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3 Reasons Why Landlords Are Losing Confidence

1st December 2019

So what’s happening in the industry to cause such low morale, and how can we turn things around in order to regain confidence? Here are the top three worries raised by landlords right now, and what we can do about them.

Abolition of Section 21

Back in July 2019, we heard the announcement that the Government would be abolishing Section 21. In short, this would mean that landlords would have a much harder time in evicting problem tenants, making the process much longer, and in some cases leaving landlords out of pocket due to rent arrears and damage costs.

The Government proposed that this change would protect the tenant from being unnecessarily evicted by landlords who used the law for unscrupulous reasons, evicting tenants to suit their own needs.

However, this also gives rise to tenants exercising their rights, when they come under attack for property damage or late payments of rent. In some cases, landlords fear that they are unable to approach tenants when problems arise, because they might find themselves in a difficult position, where they are having to take a massive loss in rent arrears, and in some cases damages to their property.

This is an ongoing argument – and it’s uncertain how it will end. But the thought is that in order to make it work, there will have to be some major reforms to Section 8 – which for years has come under scrutiny for being a failure to the industry.

Until then, it looks like landlords will have to tread carefully, but many have raised the view that if we can work towards being more proactive in choosing better tenants, and taking the time to build a positive relationship with them, then these problems will be fewer.

The Tenant Fee Ban

The new legislation preventing certain charges to new tenants came in a few months ago, and it’s had a huge impact on the industry. In truth, the ones who have borne the brunt of the Tenant Fee Ban have been the letting agents, but this has also had a knock-on effect on landlords.

It has been estimated that in its first year, the ban could mean a cost of £157m to letting agents, and up to £83m to landlords.

Pretty scary figures. The fact that property agents can no longer charge tenants for any of the fees associated with setting up a new tenancy, or check-out and third-party fees, has meant that there have been some huge losses in income, and letting agents have had to try and recoup their money in other ways – not least in increasing rents.

To further reduce costs, many landlords are being forced to spend less on essential improvements of properties, which means that they are having a harder time attracting tenants. There are also concerns that landlords may be less inclined to use letting agents to manage their properties, choosing instead to self-manage.

In order to continue to provide and fill the demand for good rental properties, both landlords and agents will need to look at ways to streamline their processes, and work together in keeping up to date with compliance, while working towards finding loyal, long-term tenants.

Rogue Landlords Database

Sadly, there are still landlords out there who are willing to cut corners, and take advantage of the more vulnerable tenants – and we as an industry are paying the price. All of the reforms and fee bans have no doubt come about in an effort to stamp out rogue landlords, and to give tenants more protection when things go wrong.

Although the forthcoming opening up of the governments ‘rogue landlord database’ to the public is a worry for landlords, it could also be seen as a blessing. How? Well, it’s really only in existence to keep track of those landlords who have either refused to comply with regulation, or have caused damage or mistreatment to tenants or property.

So, in theory, if you don’t default, or do something which gets you put on the database, you really have nothing to worry about.

In fact, you could argue that allowing the general public to access the database is a positive – it means that those of us who are working hard to bring the industry up to a decent standard will be the ones who survive, and make the lettings market a better place to trade.

The final word

Our society relies on good landlords, and it’s so unfortunate that as a collective, they seem to have been tarred with a reputation of ‘dodgy’, and that’s what has led us here. But the majority of us are working hard to provide decent housing for people from all walks of life – despite the increasingly difficult terrain. It’s no wonder, really, that confidence among landlords has diminished.

We are facing uncertain times – but we can pull through them. Demand for quality housing within the rental market is continuing to grow. And we have to work together in order to keep providing it – raising the standard and profile of the industry as we do.

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