it more difficult to rip off landlordsif there was.

report this

Rus1967

Nov 10, 2011 at 18:01

I agree a very poor and uniformed article.

I'm a Landlord and the sheer cost (in cash not mortgage) to set up a BTL is very meaningful. Landlord's run the risk of poor tenants and falling capital values. Breakeven on cash flow typcially takes 2-3 years and your capital is still at risk. Or should Landlords just break-even or lose money to provide housing for other?

Banks are unhelpful to BTL clients as is the tax man. Many landlords have had to sell their properties due to financing issues, how does that help their tenants precisely?

We are besieged with new regulations (which are mostly worthwhile however) and open liability issues for which the insurance firms do nicely.

I am at the beck and call of my tenants 365/24/7 - its not an easy business.

Yes there are poor landlords out there but I wager there are more poor tenants.

If the banks would free up the mortgages for first time borrowers, especially the huge deposits required then more people could experience the ups and downs of property ownership for themselves and perhaps understand that it's a large investment with many risks.

Or alternatively just let Landlords take the risk instead?

As an alternative why don't we step back 50 years and once again allow local councils to provide mortgages to home buyers? It will give the councils a means of earning decent returns on their coffers, allow more people to purchase property and ultimately reduce the rental prices as the risk reduces for Landlords. Surely it's not that hard to engineer, is it?

report this

CharlesBath

Nov 10, 2011 at 18:09

An extremely poor article. Has this writer any real experience of the buy to let market?

How - exactly - is limiting rents going to improve the supply of rental properties? Rental yields are already very low. If there is one thing which is going to discourage people from becoming buy to let landlords it is the prospect of rent controls. Has this writer ever heard of the saying "the best cure for high prices is high prices"? High prices draw in new supply thus reducing prices and improving choice. Why do you think that many people are now looking at getting into buy to let? It is because of rising rents.

Secondly very few landlords want to lose good tenants. Landlords do not go around kicking out tenants willy-nilly. It is very expensive to lose tenants. Again, longer term contracts are merely likely to discourage people from ever offering rental properties.

The balance of power between landlords and tenants is about even. Bad tenants are often able to do damage and avoid paying and get away with it. It is not all some easy money machine for landlords. If you think it is, just try it.

report this

sam a

Nov 10, 2011 at 19:35

One empty month and getting the flat ready between tenancies kills any benefit of raising the rent. There are some tenants I have not raised the rent on in 8 yrs, as a rule I enjoy what I do and like the idea of building good relationships.

Sometimes my tenants get their friends to move in once they vacate the premises, because they deem that they were treated fairly.

Property is what you make of it and it's very much up to how one chooses to run things.

report this

Robert Court

Nov 10, 2011 at 19:35

Where has this conception of 'greedy landlords' making fortunes off the backs of other taxpayers from housing benefit come from?

I have rented several properties and always found that my landlords were decent human beings who treated me as well as I treated THEIR properties - and that means I was a good tenant who always paid my rent on time and didn't damage property that wasn't mine to damage.

I have now become a landlord myself and hope to also treat my tenants as decently as they treat me; and 'so far so good' but woe betide anybody who decides to wreck my property or I'll do my best to make their lives miserable!

Regulations?

Regulations by successive governments to right wrongs in society are often ill thought out and have side effects not properly thought out.

It's actually not a myth that some single women breed just to have their own roof over their heads and I actually once met a woman who had nine children by no less than five different fathers who was obviously concerned that the eldest was turning 16 and she'd lose the appropriate benefits!

Would a private landlord wish to have such a person living in their property who actually taught her own children how to shoplift and kept a dog tied to a piece of rope outside covered in its own faeces?

Somebody proud to go on one of those tv shows and brag about how much money she claimed in benefits to look after her tribe of little bastards?

Regulations are often made to correct a perceived wrong; unfortunately they often have disastrous consequences for society at large and if landlords are over-regulated they'll move to other more profitable careers and what's left of the renting market would be only the worst and the best; either illegally rented shady properties or pristine properties that only the most affluent clients could afford.

I'm afraid I have to agree with most of the posts here that capping rents would not be in anybody's interests; just as capping the salaries of citywire journalists would make sense just because they made an occasional mistake!

report this

Murray B

Nov 10, 2011 at 19:59

My gosh, what a shockingly researched and informed article this is. Presumably written by a renter who cannot get on the property ladder alongside a few of her peers, who got chatting about their property woes over a glass of wine & decided that hating landlords was making them feel better about their particular current lot in life.

