Another week and another Newsround, let’s see that has been in the news this week.
Problems for landlords and the PRS
There are three big problems in the Private Rented Sector (PRS) illustrated by three posts on LandlordZone :
1. The IMLA Report
This post features comments from Kate Davies of the Intermediary Mortgage Lenders Association (IMLA) who have published a report showing the cumulative effect of the regulatory and tax changes:
- The imbalance between supply and demand in the private rented sector (PRS) has worsened.
- Real rents in the PRS have declined in recent years despite the supply shortage.
- Some landlords have seen mortgage payments rise by 238% since December 2021.
- Higher rate tax paying landlords face a double whammy.
- A significant proportion of buy-to-let landlords are failing affordability assessments and cannot remortgage, and
- As more landlords reach the end of their current fixed deal, rents will need to rise in real terms.
As the post says:
One of the most bizarre aspects of this increased regulatory burden is that both politicians and lobbyists seem oblivious to the fact that the resulting costs will ultimately fall on tenants.
Kate Davies has commented:
The focus now needs to be on prompting increased investment in the sector and supporting landlords, whose operating costs risk becoming unaffordable. If we don’t get the balance right, the result will be higher rents, and lower availability of properties – both of which are bad news for tenants and landlords
2. Increasing evictions
This post looks at the increasing numbers of section 21 evictions as landlords take advantage of section 21 while they can so they can sell up. Citizens Advice report that this is probably down to the government’s plans to abolish section 21.
The Guardian also reports NRLA CEO Ben Beadle confirming this, saying
The main reason landlords are seeking possession of properties is that it is no longer viable to continue letting
However, Citizens Advice are concerned that the replacement rules will not help tenants and that the new grounds could also be used to unfairly evict tenants.
Note also this post pointing out that many landlords are elderly and approaching retirement, with Lucian Cook of Savills commenting
There is a very real risk that landlords will exit the sector, particularly those with high levels of borrowing, putting increased pressure on a sector where demand significantly outweighs supply in many locations.
3. Landlords need support in Wales
This post reports on a meeting between the National Residential Landlords Association (NRLA) and the Welsh Minister when the NRLA warned that Welsh landlords in Wales need more support due to
- Extra taxes
- The new regulations and
- Plans to introduce rent controls
The NRLA have produced a report,the State of the Welsh Private Sector setting out their concerns.
Previous reports indicated that the rate of landlords selling up in Wales is greater than in England, and if the problems in the NRLA report continue, this is unlikely to change.
Rent Rises
Following on from all this, if landlords are to stay solvent (and be able to afford the upkeep of properties and EPC upgrades), they will need to increase the rent.
The IMLA has warned that many landlords will have no option but to increase the rent when their current fixed rate deals finish. Stating:
While the majority of landlords remain on low fixed-rate loans for now, their interest rate payments will rise over the coming months as they reach the end of their current fixed deals. This will place additional and unwelcome upward pressure on rents – which have not kept pace with inflation over recent months.
Going on to say
Today, however, two-year fixed-rate mortgage rates are above average net yields, producing negative gearing. The relatively sudden increase in funding costs is causing a significant proportion of buy-to-let landlords to fail affordability assessments when seeking to refinance loans.
Some may seek to exit the market altogether, while others may be obliged to sell some properties and re-balance the debt on their portfolios.
Figures from Foxtons show that the average weekly rent in London is now over £600.
Snippets
Guaranteed rent firm takes down website after LandlordZONE probe
Leading property figure calls for ‘tenancy register’ in England and Wales
Landlord sentenced after horrifying hammer attack
Approaching 100 court cases hit by bailiffs halting work
New leader takes over at Generation Rent
Newsround will be back next week.