Private landlords wanted?

Regulation in the rental industry is a must after we have been informed for years by the media and TV programs such as ‘Rouge Landlords’ that many landlords entered the industry during the last boom period to make a quick buck and failed in the obligations to meet their tenants’ needs.

I have witnessed this many times and tried to educate landlords about their responsibilities. I have a friend who entered the buy-to-let market after seeing the success of others around him. He should have previously learned about the rental sector. He didn’t issue his tenants with a tenancy agreement, did not maintain the property, didn’t pay tax on his earnings, and bought us all a round of drinks in the boozer with the tenants’ deposit while congratulating himself on his landlord status.

His actions and many like him have painted all landlords in a bad light, and in the last few years, the government and local authorities have stepped up more to regulate the industry, which I welcome.

I take my responsibilities seriously and constantly update myself with new rules and regulations. I am witnessing those who do not put the work into ensuring they are compliant exit the rental market due to the lower margins and the headache of being forced to take responsibility.

Even though I and many like me adhere to everything expected from us, we still must endure the insults from the media’s narrative surrounding private landlords, often called greedy and lacking in moral standing, where we steal homes from the poor to line our pockets.

Many in government and its opposition seem to believe that the rental sector is unlawful, where tenants are forced to accept the conditions they are placed in and cannot enter the property market because we have snapped up all the houses. They appear to call for the mass exit of all private landlords who do not understand the important service the industry brings to the growing modern renter who favours renting for its flexibility in modern society. They prefer institutional dominance of the rental market, which is easier to control but will reduce competition.

The economic value of a private landlord can is seen in several ways:

• Providing housing: Private landlords play a significant role in providing housing to individuals who may need help to afford or qualify for home ownership.
• Boosting local economies: Private landlords contribute to the local economy by providing jobs for property managers, maintenance workers, and other related positions. Additionally, tenant rent payments often circulate within the local economy, providing further economic benefits.
• Increasing property values: By investing in and maintaining their properties, private landlords can help increase property values in their communities; this can positively impact the local economy by attracting businesses and increasing tax revenue.
• Generating income: Private landlords earn income through rent payments, which can provide them with passive income.; this can help to improve their financial stability and contribute to the overall economy.

I believe in a Laissez-faire economy, a philosophy of free-market capitalism that opposes government intervention. Supply and demand will set the price of an asset, and when that price becomes too high, the free market will adjust it.

Many believe that the high rental costs are set by profiteering landlords and do not consider the underlying factors involved. With extra regulations such as EPC costs and the rise in interest rates when many properties are due for a remortgage, landlords now have a choice: take a loss, raise the rent, or sell the property, which causes less supply, thus raises rents further, which is blamed on the landlord and causes more scrutiny, more regulation and then more leaving the industry.

I know many landlords are now worried about the future. At the same time, many in government will make things worse by calling for rent caps and controls, not considering the underlying reasons for cost increases caused mainly by government quantitative easing stimulus policies and a shortage of social housing. Not the greedy landlords vilified by the media.

My Situation

Many landlords, such as myself, collect low historic rents from long-term tenants with whom we have built relationships and now watch as rental yields deplete and borrowing unavailable due to failed stress tests. I have transferred one property onto a tracker mortgage in the hope that rates will come down next year, and all other properties are not due for renewal until 2025. If the interest rates do not come down before 2025, I will sell like many around me. This could have many adverse effects on the economy.

Is this what the government wants?

Implementing Section 24, eliminating a landlord’s ability to deduct mortgage interest, was a way to force landlords into limited companies. The government wants sole traders to refrain from hiding behind a self-assessment operating the rental sector. I suspect they favour all rentals to be managed by trusted institutions such as pension companies and private equity. Lloyds Bank has recently announced its intention to enter the rental market.

Are we fighting a losing battle?

Like many, I was an accidental landlord who found a passion for what I do. I will stay in the industry for as long as possible while meeting all challenges I face head-on. I have great tenants, and they would give me excellent feedback too. I am disappointed that the few bad eggs have ruined the private rental sector for everyone, but I also believe these rouge landlords are rarer than the media make out.

I would like to see a future where we are seen for the economic value we bring, and those that adhere to regulation are rewarded. This could be another case of ‘buy when everyone else is scared’, and in years to come, we will look back and wonder why we didn’t buy more, or will private landlords become a distant memory.