Had she done any research, she would have realised that every part of legislation drafted was in favour of the tenant, from gas safety checks, deposit requirements, electrical certificates, eviction procedures, traceablility... Getting bad tenants out of a property is extremely burdensome and strung out, taking on average 4-6 months on the "accelerated" procedure, and then often without rent for all of this period, not to mention thousands of pounds in potential damage exposure to a property.

It's so easy for a tenant to abscond without ever being traced again, and if they are, pinning them down to their responsibilities is like trying to nail jelly to a wall as they multi- or no- address, disappear altogether or plead poverty & offer to pay at £1/week for the next 50 years. Until they move house again & needing to reapply to the court to reassign....

Victoria, I am sorry for your plight in (presumably) London (or the S.East nearby), and it may be true that some landlords do push their luck in an increasingly spiralling market, but:

1) ask yourself why landlords are not increasing housing stock for renters in your area. the answer might be BECAUSE of all the bureaucracy/red tape/legislative bias and they just cant be bothered to produce good quality housing stock for the rental market. (only last week the Gov't have stated that all 'second homes' should not have any council tax exemption. but ask yourself this - if a landlord cannot avoid this unfurnished empty property Council Tax exemption, why would he take the trouble to redecorate or upgrade the house in between lets? He will lose money twice. So potential renters also lose out on quality.)

2) landlords would much rather avoid down time & would stick to someone who regularly pays the rent & looks after the house any day than increasing the rent by a few percentage points just for the sake of it.

Please do research your work more thoroughly in the future

report this

Graham Walker

Nov 10, 2011 at 21:41

Well Victoria overwhelmingly GET A NEW JOB. Talk about never let the truth get in the way of a BAD story! I can only re-iterate what has been said here. Look at yields on the properties, like the current state of Government Bond yields, they are reflecter risk The risk of default, where the tenant holds all the cards, it can tke up to eight months to get an unwelcome tenant out...ask Sterling Moss! I would be happy to let tenants have longer AST's my average turnover at the moment is eight month's per property (10 properties) average rent 510 pcm. I would be delighted to NOT have to pay the agents £300 plus fees plus V.A.T. which we can't claim back every time a tenant decides to move on. You also fail to see that alot of sensible people are renting because the loss in capiatl values is being worn by the landlords plus the maintenance, and in the case of flats etc. the increasing management charges that can't be passed on to tenants, not to mention the rising cost of Landlords insurance (+8% on my renewals with no claims) and I could go on. If I was as rubbish a landlord as you are a journalist i would sell my portfolio and head for distant shores!!!

report this

stiff watt

Nov 10, 2011 at 21:45

Article quite unrealistic and shows little understanding of the rental market.

Yatchts are unaffordable to office employees. Flats are unaffordable to schoolchildren but are affordable to office workers. There is some shortage now because flats are affordable and because there are negative aspects of ownership (reduced mobility, risk of interest rate increases etc)

report this

Victoria Bischoff (Citywire)

Nov 11, 2011 at 10:27

OK easy guys!

Obviously there is a lot more to be said about this sector than I can include in one article – and for the record I did a huge amount of research for this piece.

Yes I completely agree that the laws around evicting tenants can be unfair for landlords and yes I don’t doubt that there are a great deal of rogue tenants out there. As I said in my piece I don’t think the rental sector is working particularly well for anyone right now.

report this

kenneth douglas

Nov 11, 2011 at 14:08

Citywire should be ashamed of letting such a load of rubbish be published. Victoria, you are doing more harm than good through your poor understanding of the UK renting market.

I have had to keep my rent on hold for the last three years, even though I am charging £50 a cal month below the adverts the Renting Estate companies are asking. You can demand any price you like, that does not say you will get it. In my area, both renting and property sales are at zero and have been for the last three years, due to many companies/shops closing their doors, and thus a total lack of work. Even DSS tenants are not about like they were, due to the latest government changes.

I am sick of reading articles on the massive profit we landlords are making on the backs of the poor renting public, in London maybe, not in the North of England, the Midlands or Wales. In my area, the tenant is king, it is they that are duing the dictating not the l/lord.

report this

edward bennett

Nov 12, 2011 at 10:34

Landlords.

