Private Rented Sector in crisis – seven factors that got us there by Paul Shamplina
Paul Shamplina Founder of Landlord Action, Chief Commercial Officer at Hamilton Fraser and Channel 5 regular TV personality from “Nightmare Tenants, Slum Landlords” is extremely well placed to give commentary on just where we are with regard to the the PRS (Private Rental Sector) and specifically the damage that has been done in this sector, here in his own words Paul sets out clearly what has been going on.
Paul Shamplina, ‘I’m quoted with Chris Norris from the National Residential Landlords Association – NRLA and portfolio landlord David Coughlin and owner of Landlord Sales Agency describing why he’s never been busier selling landlords tenanted properties at the moment.
So let’s remember the 7- major highlights that have happened since 2015, if you forgot.
2015 – George Osbourne announces additional 3% stamp duty on buy to lets along with to phase out tax reliefs on buy to let income. Paying tax on rental income not profit.
2017- Buy to let lenders tell lenders to require much higher rent to income ratios.
2019 – Capital gains tax applied to accidental landlords who sell more then nine months after moving out of their previous home.
2021- All tax relief withdrawn for landlords as five -year phase out ends.
2022 – Tougher licensing rules for councils to be brought in against landlords.
2023 – Renters reform bill confirmed, No Fault evictions to be banned and fixed term tenancies scrapped. ( This will come in a year to two years most probably) Buy to let mortgage hit over 6%.
2028 – All properties must meet an Energy Performance Certificate band C standard.
We are now in a cost if living crisis, as I’ve said before Landlord Action has never been busier and I predict we will hit 100-120k possession in 2023. Plus house repossessions will rise, with lots of borrowers coming to the end of their fix rates.
I’m really concerned with landlord panic in our sector, when the Section 21 eviction date is set down, landlords will serve section 21, so they have the option to use it or lose it before the ban kicks. Oh and by the way we had Covid also.
Landlords need to get confidence to stay in the market, they need incentives to stay in, surely the government need to look at reversing the Section 24 decision, before it’s too late. As Chris Norris reports 1 in 3 private landlords plan to cut the number of properties they rent out.
The biggest losers in all of this are the tenants, perfectly good tenants being served with section 21 notices to leave as their landlords have to sell. That is a renter’s biggest fear at the moment. Action needs to happen and the change of rhetoric against landlords also. We are in a crisis, I’ve never seen anything like this in the 32-years of acting for landlords’.
On Thursday 23rd of June the Bank of England is likely to raise the base rate yet again, raising mortgage borrowing costs and subduing the housing market
It is probable that in four-days the Bank of England base rate will be 4.75% or higher, which will instantly increase the monthly repayments for many who are on a variable rate mortgage, and make the cost of a new fixed rate two-year or five-year mortgage deal even more expensive.
Jeremy Hunt the chancellor of the exchequer has made it clear that everyone has to hang tough as in the longterm it will fuel inflation if interest rates are not raised. Personally I think that as many people who are looking to re-mortgage realise that the cost of borrowing has gone up by 40% since they last fixed their mortgage rate, this is electoral suicide, but maybe the multi-millionaire has better fiscal insight than myself.
The housing market is sliding to a halt, and selling prices are at a tipping point, with zero growth in actual prices acheived at present, which by Q4 may tip backwards sharply, if interest rates continue to climb during the autumn. This comes off the back of a 10% rise in property values year on year for the previous two years, so it like a speeding car hitting a wall, not a great situation for anyone, and there will be many dazed and bewildered property owners wandering around thinking – what happened.
It is clear from the Housing Secretary and great Leveller up, Michael Gove that it is up to the Chancellor to help those with a mortgage. But he does not see any intervention likely. The problem then is two-fold, first time buyers typically 400,000 plus of them buy each year. With skyhigh mortgage payments needed to get on the housing ladder and the absence of Help-to-buy a government backed 20% deposit towards a new home, many will not buy in 2023.
The second group getting hit is the renters, as landlords needing to re-fianance their property portfolios are finding that the cost to do so has also increased dramatically, which means higher rents to cover the cost of financing being a landlord.
Given that the prime minister whilst the Chancellor actually supercharged the housing market with his giveaway SDLT programme, maybe it is not only Boris that is now biting him on the posterior.
Proptech and Property News in association with Estate Agent Networking.
Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.
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Andrew Stantonhttps://proptech-x.com/author/andrew-stanton/
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Andrew Stantonhttps://proptech-x.com/author/andrew-stanton/
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Andrew Stantonhttps://proptech-x.com/author/andrew-stanton/
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Andrew Stantonhttps://proptech-x.com/author/andrew-stanton/
