Just when landlords thought it could not get any worse, it seems it has.
It’s all over the news that Labour is planning to deliver the final hammer-blow to landlords.
There is some uncertainty to what it actually means in practice until the details are written down but could the proposed hardship test mean even if your tenants won’t pay their rent, you will not be able to evict them if that makes them homeless or financially disadvantaged?
Seems ridiculous but in the demoralising, never ending war on landlords, who knows?
Either way, councils are going to love it and landlords are going to be expected to shoulder more burden. It’s a golden ticket to excuse them from their duty to rehouse tenants, leaving landlords unable to vacate their properties.
Capital Gains Tax is also set to increase – maybe to 45% – so now landlords will neither be able to evict tenants or sell their properties! Wow! It’s no wonder so may landlords have had enough are throwing in the towel.
David Coughlin (pictured) says: “I’m out! I’ve decided to sell most of my portfolio – keeping only the very best properties with the very best tenants and sell the rest.
"I’ve decided to move away from being a landlord and instead I’m going to use my capital to ramp up house building which is the sector that is going be highly profitable as mortgage rates fall and buyer demand increases and that will receive huge cross-party government support. For me, it’s a no-brainer.”
In other news, both the number of landlord possession actions and the average time taken from claim to repossession have risen dramatically since 2023.
The number of claims, orders, warrants and repossessions have all risen with the average timescale from claim to possession now taking almost 6 months (25.4 weeks).
As local councils exhaust the ever-dwindling number of privately owned rental options and tenants are encouraged to stay put despite court orders to the contrary; that timeframe is likely to rise and landlords wanting to sell their properties by gaining possession through courts will have to wait even longer for tenants to leave – assuming, that is, that they will be allowed to evict them if doing so causes the tenant ‘hardship’ or if selling is removed from the list of valid grounds for eviction, as it has been suggested by tenant pressure group Generation Rent.
Of course, a supply shortage will provide great opportunities for landlords with a long-term business plan to benefit from rising rents and most landlords are happy to rent long term to good tenants, but it could pose a huge problem to landlords planning to retire in the next 5 years if accompanied by new legislation stopping landlords from evicting tenants because they cannot afford to leave.
Likewise, landlords who experience cash flow problems or want to raise money from their equity could suffer from the crisis.
It’s no wonder so many landlords have already exited the sector or are in the process of selling their BTL properties when the problems selling property are getting worse and landlords who leave it too late may find themselves trapped in a vicious circle and unable to sell their properties.
The race is on to sell buy-to-let properties before the Labour governments tax and tenant policies take full effect and before market becomes saturated and prices suffer. Landlords already face a 20% hit on price trying to sell a property with tenants in situ!
The good news is there are two alternatives to evicting tenants that makes the process much faster and help landlords achieve higher sale prices. One option is to help tenants leave of their own accord (thereby allowing owners to sell for higher prices) by helping them solve the problems they face finding new accommodation.
Another option is to agree rent increases with those tenants who can afford it (carrot and stick approach is needed here) thereby enabling owners to sell some properties with tenants in situ to other investors for higher prices.
Landlord Sales Agency has been practicing these alternative methods for a long time because not only are they effective, but they are also efficient. The practice is also recommended by successive governments and tenant groups.
Of course, there is a cost involved to the seller to financially compensate a tenant to leave voluntarily but most landlords will sell their properties for a far higher price because they can provide vacant possession and this higher price more than offsets this cost many times over.
In our experience, more than 50% of tenants will agree a rent increase to stay in their property and that can be sufficient to sell with tenants in situ.
Worst case scenario we must evict the tenant to sell but mostly all tenants cooperate with the process to get rehoused with our help. We still get a buyer in place who will pay a deposit and wait up to 12 months to complete with vacant possession when the tenant is eventually evicted or leaves.
The deposit paid by the buyer is minimum £5000 and buyers also pay a higher price (for the benefit of vacant possession) so the seller has the security of that deposit and higher selling price to proceed with the eviction. Our sales progression and legal team have a 100% track record with this eviction-sale process so landlords can have total confidence in it.
In addition to using tenant-friendly options to sell property, Landlord Sales Agency also use non-refundable deposits to secure agreed sales so that 95% of our agreed sales complete.
We have a huge database of over 30,000 buyers who are willing to pay deposits and pay good prices up to 90-95% for properties. In addition, we also have more than a 1000 cash-buyers in our database who will exchange immediately buy your property in just 28 days if you have any properties, you are willing to sell at 75% market value.
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