"Me thinks thou doth protest too much"- if it wasn't lucrative you wouldn't be in the business (no research done!!!)

report this

whatever99

Nov 12, 2011 at 10:54

The writer of this article has never let a property. It is nothing but regulation. It is ridiculous to simply dismiss this in the article as if it did not exist to suit a skewered and pre-planned approach to the article. You are right about one thing though: rent caps will equal no rented market, bar a small pool of the worst DSS-facing properties.

report this

Truffle Hunter

Nov 12, 2011 at 11:17

Before 1967 we had a thriving rental market with a choice between unfurnished and furnshed rentals. The Leasehold Reform Act 1967 was brought in by a Labour government that had the effect of removing unfurnished rentals from the marketplace; if you were lucky enough to have had an unfurnished tenancy you were protected from rent increases and from being evicted. The problems of finding a place to live were increased by this ill considered legislation. Because the problems of the times were not solved with one piece of useless legislation the Labour government brought in the 1974 Rent Act which made things even worse creating shortages of accommodation. This led to the big secular up trend in buying property as soon as you could get a deposit and mortgage.This has in turn lead to the obssession with owning residential property in the UK. Unlike Germany our energies have been used to create an overvalued real estate market. The Germans by contrast have built businesses.

Regulations tend to distort the free markets

report this

Phil_G

Nov 12, 2011 at 11:38

The reasons rents are so high is that many BTL landlords are highly leveraged, often having bought at peak prices around 2006.

However, it's laughable that landlords would desert the market if rent caps were introduced. What would they do instead - leave the properties empty? They can't sell them as no one is buying.

report this

Phil_G

Nov 12, 2011 at 11:42

Another point is that the problem isn't necessarily with landlords. It's with letting agents, many of whom apply the same charges to both the landlord and the tenant.

It's not unusual for letting agents to charge tenants various admin fees totalling several hundred pounds. Plus another bung of £100 to 'reserve' the property - which is non-refundable. And then another £150 to renew the contract every 6 months.

So letting agents need to be regulated. I suspect this what the author of this article was attempting to argue, but has no knowledge of the sector, so couldn't quite get the words out.

report this

CharlesBath

Nov 12, 2011 at 12:06

@ Phil_G

Phil, landlords don't set rents. The rental market sets rents. When I let a property I get the going rate for that type of property. The going rate is what people are willing and able to pay. What I originally paid for the property and what my mortgage is, has nothing to do with it. If I make a loss that's just tough.

I just have to take what rent I can get - I can't just go out and get the rent I want.

As to your point about landlords and rent caps, sure, the number of landlords won't plummet overnight. But over a period of 5 or 10 years you would see a dramatic change. New landlords won't bother coming in to the market and existing landlords would steadily exit the market. The supply of rental properties would drop sharply over time and guess what, rents would stay elevated and choice would decline.

report this

Steven22

Nov 12, 2011 at 12:10

@Robert Court,

If I am a single person, I would be happy to live in a room in a decent house where I do not have to worry about council tax, insurance, bills, tv license, maintenance etc.

Maybe we can also have SLA written into rental agreements to ensure high standards of service.

The real attraction of owning a house in the past was that house prices nearly always go up but I will very cautious to continue to hold to that assumption nowadays.

report this

CharlesBath

Nov 12, 2011 at 12:14

@ Edward Bennett

What's your definition of 'lucrative' Edward?

Yes, I make a profit on my rental properties. But that profit represents my pay for the maintenance work I do myself on the properties. I spend about 2 or 3 days a week on average doing paperwork and practical work on my properties. A couple of weeks ago I cleaned, painted and decorated one house, put down a new patio, redid the garden fence and gate, renovated the shed, etc.

The profit also allows me to carry out periodic major works on properties. On one place I had to have the outside painted and the roof renovated. It cost £25,000.

In addition the profit is some reward for the risk taken. It's my savings that form the deposits for these properties and my name on the mortgage. If things go wrong it's down to me.

Finally you can do all the research you like and still be wrong and lose money. Nobody really expected a financial crisis as bad as we are now having. Many landlords will have found themselves in a very bad situation as a result.

report this

Robert Court

Nov 12, 2011 at 12:44

Steven22

Yeah?

Living in shared accommodation depends on both the quality of the accommodation and the quality of people you share with.

Why bother buying a 4 pint container of milk if you know it's going to 'evaporate' in the fridge, etc?

Owning a house of your own or even renting a place on your own is all part of quality of life; that's why there are now so many more 'starter homes' and flats being both built and rented.

Quality of life is both important to the tenant and a landlord; with multiple tenants I'd imagine it must be far harder to 'pin down the blame' if damage is done and if all are punished the innocent get punished for something they didn't do and the guilty pay less than the damage they have caused.

I should think that it's obvious from all the posts here that landlords highly value good tenants and that they'd rather have a good tenant paying their rent regularly than have a higher rent and more problems and periods with zero rental incomes; therefore it is in the selfish interests of a landlord to look after a good tenant whatever the regulations imposed.

