Another month, another survey from organisations representing landlords. It’s been a complex time with some reports saying property owners of HMOs are feeling buoyant while others say the situation is delicate with despair around the corner. Now a National Landlords Association survey says rental property owners are lacking confidence in the future.
Explaining the Findings
According to the report, landlords with the smallest number of properties fear the future the most. This is despite assurances from the government that they are committed to helping such landlords. Yet with recent changes in the law and the tax burden, this positivity and mindfulness is not recognised as such.
They saved their biggest criticism for the impending removal of Section 21 which they see as a safety net to protect their property and their right to operate as a landlord within a legal framework to protect it.
Business for the Remainder of 2019
Even more concerning is the financial expectation for the third quarter and the remainder of 2019. Just 29% of NLA members expected good or very good performance in Q3. This is the worst evaluation since the end of 2006. Most notably, it’s even worse than in 2015 when George Osborne first announced plans to reform BTL taxing system. Back then, confidence registered in the annual survey was 35%.
- The East Midlands had the highest levels of confidence at 34%, along with Yorkshire and Humber
- The Northeast had the lowest at 19% with London (18%) a close second
NLA believes that this low confidence is almost certainly down to abolition of Section 21 (No Fault Eviction).
Calls for Social Housing
It’s natural to assume that private landlords see social housing as a challenger or a competitor, but this is not the case. Comments from some property owners answering the survey said that the lack of social housing was putting a strain on the private rented sector. The government should “restore confidence” in the private rented sector by easing some of the financial burdens while new builds were ongoing.
Some landlords are considering leaving the private rented market due to changes such as Section 21 and tax reform affecting not just profitability, but damaging the day to day working.
Another Option
Property owners concerned about the future, and especially Section 21 abolition, may have another option. If your property is in a student town or city, or at least a decent commutable distance from one, this may be a viable replacement.
The abolition of Section 21 will still apply to landlords of student tenants, but there are several advantages:
- Tenancies typically last one year so no lengthy drawn-out eviction if things go wrong
- Students are the most reliable tenants
- They pay on time and have “The Bank of Mum and Dad” as guarantor so you won’t be out of pocket