I'm only the landlord of a single property so i have almost zero experience, but I believe that GOOD landlords provide an excellent service for which their is demand and they deserve an income for all the risk and effort they make in providing such a service.

BOTH landlords and tenants deserve to be treated fairly, but some regulations in their zeal to improve conditions (as always) have some negative consequences.

This article seemed to be somewhat anti landlord and not as balanced as it should or could have been; I'm not surprised that many landlords reacted angrily and expressed their opinions strongly.

And, another point, if being a landlord was such a cushy 'easy money' thing to be in why aren't more people successful at being landlords.

I've met a few and the impression I've got is that successful landlords build up their businesses over a long period of time and put in an awful lot of hard work to acheive success. They have to have people skills as well as all the skills related to solving problems quickly and many work long and unsocial hours because they are always on call and, in a sense, the paid servants of their tenants.

Regulations should be enforced to ensure the quality and safety of all accommodation on the rental market; regulations to define the 'rights' of both tenants and landlords need far greater care before they are introduced as they can not only distort the market but have unexpected and undesirable consequences for all.

report this

Steven22

Nov 12, 2011 at 13:31

@Robert Court,

Of course...and hence the word 'decent'. For 1/3 (or less) of the price of a running a house in a rather rough area, one can have a room in a DECENT area and I would think that works out better. I am sure you will agree that owning a house in a neighbourhood full of anti social people isn't fun at all.

One can normally meet the tenants or get together a group of friends to rent a house to share.

Owing a house as a single person without the lovely inflation busting house price inflation is a rather expensive business to many.

report this

Kenpen2

Nov 12, 2011 at 18:28

I'm with Edward Bennett, and Victoria.

There are some circumstances where a case can be made for owning property to rent out. Holiday lets make (a relatively small number of) historic or beautifully-sited houses available to (a relatively large number of) people who would never otherwise get to experience and enjoy them. Student lets provide accommodation for people who by and large wouldn't be remotely interested (at that time in their lives) in owning property. Some people go abroad for a period with the intention of coming back and don't want their houses to stand empty. These and other exceptional cases are arguably legitimate.

But the hoovering-up of "first-time-buyer" houses to be rented, at a profit, to the very people who are thereby denied their chance of a foot on the property ladder, well, for that practice despicable might not be too strong a word.

Housing is far too important to be left completely to the mercy of the market. Victoria, I'd like to know more about your "New York-style cap on rents". I'm no fan of Ken Livingstone and this is the first I've heard of them, but if they're deemed necessary even in the the land of the brave and the free, they may well be appropriate here.

report this

Anonymous 1 needed this 'off the record'

Nov 12, 2011 at 20:46

I let out 4 properties and prefer DSS tenants, they tend to stay for ever and rent is as good as a private let.

The very generous Housing benefit payment is a major facter in the shortage of housing for private tenants . Let me explain with a typical example.

I advertise "DSS welcome" for a modern 1 bed flat £675 pcm. Tenant phones and says they are single, over 35 yrs old, working part time as a care asistant. I ask how can they afford the rent ? Response Housing Benefit will pay !!

I am sorry but if they can not afford the rent on their wages they should just be renting a room. Thousands of hard working tenants are doing just that, living within their means and not expecting us to subsidise their acomodation.

The DSS lettings soak up a huge percentage of accomodation , leads to shortage and hence rent rises.

report this

Michael Brooks

Nov 13, 2011 at 00:14

The main reason I chose to go down the holiday let route when I purchased my eventual retirement property, was reading about all the landlord`s horror stories, like the tenant on benefits with the rent money paid directly to him instead of the landlord, who never saw a penny of it. When given an eviction notice the tenand complained to the court that his human rights had been infringed! After a number of months, and thousands of pounds lighter in the pocket, the landlord eventually prised him away. There are even worse stories.

With regard to the affordability of rents, I`m obviously missing something, because if the alternative is life on the streets, even for a few days, I`m sure that most people will feel they have to pay. Perhaps a young single person might survive for a time, but not a family.

report this

LANDLORD X

Nov 13, 2011 at 20:28

To all the anti-landlord whingers:

Govt spends over £20 billion per annum on housing allowance - which ends up in the private rented sector

So taxpayers' money is used in vast quantities to inflate rental demand and thereby property prices

It's your fault - the British public will not allow any cuts to the benefits culture and seems to insist that the poor should be able to live in expensive areas at someone else's expense....so be it

So the Govt splurges money on making landlords rich - so rents rise and people who work for a living (as opposed to living on benefits) find homes expensive whether they are buying or renting....it's because the DSS got there first and block-booked all the affordable housing, dummies

It's the price of socialism...

report this

Robert Court

Nov 14, 2011 at 07:44

Provided the government enforces some decent building and safety standards (surprisingly we have much lower standards than many countries in northern europe) the rest should probably best be left to market forces.

For mental health I believe it's important to have some personal space - however small and if I was renting as a single, unemployed person as long as I had a decent toilet and shower, adequate cooking facilities and enough room to swing a large rat or quite small cat I'd feel more positive than having to share a multi-occupancy property with a bunch of alcoholic or worse who'd wish to bring me down to their level of hopelessness.

Maybe the government should just give a fixed allowance and let unemployed people use their iniatiative to make the best of a bad situation and sensible landlords would oblige by making best use of the available space in the properties they own at prices their clients could afford.

Landlords should feel free to rent out to whichever niche market suits them.

report this

Anonymous 2 needed this 'off the record'

Nov 14, 2011 at 11:07

How many self declared professional landlords can conform to this list of professional criteria?

http://www.citywire.co.uk/money/what-is-a-professional-landlord/b534992

None I'd wager.

report this

Anonymous 3 needed this 'off the record'

Nov 14, 2011 at 11:55

I could, the hurdles are hardly stretching. To be honest if you can't do these then you shouldn't be a landlord at all. To say none is quite frankly a stupid and ill-thought out comment.

report this

Anonymous 2 needed this 'off the record'

Nov 14, 2011 at 14:48

Quite frankly, you present yourself as quite a rare artefact. Presumably you only know of your own exemplary behaviour. Over the last 8 years (4 years student, 4 years professional lettings) I can enlighten you that most landlords operations are utter shambles who have all claimed to offer "quality" accommodation. ARLA means nothing.

It disgusts me that so many landlords have been able to get away with it for so long. What can you do? Tenants (real tenants, not the benefit claimants these discussion always descend towards) have little power over anything and often (like myself) resort to getting the problems fixed themselves. i.e. no letter box to speak of, slugs, snails (shells and all) and bees able to get in through the large gaps between floorboards on the ground floor.

The low hurdles seem beyond landlords and their agents I and my friends and colleagues in the same situation have come across. Anonymous 3, can I come and live in one of your houses? Everyone else, shame on you.

report this

derek farman

Nov 14, 2011 at 15:23

It is beyond belief that way before now we do not have decent laws to protect both the renting public and honest landlords from the bad guys on either side . There should be a register of those on both sides who make life a misery due to their shady tactics .

report this

Robert Court

Nov 14, 2011 at 15:48

derek farman

I'd imagine both sides would cry:

'Innocent until proved guilty' and that such a register as you'd like to impose could have serious legal implications as to defamation of character.

There are obviously good landlords and bad landlords and good tenants and bad tenants; good landlords will do their best to get decent tenants and bad landlords probably won't care quite so much and hopefully go out of business if they provide bad, unsafe accommodation which ultimately nobody in their right mind would wish to rent.

Regulation has it's part to play, but regulation always COMPLICATES things for both parties and can be a genuinely negative factor if we have more and more and more regulation just for the sake of it.

Maybe we should also have a register of neighbours and how many pet dogs they have and the incidence of fouling on the streets by both four and two-legged animals.

Do people NEED to be over-regulated when the application of a little common sense might do just as well?

report this

derek farman

Nov 14, 2011 at 16:21

Robert Court ... I expect you are correct . They would . And I agree that over regulation is a nightmare. Society has become a quagmire of all sorts of silly regulations and health and safety etc .

But if there is a problem we should deal with it .

Actually it might be the landlords who need the most protection ......from appalling tenants . There are those who trash properties and use every trick in the book to avoid paying their rent. It can take long periods to evict them and then they move on to create mayhem for another landlord.

I know this because both family and friends have been caught this way.

Somehow there should be some form of alert mechanism for identifying lousy tenants and unscrupulous landlords despite the legal implications.

report this

CharlesBath

Nov 14, 2011 at 16:23

@ Derek Farman

As a landlord, I've thought about your idea myself previously but can't see it working very well.

I can't see that I would be allowed to publicly accuse bad tenants of stealing money or suchlike. And in turn bad tenants could make unfounded counter accusations. Regulation also tends to become an out-of-control monster in this country and ends up strangling and distorting what it is supposed to be protecting.

And there are in fact already a number of laws in place to protect both tenants and landlords. Landlords are bound by a general legal duty of care, by the contract they sign with their tenants, by electrical and gas safety rules (which are not to be taken lightly), by the new deposit protection rules and above all by the need to attract and retain good, long term tenants. Its worth noting that these requirements are far in excess of what most people do in their own homes - I would imagine that most people do not have an annual gas safety test done or get all their electrical appliances tested.

Tenants meanwhile are also bound by the tenancy contract and can be pursued through the courts for unpaid rent and damages.

report this

CharlesBath

Nov 14, 2011 at 16:35

@ Anonymous 2

You say that tenants have little power over anthing. Well, they have one major source of power - they can move.

I am surprised that you have had to put up with such a bad property. I would have thought that if you looked around you would find a newer property in better condition. A property in tip top condition is likely to be owned by a better landlord.

Also, in some, rare, cases tenants have an unrealistic expectation. They expect that the rental will be maintained far better than if it was their own home. They can sometimes expect everything in the rental to be 110% and all problems to be resolved ultra fast, right down to changing light bulbs. Even in your own home there are always problems and sometimes they take a few days to sort out.

report this

Robert Court

Nov 14, 2011 at 16:42

Charles Bath

Excellent point re. gas & electricity safety checks.

1. When a Council tenant I had my gas fire etc serviced for 'free' every year.

2. When I bought the property I initially took the risk and didn't get it serviced every year.

3. When I rented the property out I now HAVE to have annual gas and safety checks by law.

4. Not that I'd wish the lives of my tenants to be in any danger because of my laziness or greed, but that particular regulation is a good thing and I'm very happy to comply with it.

report this

CharlesBath

Nov 14, 2011 at 16:52

@ Kenpen2

If only life was as simple as putting price caps on everything! Ever wondered why governments don't simply cap the price of everything? Because it doesn't work.

Imagine if the government came to you and said - 'the price for the service you are providing is too high, so we are going to cap your pay so that consumers can have it cheaper'. How would you feel about that? Pretty bad I suspect. Would you work harder after such a cap? I doubt it. Would you feel like leaving the industry? I suspect many would.

Ever heard of the saying ' the best cure for high prices IS high prices'? That is simply because high prices draw in supply, eventually depressing prices.

And your analysis of who is renting shows little understanding of the rental market. Common tenants we have are:

1. Divorcees / people splitting from partners who need a place quickly to sort their lives out

2. Foreign workers over here for a few months or years

3. Workers who move around the UK

4. Single mums and sometimes single dads

5. A selection of other types of tenant some of whom don't want to buy

Its true that some tenants would like to buy but can't. But the main problem now is that it is difficult to get a mortgage and deposits are high. And the high price of property is at least as much to do with low historic interest rates and population/household growth as it is to do with buy to let.

report this

Nick74

Nov 19, 2011 at 12:22

Victoria, excellent article.

Landlords - look up "security of tenure" and have a think why a young family might attach some importance to this. Comments like "generally my tenants stay for a long time" just obscure the fact that with 2 months notice you can dramatically increase rents or kick people out.

Also please do not repeat your tiresome discussions about welfare claimants, restrict your comments to the privately rented sector - you know, the group that can't afford to buy because you bought the properties to let to them.

And for the record, if someone leaves your property and owes you rent or you have a claim for damages take them to court and providing the court agrees with you then that person will have a record of this which the next landlord would pick up during the bckground checks - yes,it may cost a few quid, and you may get "a pound a week", but if you all demonstrated some altruism you would see that this would benefit your fellow private landlords.

report this

CharlesBath

Nov 19, 2011 at 12:49

@ Nick74

No, it's not an excellent article by any stretch of the imagination.

Your comments suggest that you have little or no experience of letting property.

Firstly, get this through your head - landlords do not and cannot set rents. Landlords just get the going rate for similar properties in the area. You cannot just arbitrarily get some rent level that you would like.

Secondly, it is very expensive to have a change of tenant. Firstly letting fees from agents are around 1 months rent. Secondly, you often get a void of up to a month or more. Thirdly the property will often require redecoration and renovation when the prior tenant leaves in order to attract new tenants. There has to be a really big gap between market rents and the rent you are receiving to justify that.

But even if that is the case, landlords will often not want to change tenants. If I have a good tenant who has been paying for years and is happy in the property it is a big risk to change that tenant. I have never done it. My first option would be to speak to the existing tenant about putting up the rent.

Now, why should landlords not put up the rent for existing tenants? Why should we rent properties for way below the market rate? Would you? Like hell you would. If you would, please buy some and rent them out at a 25% discount to market rents. Would you be willing to work for a pay packet 25% below market rate? I doubt it.

And if all rents were capped going forward, what do you think would happen to the supply of rental properties? Do you think that would encourage new landlords to come into the market? And if supply shrinks, what do you think happens to prices and choice? C'mon, it's not that hard.

And it is junk to suggest that buy to let landlords are the only reason for high property prices and the difficulty of buying for many people. Buy to let has had some impact but low levels of building, low historic interest rates, population and household growth and other factors have been much bigger factors.

Don't you think we know about pursuing people through the courts for unpaid rent? Of course we do that wherever possible. But often hardcore rent dodgers move multiple times and stay 'off the radar'. It is hard to track them down let alone find out who they are now renting from. It can be difficult to get court judgements against such people.

report this

LANDLORD X

Nov 19, 2011 at 17:13

@ Charles Bath

Excellent comments - I could not put it better myself

There is such a poor level of debate on CityWire about the private rented sector with so many totally ignorant comments by people who are obsessed with blaming landlords for all their personal problems

I wish we could have a more intelligent debate on here without the crude landlord-bashing by people who have no clue about the workings of the private rented sector

For all those who want rent caps: I will campaign for your wages and salaries to be capped - then tell me how you feel about Govt imposing some arbitrary limit on how much you can be paid. Also cap benefits and pensions while we are at it - see how that goes down.

Rent caps will just cause shortages, a black market and reduced maintenance and investment in housing - so a process of slumification. But never let commercial reality get in the way of a good socialist prejudice, eh?

report this

Nick74

Nov 19, 2011 at 17:36

Landlord X, Charles Bath

No comment from either of you about security of tenure - I assume as landlords you are opposed to longer rental contracts as it rstricts your right to impose rent uplifts arbitrarily.

You of course may claim that this is your right, however it's fairly clear that generally successive governments on behalf of the voters for time immemorial have concurred that being a landlord confers rights and incurs responsibilities.

What Victoria refers to in her article is that tenants recognise that they are likely to be renting for longer however all that is available in the UK is generally 6 or 12 month contracts - I repeat, not much use if you have a new baby etc, and just generally it's not pleasant to have no security of tenure.

If you have any interesting suggestions to how to solve this problem feel free to share them.

Nb if 75% of private landlords stopped being landlords there wouldn't be a shortage of houses. If there was a rent cap then the level of that cap would be used as the pricing mechanism to dictate the asset price, based on the return that the investor required. If that asset price is much lower than the current price then the market would correct itself, which would probably lead to a transfer of properties from the BTL sector into the owner-occupier sector, and realistically what would remain is the professional landlords who know what they are doing and take a long term view.

Kind regards

report this

Murray B

Nov 19, 2011 at 18:26

Nick 74,

With the greatest of respect the arguments have been made. The contra arguments to yours are that:

Security of Tenure - Landlords do not routinely have an appetite to throw tenants out who pay regularly on time & look after the house. most are happy to roll/renew tenancies ad infinitim, as down-time is far more leveraging than a few %age points extra on the rent. London seems to be a slight exception to this, though it cannot keep heating up the way it is & I wouldn't be surprised to see a correction at some point

You argument about private landlords choking off the supply of 1st time buyer of houses, is slightly incorrect. 80-85% of all housing is owner-occupier, although the forecasts are for the BTL sector to grow ot 20% within the next 10-20 years. It is also made to sound like, for some reason, private individuals should be denied their right to own a particular asset class for the common good. What, like cars because they're bad for the environment? The problem I think is the lack of entry-level housing being built. How many "starter-homes" do you see the developers just slipping in 2 x ensuites & a few extra specs here & there, upgrading an apartment by 5% & charging 30% extra for it. We need a supply of AFFORDABLE entry-level specification homes on to the market.

The legislative framework, without boring you & everyone for the purposes of this reply are, believe me, unbelieveably weighted on the side of the tenant, and the new Localism Bill continues this trend.

The idea of a release of large-scale release of BTL property on to the market would cause a depression in house prices for sure, though this will lead us into a further economic recession, as all of the allied services to the housing sector will collapse (construction will halt, DIY shops have no trade, no Architects

have work etc etc). And your argument seems to infer that there are enough people waiting there to snap up all of this increased supply... when they have not got the sufficient deposits required (the requirements of which will increase from the banking sector due to the uncertainty on house prices), and the lack of availability of mortgages generally...

I do feel sorry for you seemingly having concerns about raising a young family in a home & wanting to settle in a property, though I would suggest that you:

1) live outside of the London bubble (if you dont already)

2) ask your prospective landlord whether he is interested in a short or long term let (FYI I have my original tenant still in my 1st BTL property of 14 years next month & someone else that moved out of her own accoord after 9.5 years last year)

3) pay your rent on time, look after the house & keep an open dialog with your landlord

That way you are increasing your chances of a long-term, successful relationship with your landlord

report this

Nick74

Nov 19, 2011 at 18:55

Murray B

Thank you for the reply but on security of tenure it's irrelevant whether landlords "generally" don't want to change tenant, the fact is that tenants do not have a right to remain, which is the whole thrust of Victoria's article.

As an asset class houses are unique: there is a shortage of supply ,they are generally not purchased outright, the asset generally changes ownership, and successive governments have confirmed that the will of the voters is that housing needs legislation - no other asset class is similar.

For clarity I am not a renter and earn a six figure sum - I just care that housing is going wrong for many people, and it needs solving

report this

CharlesBath

Nov 19, 2011 at 19:25

@Nick74

Oh great, that's just what we need, more people who 'care' but don't know what they are talking about and suggest ideas that are highly likely to make the problem worse!

What does "housing is going wrong for many people" mean exactly? There are a number of different aspects to the problem with different causes. We have had a rapidly growing population, low levels of building, more difficult mortage conditions and other factors making housing very expensive in the UK.

And you know what, housing is never going to be 'cheap' for most people. It always likely to be expensive for people to get a house whether its rented or bought. See a how being built and look at how much labour and materials and land goes into it and you'll see why it will never be cheap.

And are houses really that unique? Why? If you're going to cap prices on rents, why not food, or petrol, or all sorts of other things which are important to people?

And housing and buy to let already is regulated.

It's not just that landlords don't 'generally' want to change a tenant, I would say that very, very few landlords would want to change a good tenant - it just makes no sense.

report this

Nick74

Nov 19, 2011 at 23:17

Thanks for the response.

You know housing is different - mixng it up with petrol, food etc is sophistry, and food IS regulated - commn agricultural policy, anyone?

Tax on petrol is also regulated.

Let's repeat the challenge - increasing numbers of working folk are not able to buy and need to rent, so would you mind eg 5 year contracts to give security of tenure? Provided landlord protection is sustained doesn't this give landlords a 5 year revenue stream against expenditure, thus stability?

The balance of rights is indeed against your right as the asset controller (not owner, most properties have a mortgage or loan attached and are thus a securitised asset) versus the position that the tenant wants to have longer term stability as a right, not s a gift.

I suspect we won't resolve this but your perspective is valuable

Kind regards

Nick

report this

Murray B

Nov 20, 2011 at 07:27

Most landlords invest in the BTL sector for the long-term, and (again, outside of London, given its' seemingly different dynamics) would be happy to have tenants for the long-term as has already been stated.

To answer specifically regarding your point on longer tenancies, as long as there were no issues with mortgage providers or house insurance companies (some of which insist on AST's) I personally would be happy to offer longer term tenancies - 5, even 10 years as examples) as long as there is robust & effective remedy for significant contract breach (damage to property, persistent late/non payment of rent, subletting etc.) and an agreed annual rental escalator inserted. I assume even the left-wingers would agree that to hold rent static for 10 years would be unreasonable on the landlord...

report this

Nick74

Nov 20, 2011 at 09:17

Excellent, one landlord agreeing, 1 million to go!

Rent escalators are a given, although the downside for landlords is that this cannot of course be a "market" escalator and must be related to an index, probably RPI.

Ultimately this cannot have a negative impact on a landlord as at the outset you know your breakeven rental income level and the assumption is that you have set your rent level to provide a reasonable yield, and as mentioned previously the asset price will reflect this.

The free market piece is that I do not necessarily agree that there should be set rent levels, and that each contract either at the outset or at renewal should be renegotiated.

Could be tough but iit seems that to address the issue of legal security of tenure for tenants there are limited options.

report this

Steven22

Nov 20, 2011 at 11:30

@Nick,

Landlords are business person and long lease are common in the commercial sectors and those will be made available to residential tenants at the same term (e.g. fully repairing, rent reviews, RPI tracking etc) if the tenants want them.

It is only when the terms (and legal protections) are asymmetric then the problems you mention arise.

Having said that, I do agree with you that 'housing market' is not really a free market and the holder of these quasi monopoly assets cannot use free market as the sole excuse for doing whatever they like.

We already have residential property tribunal and rental related claims should really go there rather than the country court, An efficient dispute resolution process will greatly improve the working of the rental market.

report this

sK

Nov 21, 2011 at 11:27

@Nick,

I have to offer 6 month SATs as that is a requirement from my mortgage company (and a lot of other mortgage companies). Are you aware of this? As we don't all own property outright.

report this

Nick74

Nov 21, 2011 at 21:23

SK, thank you, dislexic landlord mentioned/alluded to this also.

This certainly is a potential blocker.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet